Milk buyers in the spotlight as dairy farmers slow to receive improved market returns

NFU dairy board chairman Michael Oakes is questioning why milk buyers are still not passing on the huge lifts in market prices to their suppliers.

Arla has announced a 1.49ppl increase in the price they pay their UK members for conventional milk taking the November price to 23.14ppl.

But with market indicators AMPE and MCVE at and around 30ppl, Mr Oakes said he wants to know what is holding back bigger increases in the UK milk price for farmers.

“With market indicators racing upwards in the UK and EU and our domestic milk production down eight per cent daily I cannot understand what’s holding back farmgate milk prices to this degree”, said Mr Oakes.

“Yes we have seen price rises but they haven’t matched the massive increases at the wholesale end.

“Last month we published a short report that showed £200 million missing in the UK dairy supply chain between April and September. Since then commodity markets have strengthened further – butter prices are now at UK record levels, 108 per cent higher than they were in April; cream prices are 144 per cent higher at well over £1900/ tonne for October – yet we see little movement at farmgate.

“We know that Arla pays an EU milk price and benchmarks against the Dutch co-operative Friesland Campina (FC). Last week FC increased its guaranteed milk price by 3c/l for October. FC members are now receiving 29.25 €/c per litre, equivalent to *26ppl. That’s nearly 3ppl higher than the Arla UK price. What’s going on?

“The Dutch co-operative has worked with its members to better match supply to demand – bringing in bonuses for production reduction in times of oversupply and vice versa. At the same time what has Arla and its farmer representatives done?

“But let’s be clear. This isn’t just about Arla. Farmers are now looking at AHDB’s AMPE and MCVE indicators which show prices at 28.5ppl and 32.4ppl respectively. The Defra UK average is now 21.34ppl. Clearly we need all UK milk buyers and customers to act responsibly and start reflecting the true value of farmgate milk in what they pay their suppliers.”

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