Milk price cuts wipe over €1 billion off UK dairy incomes

Recent milk price cuts have wiped an estimated €1 billion (£800 million) from the annual income of UK dairy farmers according to the National Farmers Union.

National Dairy Board Chairman Rob Harrison said dairy farmers who have completed their budget plans for the next 12 months will know that, at the moment, it’s not pretty reading.

Harrison said confidence in any industry struggles when there are a lot of ‘unknowns’, and dairy is no different.

“Some scaremongers are talking prices down towards 20ppl, based on Actual Milk Price Equivalent (AMPE). But let’s look back a minute – when AMPE was 39ppl our milk price peaked at 34.5ppl – all because of our ‘focus’ on strong national brands and the domestic retail market. So if we don’t benefit from high AMPE’s should we really suffer the lows?

“We are increasingly part of a bigger global market, but our strong domestic situation should give us some protection from the very highs and the very lows.”

Nonetheless, Harrison said it’s going to be a tough 12 months. “The smart money is on improvement in the second half of 2015 – let’s not talk the price down even further before then,” he said.

Harrison said that as farmers we need to put plans in place to cope with increased volatility.

“It is important that farmers talk to their processors and understand what factors impact on their milk price. Asking questions and staying in contact is vital. Processors should be giving farmers the correct market signals and investing in measures that can deliver value.”

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