Milk price cuts not slowing down UK production

Despite the frequent announcements of milk prices cuts over the past few months, UK milk production in July has remained strong.

According to DairyCo, production in July reached 1,231m litres, the highest level of production in July for over 10 years, putting cumulative production (Apr-Jul) up 9% on the previous year. The favourable grazing conditions and relatively low feed costs will be helping to support margins, and limiting the impact of lower prices on production.

However, this may change once more cows become housed and the quality and quantity of silage becomes a factor affecting yields. If milk prices reduce further and silage quality is an issue, this could prevent farmers pushing for extra litres.

DairyCo also outline that the May 2014 UK dairy trade balance was recorded at a surplus of just over 328 tonnes and was the first trade surplus recorded by volume since May 2012.

It says a 16% decrease in imports and 15% increase in exports over the past year have caused this trend. Strong milk production and healthy global demand has allowed for the UK to increase exports while displacing some imports.