What average price can dairy farmers expect over the next five years?
Perhaps the most pertinent question for dairy farmers that was asked this week at an international dairy conference was what average price can they expect over the next five years.
However, few were prepared to answer the question.
David Dobbin, the outgoing Chief Executive of Dale Farm, said he does not see the current rate of three-year cycles continuing.
“The last cycle was helped by Europe having quotas. Now, the EU farmer can respond in a way he could not previously and that will cap the recovery.”
He warned that European dairy farmers are facing an era of quite low average milk prices for the next five years and said he would be shocked to see a spike in milk prices again, unless a severe crisis such as weather hits.
Making a prediction, he said low 20s, with a maximum of mid 20s for the immediate future. “The days of the big peaks are gone for five to 10 years”.
Adriaan Krijger, a former Secretary of the Dutch National Committee of the International Dairy Federation, reminded the audience at the DIN conference in London how experts, like himself, thought the Dutch milk price would be 40c/L in the past few years.
“In the Netherlands, we were very optimistic about global demand and the growth of world population. Now milk is a commodity and commodity tends to get lower in price – therefore, the dairy price will be low unless we are able through innovation and branding get a higher price.
“Only 15% of Friesland Campina milk is branded product. You need a lot of innovation and branding to have a positive impact on price.”