On the eve of the Livestock Event, NFU dairy board chairman Michael Oakes says that with further positive moves on the markets, more money should now be coming back to the farm gate.
Dairy commodity prices have strengthened with AHDB figures showing that as the markets continued to firm throughout June, wholesale prices have also been pushed up.
The bulk cream price increased 28 per cent between May and June while the estimated cream income to a liquid processor up by 1.41ppl to 6.40ppl in June.
Despite a number of milk price increase announcements for July and August, prices remain far below sustainable levels on farm, and we need to ensure that extra money is passed back to farm as quickly as possible.
Mr Oakes said: "With the cream prices rising, we should be seeing milk prices improve across the board and in that respect it was disappointing to see Muller hold the milk price for August. There are clearly delays which just don’t make sense.
"Both AMPE and MCVE, dairy market indicators, have recently increased, with AMPE up 12% to 18.9ppl in June and MCVE up 19% to 19.6ppl in the same month.
With such leaps forward in those price indicators surely we should at least see some of the lower end cheese prices start to improve.
Spot milk prices have also jumped from 16ppl in May to 25ppl in early July, yet we haven’t seen such a big lift in B prices – these should theoretically be the first to react to market improvements.
"On liquid milk we need to make sure processors aren’t hiding behind retail premiums.
"Retailers have stuck by their word with minimum pricing on liquid milk, and in some cases on cheese, but these should not be used to hide real dairy market improvements."
Money 'needs to go to farm gate'
NFU Cymru Dairy Board Chairman, Aled Jones, says with the outlook in the dairy sector looking a little brighter, it is critical that dairy farmers see money going back to the farm gate quickly and not stuck in the supply chain.
Following a global supply and demand imbalance that sent dairy commodity prices - and the price farmers are paid for their milk – plummeting, there are now signs that the bottom of the trough has been reached.
Aled Jones said: "It’s been the longest and deepest crisis anyone in the dairy sector can remember and clearly current farmgate prices are not sustainable.
"It’s still early days but from what we’re seeing on the futures markets, it’s looking like things are on the cusp of improving.
"Supply is pulling back across the world and there are reports that dairy consumption will be bigger than the growth in production this year.
"On farm we’ve seen price increases, a few price holds and although no overall change on the last Global Dairy Trade auction, this follows two positive auctions.
"Some traders are increasingly concerned where they will source products for the end of the year so the right signs are there.
"However, many farmers are receiving an extremely low price for their milk, so despite any small increases, prices will still be extremely low and how quickly we get back to a sustainable level no-one knows.
"There is still a long way to go but the key message has to be for processors to pass price increases back to farmers as soon as they materialise."
