Very gloomy times for UK dairy, Farmers for Action predicts

This week could be 'very gloomy times' for UK dairy farmers, according to Farmers for Action as they expect prices to fall by as much as 2ppl for October milk.

"This will be blamed on global markets, falls in power prices and cream prices," the organisation said.

"In our view there is only one sector to blame and that is dairy farmers. We need to stand up and stop the decline in our milk prices unless you all feel as dairy farmers you can produce milk 365 days a year at prices below 25p because believe us that is where we are heading and we will be brave enough to predict that by December, we will see at least another 3p off milk prices if we do not do anything."

Recently, dairy farmers are having to deal with the current ban by Russia on EU produce. A series of key meetings involving European dairy industries, government bodies and the European Commission will be held in the next month to address the Russian import ban on dairy products.

FFA said according to their calculations feed prices would have to fall £100 per ton minimum for farmers to go through the winter producing milk at these prices.

Dialogue is continuing on a daily basis with a war of words but is not stopping processors cutting the prices, month in, month out. Therefore, whether you agree with it or not there has to be some form of direct peaceful action to let both retailers, processors and government know that UK milk producers are not going to accept prices below 2011. It is unsustainable even for the top 25% if they are honest, to continue producing milk 365 a days a year at these prices.

Rural accountants Old Mill said the likely impact of milk quotas being abolished next spring is still difficult to predict, with the potential for both increased imports from Ireland and greater export opportunities to the Asian market.

“With UK milk production running 5% ahead of last year, as well as strong production in the EU, US and New Zealand, global dairy commodity prices are already under pressure,” said head of rural services Andrew Vickery.

DairyCo’s Actual Milk Price Equivalent, based on a basket of commodity prices, was pegged at 30.9p/litre in July – 8.9p/litre down on the same time last year, he adds. “If this downward trend in commodity markets continues then there will no doubt be pressure on the processors to drop milk prices further.”

That in itself is not necessarily a bad thing, provided that costs can be reduced by at least the same level. “Feed prices should be lower this winter – and the good weather of recent months should help to keep dairy farmers’ costs down as well,” said Mr Vickery.

The effect of the strengthening pound in recent months will also have an effect on the market. “Imported commodities – notably proteins like soya - are likely to get cheaper, while putting further pressure on UK arable exports. However, there will equally be pressure on dairy exports, and imported dairy commodities will become more competitive.”