With the gap between farmgate milk and retail prices promising no let-up and high input costs putting significant strain on the sector, British dairy farmers are facing a tough six months ahead, the Royal Association of British Dairy Farmers (RABDF) has warned.
Government figures show the average UK gate price for milk was 36.48 pence per litre (ppl) in June, down 16% on the same month last year. Meanwhile, the current cost of production is estimated to be between 40ppl and 45ppl, making it unsustainable for many dairy farmers.
RABDF chairman Di Wastenage said producers are caught in the crossfire, with little let up forecast in the short-medium term.
“Our dairy farmers are facing enormous financial pressures,” she remarked. “They are caught in the crossfire with farm gate milk prices remaining low, while farm input costs are stubbornly high and high retail prices impact consumer demand too.”
Mrs Wastenage added UK processors are also grappling with high energy and labour costs, which is reflected in the prices. Moreover, she explained the reason for the higher retail price of certain dairy products such as cheese is manufacturers using higher cost milk from earlier this year.
As for the next six months, she said global markets leave little scope for optimism for UK dairy farmers.
“The downturn in demand for whole milk powder (WMP) from China and the forward forecasting from Fonterra suggest this is going to become an uncomfortable year. Sadly, for many, this may be financially unsustainable,” she warned.
“The UK needs a dairy industry from the farmgate to the supermarket shelf to operate efficiently and profitably for all sectors along the supply chain. We must ensure this happens and that the value is shared with all parties,” Mrs Wastenage concluded.
