Dairy farmers to benefit from milk price hike

Related tags Dairy farmers Cost

Dairy Farmers of Britain (DFOB), one of the UK's largest milk
processors, announced last week that it is to increase the price it
pays farmers for their milk, with a number of major processors
likely to follow suit. But will this signal a turnaround for the
UK's beleaguered dairy farmers, Tom Armitage investigates.

The 3,250-member co-operative confirmed that its farmgate milk price to members would increase by 0.3p per litre to around 18.5p per litre, while further increases could be expected later in April.

"After months of talking about the need for higher milk prices to cover the increased cost facing dairy farmers, I am delighted that the market has started to move in the right direction,"​ Malcolm Smith, DFOB's chief executive, commented.

"The interim increase that we are paying for March milk relates to the extra returns that we have received during March from parts of the liquid market. Not all sectors of the liquid market have increased price yet, and those that have moved have done so at different times,"​ he added.

The payout recommendation was based on its member farms processing an average of 600,000 litres per year, with milk containing 4.1 per cent butter fat and 3.3 per cent protein (the farmgate price of milk depends largely on these two factors).

The dairy co-operative also noted that its next objective was to achieve a similar price increase for UK cheese manufacturers, which have seen prices adversely affected by rising raw material costs (oil in particular) and an overall slow-down in the UK cheese market.

Dairy Crest, the UK's second largest milk processor, hinted last week that it would be willing to consider upping its prices after confirming that a number of major UK retailers had offered it higher prices in a bid to offset rising industry costs.

"The recent price increases show that the industry is better able to increase returns when required and that retailers acknowledge the need for the industry to cover its costs,"​ Peter Dawson, policy director for UK dairy association Dairy UK, commented.

Meanwhile, the UK's other major milk processors, Robert Wiseman and Arla Foods, were both rumoured to be considering a similar price hike.

A spokesperson for Arla told DairyReporter.com​, however, that it was "still in discussions with producers"​, while Wiseman was unavailable for immediate comment.

"The recent price increases are to be welcomed as they will go some way to addressing the cost increases that have been incurred by dairy farmers and processors,"​ Dawson added.

Furthermore, he noted that the supply chain has recently become much more integrated with the milk market as a whole, something which has subsequently left the majority of UK farmers upbeat about addressing future challenges.

Related topics Markets Fresh Milk Pricing Pressures

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