British dairies see first farmgate price holds and rises after months of negativity

The start of July brought tentative signs from several dairy co-ops that the price declines could be over – at least for now.

Arla announced its July price for conventional and organic milk will remain unchanged; Payne's Dairy is also standing on for July. For August, First Milk, Freshways, and Wyke Farms all stand on, while Barber and Saputo will lift their prices by 75ppl and 5ppl respectively.

Paul Savage, agricultural director for Arla UK, said: "After a period of negativity, it is welcoming to see commodity markets recover. With the outlook also stabilising, as a farmer owned cooperative we are firmly focused on building on our already strong customer relationships to add more value to our farmer owners milk.”

Robert Craig, farmer director and vice-chairman of First Milk, commented: “Whilst there continues to be uncertainty in the wider economy, dairy markets appear to be stabilising at present and we continue to work hard to maximise milk price returns for our members in the months ahead.”

Announcements were still largely negative, however. In cheese, Wensleydale Creamery announced a 0.59ppl milk price reduction to 35.64ppl for July, while in liquids, Muller dropped its milk price by a penny in August to 37ppl for a standard liquid litre of 4% butterfat and 3.3% protein. Richard Collins, head of agriculture at Muller Milk & Ingredients, said: “We must reflect continuing market pressure with supply remaining ahead of forecast. We remain committed as always to paying a competitive milk price and ensuring security of supply.”

Summer months could bring stability to the farmgate

The Dairy Group reported that EU commodity markets have been relatively stable since April, with cheddar being the only outlier and the UK markets showing small gains in the past two months. Meanwhile, UK milk supply has stayed largely unchanged from April to June. This stability has finally fed down through to the farmgate, with strong potential for prices to remain stable over the summer months. According to GrassCheck GB, grass growth rates have been steadily dropping throughout June on the back of hot, dry weather.

Farm input costs have also declined, with feed prices predicted to be 20% below the high prices of last year triggered by the war in Ukraine. At the same time, the average cost of production is likely to only ease between 10%-15% in the next year, making profitability challenging.

Other factors, such as the ongoing labor shortages, continue to put pressure on farmers. A survey of Arla’s farmer owners found that more than a tenth of farmers are considering leaving dairy farming due to staffing issues, and almost three fifths were finding it harder to find staff compared to 2019.

Meanwhile, British cull cow prices have also risen year on year. According to the AHDB, the average liveweight price of the dairy sired cull cow for June 2023 was 163.84p/kg, up 8.20p/kg (5.3%) compared to June 2022.