The Royal Association of British Dairy Farmers (RABDF) has warned that the difference between farmgate milk and retail pricing will continue to widen, and that high input costs would put major burden on the industry.
According to government data, the average UK gate price for milk in June was 36.48 pence per litre (ppl), a 16% decrease from the previous month. Meanwhile, the present cost of production is expected to be between 40ppl and 45ppl, rendering many dairy farms unsustainable.
According to RABDF chairman Di Wastenage, producers are caught in the crossfire, with no respite expected in the short to medium term.
“Our dairy farmers are facing enormous financial pressures,” she said. “They are caught in the crossfire, with farm gate milk prices remaining low while farm input costs remain stubbornly high, and high retail prices also have an impact on consumer demand.”
Mrs. Wastenage went on to say that UK processors are also dealing with increased energy and labor expenses, which are reflected in the pricing. Furthermore, she noted that the increased retail price of some dairy goods, such as cheese, is due to producers employing higher-cost milk earlier this year.
In terms of the next six months, she believes global markets provide little hope for UK dairy producers.
“The decline in Chinese demand for whole milk powder (WMP) and Fonterra’s forward forecasting indicate that this is going to be a difficult year.” “Unfortunately, for many people, this may be financially unsustainable,” she cautioned.
“The UK requires a dairy industry that operates efficiently and profitably from the farmgate to the supermarket shelf for all sectors along the supply chain.” Mrs Wastenage said, “We must ensure that this occurs and that the value is shared by all parties.”
