The UK’s average farmgate price exceeded 25p/litre in November 2016 for the first time since March 2015, according to the latest Defra figures.
In the five months to November 2016, UK average farmgate prices rose by 28.42% to 25.62p/litre, 5.9% (1.43p/litre) up on the same month a year ago.
A milk price of 25p/litre is generally regarded as the lower end of the average national cost-of-production figure, providing a further positive indicator of the state of UK dairy.
“These latest Defra figures allow producers to be a little more comfortable in 2017,” said Luke Crossman, senior analyst at AHDB dairy.
“There’s been a slight drop in recent wholesale prices, but it’s being viewed as more of a correction than a fall.
“I don’t see any incentive for farmgate prices to drop before the spring flush and with some processors already offering 30p/litre plus, there’s no reason the farmgate average can’t hit 27-28p/litre come January.”
Mr Crossman added, “Production will be the crucial factor in determining future price rises.
“Although it is rising at the moment, UK production is still 6% lower than this time last year, so as long as EU production doesn’t boom during the flush, it should be a good year for dairy farmers.”
Source: Farmers Weekly