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Farm-Gate Milk Price Needs To Move Up

09 June 2011

WALES, UK - Members of NFU Cymru's Milk Board have expressed their dismay and frustration at the lack of any upward movement in the farm-gate milk price despite commodity prices rising significantly.

NFU Cymru Milk Board Chairman, Maurice Jones, said: “It is hugely disappointing that milk buyers and processors have not responded to market opportunities. Commodity markets for cream, butter and powder have all risen yet the farm-gate milk price here in the UK has not moved. It remains well below the average cost of production and is not returning sufficient to allow for reinvestment on our dairy farms. It just doesn’t make any sense that, when these commodity markets are moving upwards, our milk price stays unchanged.”

Mr Jones explained that UK farm-gate milk price in March this year stood at 26.5 pence per litre (ppl) and has not really moved since then. Yet the market indicators for the returns from butter and skimmed milk powder, for instance, gave a milk price equivalent of 33.4ppl. Similarly, the indicator for milk used for cheese manufacturing was standing at 32.8ppl and the market for bulk cream had risen some £200 per tonne in the last six weeks. He said these were huge differences and processors needed to be taking full advantage of these markets and returning this benefit to milk producers.

Mr Jones continued: “The NFU cost of milk production report issued earlier this year calculated the average cost of milk production at 29.1ppl. Compare this to a UK farm-gate price for milk in March of 26.5ppl and you’ll see that the immediate situation is dire and characterised by huge pressures with ever increasing input costs, instability and an overwhelming lack of confidence amongst dairy farmers. The consequences are very real with massive underinvestment on our farms, a high exit rate of farmers from producing milk and a shrinking national herd.

“The pressure is really on milk buyers to increase prices in line with the market. As farmers we know what is going on. We know what commodity markets are returning. We know what the market indicators are and they all point to immediate rises in the farm-gate price paid for the milk that we produce. We expect our milk buyers to deliver,” Mr Jones said.

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