Increasing UK milk price gap indicates a broken market

The widening gap between the highest and lowest milk prices was highlighted as competing brands announce opposing price points.
calendar icon 23 March 2020
clock icon 2 minute read

According to analysis in the Farmers Guardian, Arla foods announced it was increasing its manufacturing milk price by nearly 1 ppl while competitor Meadow Foods said it would drop its price by 2 ppl.

AHDB figures show the gap between the highest and lowest 2019 milk price was 9.34 ppl, more than double 2018 figures. The most expensive was Muller’s price for suppliers to Marks & Spencer. The supermarket has been top in eight of the last 16 years, with Booths and Waitrose topping the chart in other years.

The least expensive offering was Pensworth – a Buckinghamshire-based dairy – at 24.09 ppl.
The article reports that the gap between the highest and lowest isn’t the largest seen in the UK. In 2015 the gap reached nearly 14 ppl, with Meadow Foods producers being paid just 19.19 ppl compared to 32.92 for farmers supplying Booths.

Dairies who supply non-supermarket customers with liquid milk regularly appear towards the bottom of the league.

Dairy market analyst Chris Walkland said it was difficult for processors who over-rely on liquid sales in expensive to service markets.

“Those dairies have a fragmented customer-base in urban areas where it is getting more difficult to make deliveries,” said Mr Walkland.

“This is especially the case in London which is expanding its emission zone charges over the next two years to cover more vehicles and a wider area.”

NFU dairy board chairman Michael Oakes said reform and investment were needed in the sector.
“It is clear the British dairy market is not working in the interests of a lot of producers,” said Mr Oakes.

“At a recent European dairy producer meeting, the Arla price of about 30ppl was the standard, not the exception.”

“In the long-term, there needs to be more investment in value-added processing and the Government has a role in encouraging that.

“However, this does little to comfort farmers who are facing a fall in prices which could see them losing 5ppl or more.

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