Monday, 19 November 2012

Dairy farming and milk production

Following all the milk price protests earlier in the year, it is interesting to learn that UK milk production continues to fall sharply. I suspect this is a combination of the poor weather conditions, affecting the quality of forage and also the number of dairy farmers exiting the industry. What this means is that in October the UK produced 993m litres which is a 6.5% fall on last year’s production for the same month.

It appears that this phenomenon is not restricted to the UK alone. DairyCo, which is a not-for-profit organisation funded by dairy farmers to work on their behalf commented, "Milk production in the rest of the EU and in the USA is lower than expected, adding support to commodity markets. However, trade remains thin and any small change in market conditions could have a larger effect on prices."

Dairy farmers in the UK will obviously be hoping that the apparent shortage of milk production beyond our shores will have a positive impact on world commodity prices and then on milk prices paid to farmers here. It has to be remembered that one of the factors which was blamed by many milk purchasers for the price cuts which sparked farmers to picket milk factories earlier in the year was the low price of cream on the world markets.

One of the factories which was picketed was in Somerset, being the new Wiseman Dairies facility off junction 24 of the M5 near Bridgewater. Since building the facility Wisemans have now been taken over by Muller and so it will be gratifying to those farmers who supply them with milk that they will get a phased 1.5p/litre milk price increase to 30.5p/litre between 1 December and 1 February.

Ronald Kers, chief executive officer of Müller UK & Ireland Group said, "We want to return a higher milk price to farmers so that we can ensure security of supply for our customers in an environment where on-farm milk production is dropping," He went on to comment, "We are determined to be the leading dairy company in the UK and Ireland and the preferred home for milk produced by Britain's dairy farmers and we will work closely with the farmer board to this end."

These are positive words although they do seem rather hollow in the light of the sudden and dramatic price cuts Muller/Wiseman announced without warning earlier this year. Therefore, from the British Dairy Farmer’s perspective let’s hope this heralds the start of a new and more constructive relationship between dairy farmers and milk processors such as Muller because the problems encountered earlier in the year have done nothing to engender confidence anywhere within the supply chain.


James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells

T: 01749 683381
E: james.stephen@carterjonas.co.uk

1 comment:

toom smith said...

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dairy farming