The UK churned out its highest milk production for a decade last year, resulting in plummeting prices and expectations that farmers would scale back output. But early indications suggest the 2015 spring flush could be even bigger than in 2014.
The latest data from Defra/RPA suggests UK milk deliveries for 2015/16 are now running at nearly one million litres per day above the same time last year. In the two weeks ending 9 May 2015, UK daily deliveries averaged 44.3 million litres per day, a 1.9% increase on the same period last year and 8.4% above the three-year average.
“Confidence was running high 18 months ago and so many farmers invested - given this, many will now need to keep going despite the price pressure,” said dairy industry consultant Will Sanderson. “There is also a cashflow issue, which means farmers will have to increase production to offset the fall in the price being paid.
“Finally, we have had good weather this year, with an increase in temperature around spring, leading to excellent conditions to produce more milk.”
Another industry source said given the impact of the 2014 flush on prices, there was now real concern about what lay ahead for 2015. “I don’t think many people realise just how high production is at the moment,” he warned.
Global milk production is also running higher this year, which has been reflected in a drop-off in wholesale commodity prices following the bounce at the beginning of the year. DairyCo said last week the latest Global Dairy Auction price index had fallen by a further 2.2%.
Sanderson warned there was potential for prices to fall more, which could lead farmers to scale back or even stop production later this summer.
Farming groups met last week to discuss the situation and agreed there was an urgent need to improve milk contracts.