The dairy industry is “too slow to react” to rising prices in the wake of tightening supplies and should do more to pass on all-time high commodity prices to farmers, the NFU has urged.
Cream wholesale prices in the UK jumped by 21% from May to June this year, while butter prices were up 19% and skimmed milk powder up 10% [AHDB]. Year on year butter prices are also up, by 108%, with whey up 118% and cheddar up 63% [Mintec].
Some industry insiders have suggested there could even be shortages of dairy commodities in the UK by the autumn. But despite prices surging, many farmers were questioning where the extra money was going, said NFU dairy board chairman Michael Oakes, who called for greater transparency in the supply chain.
“We know the market’s improving, but there’s no mechanism for farmers to be able to gauge that and it means there’s always a massive lag in the marketplace when prices do improve.”
Oakes called on Defra to introduce mandatory price reporting, which would allow for more transparency and therefore help farmers to make more informed decisions regarding production.
It comes as Arla announced it had increased its farmgate price for July by 1.65ppl to 29.17ppl. However, some dairy commodities were selling at upwards of 36ppl on the spot market.
“The current market situation is characterised by strong demand and low stocks of fat, which is driving up prices for butter, cheese and other products containing fat,” said Arla Foods amba board director Jonathan Ovens.
“This will be welcome news for our owners that we are reflecting current market returns from rising fat prices in our July milk price.”
Oakes welcomed Arla’s move and hoped it would be the start of “steady price rises into the autumn”. But he said these increases were not happening as quickly as the NFU would expect.
Retail milk prices also began creeping up this week, as Asda increased the price of several own label six-pint fresh milk SKUs by 3p to £1.48 [Brand View 20 June 2017 to 27 June 2017]. The 2% increase brings Asda’s six-pint price in line with Waitrose, Sainsbury’s, Tesco and Morrisons.
Asda hiked the price of four pints of milk by 4p to its highest level in almost two years in October (99p), following tight milk supplies.
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