Yesterday, July 1, the EU’s dairy reforms moved into their second phase. Support, or intervention, prices for butter and skimmed milk powder were cut for the second year running - and there are two more years of cuts still to come.
This year, the intervention price for butter is coming down by 7.5%, equivalent in the UK to a £136/tonne drop at current exchange rates. Skimmed milk powder is down by 5.3%, a drop of £68/tonne.
Over the four-year period, the support price for butter will have fallen by 25% and for skimmed milk powder by 15%.
Those looking for immediate price cuts in the market may be disappointed. The support cuts made in July last year took around six months to affect actual market prices for butter and skimmed milk powder.
The same thing may well happen again. This is because stocks are low and export demand is high, particularly for skimmed milk powder, for which prices are currently