Staple dairy lines such as butter, cream and milk will come under renewed price pressure this autumn as milk supplies plummet.
Shortages are already beginning to affect manufacturers using dairy products, and industry insiders say this will inevitably push up shelf prices for many household dairy products.
Farmers are looking to tear up supply contracts with dairies in order to secure a better price for milk on the spot markets. But even without such drastic action, some manufacturers are having trouble securing the supplies they need.
"Companies are struggling to get hold of wholesale butter as processors are concentrating on fulfilling retail orders instead," said Jim Hawkins of ingredient supplier Napier Brown. "It is going to get worse."
Medina, which supplies independents and other buyers in the middle ground, has reported problems getting hold of unsalted butter for the stores it supplies. Prices are going up accordingly. Medina this week sent letters out to its customer base of independents and wholesalers detailing rises of 20% on 300 product lines, including milk, cheese, butter, cream and bread. Milk alone will increase by 2ppl to 3ppl in the short term.
"We are pushing our prices up significantly and are struggling to get some lines from the UK," said Terry Ziton, Medina MD. "We are having to look outside to fill the gap."
Dairy Crest has been forced to scale back butter manufacturing because of cream shortages. "We will just have to get used to being short of dairy lines this year," said milk purchasing director Arthur Reeves.
The shortage is likely to get worse as the November trough in milk production approaches. Not only are more farmers planning to quit, but the endless rain has damaged the forage crops that cows eat in winter. Farming experts warn this will cut milk yields and push up feed costs, making milk even more expensive.
"There is nothing in the dairying pipeline that will help matters," said David Levick of Kite Consulting.