Dairy prices have collapsed even further, with Arla, Müller, First Milk and Freshways all reducing the price they pay to farmers.
Farmgate prices have fallen again as milk supply in the UK continues to be up 6% on last year, according to data from AHDB.
The lowest price per litre was announced by Freshways, which has cut prices by 3ppl. This means its base price will be 30.4ppl from 1 January, far below competitors Arla and First Milk, which also cut prices by over 3ppl, bringing their payment levels to 39.2ppl and 32.25ppl respectively.
Freshways MD Bali Nijjar told farmers that “milk and cream prices continue with their unprecedented decline, driven by oversupply and reduced demand”.
Arla echoed these issues, pointing to global pressures on the market. It said the “outlook continues to be negatively impacted” and that it was currently difficult to “find short-term outlets for the sudden significant milk increase”.
“Whilst it is disappointing to see further milk price cuts, it is understandable given the current market context,” said Susie Stannard, lead analyst (dairy) at AHDB. “Milk supplies are well above what demand requires currently, and it is challenging processing capacity at a time of year when supplies should be more manageable.”
Stannard added that global supplies were also growing in Europe and the US, which was adding “a lot of pressure” to commodity prices, with the result that milk has lost one third of its value.
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Müller has also confirmed that its price for its Advantage farmers will go down to 38.5ppl from 1 January, a reduction of 1.5ppl.
“Unfortunately, we can’t ignore the continued pressure that is evident across dairy markets,” said Richard Collins, agriculture director at Müller Milk & Ingredients. “We’re seeing market price reductions and daily collection volumes are still significantly higher than they were last year.
“As always, we are keeping a close eye on supply and demand.”
Stannard warned that prices would continue to be low until supplies came back under control.
“It will take time for this to happen and for high commodity stocks to be managed so the outlook in the short term is gloomy,” she said, adding that it could be until the second half of next year before prices bounce back.
The NFU said the latest cuts emphasised the need for collaboration between processors and farmer representation groups.
“Behind every fall in the farmgate price is a family farm struggling to cover their costs,” said NFU dairy board chair Paul Tompkins. “To ensure we have resilient dairy farming businesses, we must see better trust and transparency between farmers and milk buyers.”
He added that this collaboration would help to “manage milk volumes and improve transparency in dairy contracts”.
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