Consumers could be facing another big rise in the supermarket price of dairy products, after processors gave the strongest indication yet that a 20% rise in farm gate milk prices is on the cards.
Arla Foods Milk Partnership chairman Jonathan Ovens has become the latest to predict that raw milk prices would soon top 30p per litre, after Robert Wiseman warned earlier this year that 30p could be a reality by Christmas. Ovens told Scottish farmers last week he was negotiating for a the January price that started with a '3', up at least 5ppl on the October price.
When Arla raised the amount it paid dairy farmers by 5ppl in August, its major customer Tesco raised shelf prices by the equivalent of 8.8ppl in a move that was quickly followed by all the retailers. If the forecast increase resulted in a similar retail price move, a four-pint bottle of milk would jump 19p to £1.53 - or 38p on the year.
An Arla Foods spokeswoman refused to confirm the move, but said: "We can only pay out what we get in."
Industry sources said that a price hike was looking increasingly likely.
"Jonathan Ovens led the pack earlier in the year up to 25ppl and has a track record of delivering," said Kite Consulting's John Allen. "It won't be easy for him, but he shouldn't be written off."
Another processor, however, said that if there were a price rise it would come later next year.
Traders added that any price rise would have to be underpinned by further increases on cheese, cream and other dairy products to be sustainable.
"Liquid will have to go up again, but if it is to deliver an ex-farm price of 30ppl we need the other sectors to perform as well if we are to avoid prices coming down quickly afterwards," said one cheese trader.
In Northern Ireland, the average price for milk sold at auction hit more than 30p in August and has stayed there ever since.