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Agribusiness News August 2022 – Milk

3 August 2022

Price rises begin to cool

  • UK milk output is well behind last year. At the end of June 2022, the UK is already 64.28m litres down on 2021
  • UK milk prices remain buoyant as high farmgate prices continue to be driven by soaring production Producer margins remain fine.
  • Although some farmgate prices have increased for August 2022, there are signs that retailers are unwilling to raise milk prices much further.

The latest milk production statistics from AHDB for June 2022 indicate that output for the month is estimated at 1,273.11m litres (before butterfat adjustment) – a reduction of 25.55m litres compared against June 2021. Cumulative production for the 2022/23 milk year to the end of June 2022 stands at 3,994.16m litres (before butterfat adjustment), which is 64.28m litres down on the same period last year.

The latest figures available from AHDB show that the average UK milk price for May 2022 is estimated at 40.39ppl. Several milk buyers increased their farmgate milk prices during June and July and the data relating to these milk price increases is still being collated by AHDB. During the June/July period, most farmgate milk prices have been sitting around 42.00 – 46.00ppl.

Farmgate prices: August 2022

The main price changes for August 2022 shown below:

  • Arla direct supplies – 59ppl price increase confirmed from 1st August 2022. The liquid standard litre for direct suppliers is set to increase from 43.44ppl to 45.03ppl.
  • Arla Foods amba – members will receive a 1.0-euro cents increase from 1st August 2022. This equates to an increase of 0.86ppl for the liquid standard litre which lifts the farmgate milk price from 47.56ppl to 48.42ppl. The manufacturing standard litre (4.2%BF & 3.40% protein) increases by 0.90ppl from 49.45ppl to 35ppl.
  • Arla Foods organic – Organic suppliers will also receive the same 1.00-euro cents increase which takes the liquid standard litre up to 53.87ppl and the manufacturing standard litre up to 01ppl.
  • Müller Direct – No change to the Müller Direct milk price for August 2022, following a 4.50ppl increase in July 2022. See Milk Price table.
  • Fresh Milk Company – 00ppl increase confirmed from 1st August 2022. This takes the liquid standard litre price up to 46.40ppl (see Milk Price table below). The manufacturing standard litre price increases by 1.04ppl to 48.25ppl.
  • First Milk – FM milk price will increase by 05ppl from 1st August 2022. See Milk Price table, below.
  • Graham’s Dairies – 2.00ppl increase confirmed from 1st August 2022. This takes the liquid standard litre price up to 46.00ppl for August
  • Sainsburys (SDDG) – 1.00ppl increase confirmed from 1st August 2022. The price increase means that Müller members of the SDDG will see their price move up to 47.00ppl for the liquid standard litre, whilst Arla members will see prices move up to 88ppl.
  • Co-op – 0.33ppl increase confirmed from 1st With the July 2022 Coop milk price having increased by 2.65ppl due to the Coop milk price tracking Sainsburys (SDDG) and Tesco (TSDG) milk prices, the latest 0.33ppl increase for August means that the liquid standard litre price for August 2022 moves up to 46.33ppl.

Wholesale prices begin to level off

Reduction to Tesco cost of production

Although the Tesco milk price will continue to track the Müller Direct milk price during August (45.75ppl in Scotland), the retailer has given a signal of intent by announcing that the cost of milk production reduced by 0.32ppl during July 2022 to 42.59ppl. Whilst the Tesco (TSDG) milk price continues to mirror the Müller Direct for now, this latest announcement suggests that a downward movement to the TSDG milk price may be imminent. Ultimately there is a limit to how much the consumer is prepared to pay for milk and this latest announcement from Tesco suggests that the retailer would prefer to see a lower price level., 07771 797 491

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