Agribusiness News July 2022: Milk

Retailers rally on July milk price

• UK milk output for 2021-22 is down by 42.10m litres against 2021-22.
• By June 2022, several retail aligned milk prices were lagging behind non-aligned farmgate prices, prompting many aligned farmers to seek out new supply contracts elsewhere.
• Some retailers have applied substantial ‘booster payments’ to their July milk price to help bring aligned milk prices back in touch with the market.

 The latest milk production statistics from AHDB for May 2022 indicate that output for the month is estimated at 1,390m litres (before butterfat adjustment) , up 4.5% on the revised figure for April 2022 of 1,330 m litres but 1.1% lower than May 2021.  The UK average farm-gate milk price for May 2022 was 40.39 pence per litre (ppl).  This represents a 5.0% (1.94 ppl) increase on April 2022 and a 34% increase on the same month last year.

South of the border, two milk buyers have recently announced a farmgate milk price of 50ppl (Pensworth for August 2022, and Freshways for September 2022).  This is a considerable lead over the prices listed in our milk price table (right) for July and demonstrates the potential for further increase to Scottish price levels.

Farmgate prices: July 2022

There are some big price increases for July 2022:

• Arla direct supplies: 4.32ppl price increase confirmed for July 2022 increasing the liquid standard litre for direct suppliers from 39.12ppl to 43.44ppl.
• Müller: Müller Direct suppliers will receive a 4.50ppl increase from 1^st July 2022. This takes the liquid standard litre price up to 45.75ppl for suppliers in Scotland.  Müller’s organic milk price is also set to increase by 4.50ppl for July 2022.
• Fresh Milk Company: 3.90ppl increase confirmed from 1^st July 2022. This takes the liquid standard litre price up to 45.40ppl.  The manufacturing standard litre price up by 4.04ppl to 47.21ppl.
• First Milk: FM milk price will increase by 1.40ppl from 1^st July 2022.
• Graham’s Dairies: 4.00ppl increase confirmed from 1^st July 2022. This takes the liquid standard litre price up to 44.00ppl for July 2022.
• Tesco: After initially announcing a 0.76ppl increase for July 2022, Tesco has added a further 3.65ppl to the July 2022 milk price. This takes the price for Müller Milk Group suppliers up from 41.59ppl to 46.00ppl.  The milk price for Arla TSDG suppliers will move up from 41.34ppl to 45.75ppl.
• Sainsburys (SDDG): having initially announced a 1.26ppl increase for July 2022, Sainsburys have added a further 4.30ppl booster payment to the July 2022 milk price, making the total increase a massive 5.56ppl. The price increase means that Müller members of the SDDG will see their price move up to 46.00ppl for the liquid standard litre, whilst Arla members will see prices move up to 45.88ppl.  It remains unconfirmed how long Sainsburys will pay the booster payment.
• Co-op: 2.17ppl increase confirmed from 1^st This latest price increase takes the liquid standard litre price for July 2022 up to 43.35ppl.

Dairy wholesale prices rising

World milk production: March 2022

The table below provides an overview of the position on global milk production at the end of March 2022:

alastair.beattie@sac.co.uk, 07771 797 491

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