Agribusiness News November 2022 – Milk

More price increases for November ‘22 

• Some milk buyers have announced a price increase for November even though farmgate prices are already at a record high.
• UK production remains below last year despite high farmgate milk prices.

 AHDB milk production data shows that output for September 2022 is estimated at 1,155.06m litres (before butterfat adjustment), an increase of 0.76m litres on a year-on-year basis.  Cumulative UK production for the 2022/23 milk year to the end of Sept 2022 stands at 7,566.85m litres (before butterfat adjustment), which is 96.73m litres lower output compared with the same time last year.  The UK average milk price for September 2022 is estimated at 48.86ppl.  This represents a 1.78ppl increase from the previous month (47.08ppl) and a year-on-year increase of 17.29ppl from September 2021.

Farmgate prices: November 2022

The main price updates for November 2022 include:

• Arla Foods amba – No change to farmgate milk price for Nov 2022. The liquid standard litre price holds at 48.96ppl.  The manufacturing standard litre (4.2%BF & 3.40% protein) holds at 50.91ppl.
• Arla Foods organic – No change for November 2022. The organic manufacturing standard litre holds at 55.69ppl.  The liquid standard litre price holds at 53.57ppl.
• Arla Directs – 0.56ppl increase to farmgate milk price from 1^st November 2022 for Arla direct suppliers. This takes the manufacturing standard litre price up to 48.32ppl.  The liquid standard litre price increases by 0.54ppl to 46.43ppl.
• Müller Direct – No change for November 2022 farmgate milk price.
• First Milk – FM milk price will increase by 0.30ppl from 1^st November 2022.

Fresh Milk Company (Lactalis) – The manufacturing standard litre milk price increased by 0.50ppl from 1^st October taking the milk price up to 49.70ppl.  The liquid standard litre milk price increased by 0.48ppl to 47.80ppl.  (This announcement was made after the October edition of Agribusiness News had gone to print.)

• Müller Direct / Lidl fixed price – Müller direct suppliers on contract with Lidl are to receive a 2.00ppl price increase from 1^st November 2022. This takes the liquid standard litre milk price up to 48.00ppl.  This is the fourth time that Lidl has increased the milk price for contracted suppliers.  The 3-year contract was launched in July 2021 with a fixed price of 29.00ppl, some 19.00ppl below the November 2022 offering.
• Sainsburys (SDDG) – confirmed another monthly hold on milk price (for November). Müller members of SDDG hold at 47.00ppl for the liquid standard litre, whilst Arla members hold at 46.88ppl.
• Tesco (TSDG) – No change for November 2022. The liquid standard litre for Müller TSDG suppliers holds at 48.00ppl, whilst the milk price for Arla TSDG suppliers holds at 47.75ppl.

Wholesale prices reduce in October

After something of a recovery to dairy wholesale prices during September, prices have eased back again during October 2022.  During the summer, prices on the continent have been supported by low production and tight milk supplies.

Arla – Sustainability Incentive Model

Arla is to introduce a points-based sustainability incentive that will deliver payments to farmer members who are prepared to take action to deliver reductions to greenhouse gas emissions.  Arla will set aside 3-euro cents of the milk price (in addition to the 1-euro cent for climate check data) to provide an incentive for farmers to take action on five key areas including feed efficiency, fertiliser use, land use, protein efficiency, and animal robustness.  The annual cost of the scheme is estimated at around €500m.

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