Agribusiness News October 2022 – Milk

Price increases continue into October

• For the five-month period April to August 2022, cumulative UK milk output is 100m litres behind last year.
• Several UK milk buyers have increased farmgate milk prices from 1st October 2022 after continued contraction to supply.

AHDB milk production data indicates that output for August 2022 is estimated at 1,184.31m litres (before butterfat adjustment) – a reduction of 15.50m litres compared against August 2021. Cumulative production for the 2022/23 milk year to the end of August 2022 stands at 6,407.51m litres (before butterfat adjustment), which is 100.26m litres lower output than the same time last year.

UK average milk price for July 2022 is estimated at 45.57ppl. This represents a 2.45ppl rise from June 2022 and a 15.09ppl year-on-year increase from July 2021. Some price increases have been confirmed for October 2022 (see below). Across the UK, most farmgate milk prices are currently sitting within the range 45-50ppl for October 2022.

Farmgate prices: October 2022

The main price changes for October 2022 are shown below:

• Arla Foods amba – farmgate milk price is set to increase by 1 euro cent/kg for Arla members from 1st October 2022. However, the increase to the milk price is negatively impacted by Arla’s quarterly currency smoothing mechanism by 0.33ppl. As a result, the liquid standard litre increases by 0.54ppl to 48.96ppl. The manufacturing standard litre (4.2%BF & 3.40% protein) increases by 0.56ppl to 50.91ppl.
• Arla Foods organic – Due to there being no price increase for organic suppliers, the organic milk price will reduce because of currency smoothing adjustments. The organic manufacturing standard litre reduces by 0.32ppl to 55.69ppl. The liquid standard litre price reduces by 0.30ppl to 53.57ppl.
• Müller Direct – Müller Direct milk price will increase by 1.00ppl from 1st October 2022. See Milk Price table, right.
• First Milk – FM milk price will increase by 0.75ppl from 1st October 2022. See Milk Price table, right.
• Co-op – suppliers will receive 0.67ppl increase from 1st October 2022. This mirrors the price increase from 1st September 2022. This latest price increase means that the liquid standard litre price for October 2022 moves up to 47.67ppl.
• M&S – have confirmed a 1.279ppl increase from 1st October 2022. This takes the liquid standard litre price up to 51.38ppl.
• Sainsburys (SDDG) – confirmed another hold on milk price. This means that October 2022 will see Müller members of SDDG hold at 47.00ppl for the liquid standard litre, whilst Arla members hold at 46.88ppl. This is despite the Sainsburys cost of production tracker indicating that total cost of production has increased by 1.79ppl (to 43.65ppl).
• Tesco (TSDG) – 1.00ppl increase from 1st October 2022. The liquid standard litre for Müller TSDG suppliers increases to 48.00ppl, whilst the milk price for Arla TSDG suppliers increases to 47.75ppl.

Wholesale prices bounce back

After a dip to UK wholesale prices during August 2022, prices have bounced back during September, with price levels rising across the board for cream, butter, SMP and mild cheddar.

Doubts over future of Dale Farm sites

Dale Farm has entered a consultation process with staff regarding the future of its sites at Rowan Glen (Dumfries & Galloway) and Kendal (Cumbria). The consultation process follows the completion of a review into Dale Farm’s business operations to identify which parts of the business are sustainable.

The company has reported declining demand for its products (yogurts, cottage cheese, and fresh desserts), in addition to inflationary cost increases and significant reinvestment requirements as being major reasons for the review of the business.

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