Commodity prices indicators now back to 2013 levels

Dairy farmers patience is legitimately wearing thin as market indicators for dairy commodities soar to levels not seen since the heady highs of 2013.

By comparison, farmgate prices have, as yet, failed to respond leading to anger and frustration at farm level.

Actual Milk Price Equivalent (AMPE) and Milk for Cheese Equivalent (MCVE) track the basic wholesale commodity prices for butter, skimmed milk powder, mild cheese and cheese by-products.  

While NFUS acknowledges that they do not set the price, they have risen from a low of around 17p per litre a year ago to almost 37p now.  That is a staggering increase that has yet to be fully reflected in the price farmers receive for their milk.  Farmgate prices by comparison have risen by only 7p in the same period to an average of 26 or 27p per litre.

NFU Scotland’s Milk Committee Chairman, James Rankin said: “By anyone’s arithmetic, this does not add up.

“Milk buyers failing to pass on market returns is clearly unacceptable in any circumstance, but particularly at a time when dairy farmers are recovering from the deepest price squeeze many have ever experienced.
“There is no reasonable excuse. Production is muted, demand is strong and while the processing and retail sectors can cite concerns about oversupply and being competitive, there is no reason to hold back prices at this time, other than to manage their balance sheets and risk at the expense of farmers.

“NFU Scotland and our fellow farming unions are as ever very open and willing to work with the dairy supply chain to manage risk and opportunity.  

“We acknowledge that volume management and market competitiveness are real issues, but we are very concerned that farmers are once again not being fairly or respectfully treated in terms of receiving a reasonable reward from such a strong market.”

Notes to Editors

• UK butter prices have increased 19 percent to £5,100/tonne and SMP prices increased by 10 percent to £1,700/tonne. As a result, AMPE has increased by 5.4p per l to 36.4p per l.
• Mild Cheddar prices have increased by around £275/tonne compared to May. Whey powder prices increased by 6 percent while whey butter rose 20 percent. This resulted in MCVE increasing by 11 percent (3.6p per l), compared to May.
  

Ends

Contact Bob Carruth on 0131 472 4006