Milk Prices

Press coverage of falling milk prices and the impact on the UK dairy sector is borne out by the latest statistics from DEFRA, (UK Food and Farming Brief Jan 2015) dairy farm incomes in England are expected to be 11% down for 2014/15, driven by the falling farm-gate milk prices. Higher milk commodity prices and lower feed costs early in 2014 stimulated increased global production – and consequently a downward pressure on prices later in the year. Price competition between supermarkets has also played a significant role in falling farm-gate prices. The UK average farm-gate milk price in December 2014 was 19% lower than in December 2013. Despite this, forecasts from the EU Commission indicate that prices will improve during 2015, as consumers respond to low prices with increased consumption of dairy products, and as supplies tighten globally. It is also expected that increased demand from consumers in China will drive higher dairy prices in the medium to long term. Rising prices in the long term would present a challenge of UK retailers, and why they would be very foolish indeed not to act to secure the viability of domestic supplies.


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