Dairy processors in the UK have pledged to maintain their raw milk pricing support for farmers, despite weakening market signals.
Robert Wiseman Dairies last week announced that it would continue with its planned milk price rise to suppliers despite weaker bulk cream prices that would ordinarily lead to lower milk prices.
In a trading statement, Wiseman said: “We believe an increase is required, however, to improve our relative position with regard to milk price paid and to help ensure we have sufficient milk to meet our requirements in the forthcoming year.”
At the same time, Dairy Crest said it had supported its farmers over the last few months by maintaining raw milk prices “despite falling prices in dairy ingredients”. In a statement it said: “We intend to continue to be supportive.”
Industry raw milk prices rose sharply in the UK last autumn as a result of increased commodity prices and higher on-farm costs such as animal feed and national volume shortages.
However, The Dairy Group consultancy noted that prices had risen more sharply in the EU than the UK, which remains at the low end of the EU milk price league, suggesting “the UK industry has still failed to deliver an adequate share of market returns”
The Dairy Group director Nick Holt-Martyn said: “The expansion of production in key dairy countries of the EU, with the current notable exception of the UK, Denmark and Ireland, should be a concern that increased production this spring could weaken EU markets later in the year.”
He added: “With sterling expected to weaken further, the UK should see more stability in milk prices provided there is no rapid expansion in production.” The Dairy Group expected average farm gate prices to peak at around 25 pence per litre (ppl) during the summer, compared with 24.9ppl now.
Meanwhile, Robert Wiseman has announced a delay in the full commissioning of the third and final filling line of Phase 1 at its new Bridgwater dairy factory in the south west to the end of May due to contractors running behind schedule. This delay is expected to cost the company £1M in the first quarter of 2008.