Dairy Markets Look Better?

    Dairy Markets Look Better?

    There is little doubt that dairy prices are rising.

    The best indicator of price trend, and consequently supply and demand balance, is invariably the dairy auction prices.   However, it is not just UK prices that are rising but global prices too.  The following graph shows UK milk price as represented by the data from United Dairy Farmer auctions and global prices represented by Cheddar and Skimmed Milk Powder (SMP) produced by Global Dairy Trade auctions.  All the data has been indexed against July 2011 (i.e. July 2011 prices are shown as 100% with subsequent prices relative to that price.

    Our graph shows the recent improvement of dairy prices.

    As can be seen, prices (domestic and global) were low and it was not just UK farmers facing a difficult time although no doubt the poor weather in the UK added additional cost to the low price.

    It is going to be a long, painful and a crucial period for dairy farmers.  Despite a number of environmental advantages over most of our European neighbours we are slipping behind in terms of production.  Dairy quotas are still expected to disappear in 2015. According to Eurostat the UK is by far the largest shortfall against quota within the EU and consequently, in some respects, quotas are already virtually redundant.  However, if they were abolished we are under threat from Ireland, the country with perhaps the greatest competitive advantage for dairy products in the EU.

    We have highlighted in the past that in terms of subsidy, English dairy farmers are disadvantaged compared with many other EU member states. The historical system (e.g. in Wales and Scotland) provides one of the highest levels of subsidy to dairy farmers and while it is expected that the remainder of the EU will follow suit, there is likely to be scope to transfer subsidy from (say) the arable sector to dairy producers as already occurs in several other countries. Now is a good time to lobby. 


     

     
     

    Key contacts

    Andrew Wraith

    Andrew Wraith

    Director
    Food & Farming

    Savills Lincoln

    +44 (0) 1522 508 973

    +44 (0) 1522 508 973

     

    Steve Hollis

    Steve Hollis

    Director
    Food & Farming

    Savills Salisbury

    +44 (0) 1722 426 853

    +44 (0) 1722 426 853

     

    Keith Preston

    Keith Preston

    Director
    Food & Farming

    Savills Oxford

    +44 (0) 1865 269 170

    +44 (0) 1865 269 170

     

    Ashley Lilley

    Ashley Lilley

    Director
    Food & Farming

    Savills Cheltenham

    +44 (0) 1242 548 012

    +44 (0) 1242 548 012

     

    Giles Hanglin

    Giles Hanglin

    Director
    Rural Research

    Savills Margaret Street

    +44 (0) 207 016 3786

    +44 (0) 207 016 3786