Milk price to rise as it is too cold for grass to grow

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Some say they have never seen the grass grow so slowly, leading to a shortage in forage stocks to feed cattle in order to produce milk – and a shortage in supply can drive up prices. NFU dairy board chairman Michael Oakes said: “So many farmers – even the ones being paid the higher prices – are feeling a lot of pressure on their margins. “Options for many are running out and it’s not a comfortable place to be.”

The problem is compounded by increased demand for dairy products across the globe as lockdown restrictions ease and people start to eat out again.

Michael said the average “farmgate” milk price collated by the Department for Environment, Food & Rural Affairs (Defra) hid “big disparities” in fees paid to farmers with many, particularly those supplying mid-market and commodity-focused processors, receiving less.

He said: “We’ve seen massive increases in input costs and we have less stocks of feed from last year to carry over.”

Although the UK farmgate price – the average fee paid by dairies – has yet to be passed on to shops, suppliers warn it is unlikely to remain unchanged for long.

Muller’s prices have just gone up by 1p a litre to 28.25p, Medina Dairy has risen 2.7p to 28.24p and Freshways by 2.5p to 28.5p, said The Grocer magazine.

Processing plants have also hiked the price of cheese and demand is expected to put pressure on supermarkets to make the consumer pay more. One dairy source told The Grocer: “Any further farmgate hike may soon be passed on to the retail sector.”

John Allen, director at trade specialists Kite Consulting, added: “We have already seen some cheesemakers ask for more money.

“The expectation is prices will spike so retailers will be faced with processors asking for more.”

Chris Gooderham, dairy expert with the Agriculture and Horticulture Development Board, said he couldn’t “see any downward pressure on prices for the next two to three months”.

Rising costs are in stark contrast to this time last year, when an oversupply caused by the closure of the hospitality sector during the first Covid lockdown led prices to collapse.

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