Dairy produce prices rise to record highs - but dairy farmers count the cost

Cream prices have soared to a record �1,800 per tonne and dairy farmers are still leaving the industry, Mid Norfolk MP George Freeman has been told.

Butter and cheese prices have all risen sharply and have approached record levels while the country's milk producers were being paid an average of about 4p litre less than continental competitors.

Mr Freeman, who is chairman of the parliamentary all-party agricultural group on science and technology, was briefed about the industry by leading milk producers Ken and Rebecca Proctor, of Grange Farm, Shipdham, near Dereham, and independent dairy consultant Ben Watts, of Kite Consulting.

At the Great Yorkshire Show last week, farmers' leader Peter Kendall said that it was a 'disgrace' that UK producers received 4p per litre less or an average 26.26p – 12.5p litre less than the weighted average for the EU27.

And Mr Watts, who lives near Beccles, said that global commodity prices of skim milk powder and butter were at their highest.

'The cream price has been a sky high �1.80 per kg – the highest price on record. But the dairy farmer is not receiving any part of that when cream to the processor is worth 10p per litre,' he added.

Most Read

The unsalted butter price was �3,800 tonne last month – an increase of �350 on May – and �450 tonne higher than a year earlier. Skim milk powder was up by more than 10pc from �2,000 tonne a year ago to �2,250 and mature cheddar prices had risen from �3,050 tonne to �3,200 tonne.

In a 90-minute briefing, Mr Freeman was told that the dairy industry's measure of returns, the AMPE (Actual Milk Price Equivalent) had also risen from 30.7p per litre a year ago to 35.2p/ litre.

Mr Proctor, who is vice-chairman of Norfolk National Farmers' Union and a former president of Europe's largest breed society, Holstein UK, said that eight of the county's dairy farmers have now sold their herds in the past four months. These included many of the highest performing herds sold by Chris Whipps, of Denton, near Harleston, and Julian Taylor, of Starston, also in the Waveney Valley as numbers have fallen to about 50 herds left in the county.

It was quite obvious, said Mr Freeman, that the market for milk was not operating fairly. It was serious too that eight herds have gone in recent weeks. 'It is very sad that in a county as agricultural as Norfolk that we're witnessing that rate of decline. I've been very struck by the way that the market isn't working.'

He understood that the share of the milk price taken by leading supermarkets had increased. 'The slice that the retailer now takes out of every pint or every carton is significant – even if 1p or 2p litre was passed back, it would make little or no difference to consumer prices but would make a huge difference to the whole producer sector,' said Mr Freeman.

And consumers were starting to understand the impact on the doorstep. 'The price we're all paying for cheap milk is closure of dairy farms, abandonment of the industry and ever more concentration in smaller number of larger herds and the decline of our countryside,' he added.

Mr Proctor said that for his family business, which produces about four million litres from more than 300 cows in a year, ever 1p in increased milk prices would be worth about �40,000. He had spent �400,000 on measures to minimise the pollution risks of staying in the dairy business.