Tag: Dairy

Arla Price to Stand-on

In a significant boost to the dairy industry, Arla has announced it will not be cutting its conventional milk price in April.  In fact, due to the April to June ‘currency smoothing’ mechanism the April price will actually increase by 0.32ppl.  Readers will recall Arla cut its price by 2.16ppl in March, which was a huge blow.  But it looks like that could possibly be the last cut for the processor for now as commentators believe its next movement will be a price rise.  As Arla is usually a ‘trend setter’ this should mean fewer (if any) price cuts for May.

Revised Milk Production Figures

DEFRA has revised its milk production figures upwards for each month it has previously reported on in 2017 (January to October).  This means the cumulative production for the calendar year to October is now 12,315 million litres, an increase of 332 million litres (+2.7%) compared with the previously published data.  Production for the current milk year, April to November, is now reported to be 9,860 million litres(2.8%) higher than previously reported.

AHDB Dairy has voiced concerns on a number of occasions over the figures, but state, despite the adjustments being significant, that the 2017 figures are now inline with its expectations.  The levy board does however believe the May 2016 to December 2016 figures are about 20 million litres lower than expected, and therefore cautions using them in making year-on-year comparisons.

The revisions have apparently been made following ‘re-analysis of submitted data’, but it is a worry and begs the question whether there is a lack of detail/care being applied in gathering and analysing the data, or indeed whether the processes have not been updated to take into account the changing structures within the industry (perhaps due to funding cuts).  Especially when we hear other statistics are seeing large revisions as well (see meat market article).  The problem being that farmers and processors are making decisions based on these figures.

GDT Up

The GDT average index has increased at both auctions held in January.  This is the first significant increase since back in September (there was a 0.4% rise in December).  At the beginning of January, the index was up by 2.2% compared to the previous auction and at the event held on 19th January it saw a further increase by 4.9%.  All products saw a rise, in particular Butter (8.8%), SMP (6.5%) and WMP (5.1%).  Drought conditions in New Zealand has seen Fonterra reduce its production estimates for the country by 4%.  Consequently Fonterra has reduced the volumes being put forward to auction.  The purchaser collects around 85% of New Zealand’s milk.