Despite low milk prices, UK production over the past 10 months was running at 1.27 billion litres above the 10-year average.
With the spring flush around the corner, Walkland’s number crunching predicted there would be 77 consecutive days between April and June when daily production exceeded the average of the previous four years, with a daily peak of 45.2 million litres.
There was a real danger there would not be enough UK processing capacity for this milk, which could see it traded on spot markets for about 10 pence per litre and a B price of just 6ppl.
This had the potential to wipe another £460m off dairy farmers’ bottom lines, he said.
A variety of price indicators pointed to average A prices of 19-20ppl over spring and summer, which masked the vast difference between aligned and non-aligned price, Walkland said.
In a meeting that sought to find solutions among the gloom, Dairy UK and AHDB Dairy representatives revealed they intended to use levy money and, when it was available next year, Euroean Union funding to build on Dairy UK’s export strategy and promote the benefits of milk in the UK.
The plan was to present a proposal to AHDB Dairy’s board in March. Dairy UK chief executive Judith Bryans said: “You cannot promote your way out of volatility, but you can develop a market for the future and not hand this market to your competitors.”
AHDB Dairy chairman Gwyn Jones said AHDB had received a “very clear message from levy payers” about the need to change how it spends levy money.
National Farmers’ Union dairy board chairman Rob Harrison said: “The next six months is looking pretty bleak. We are seeing a lot of producers who will struggle to carry on at those prices so, sadly we are going to see a lot of producers exit the sector.”
