Milk prices have been flying high for most of 2022, but the tide looks set to turn if the latest production figures for the past few months are anything to go by.

Speaking at last week's Scottish Dairy Hub and Kite Consultancy seminar at AgriScot, industry commentator, Chris Walkland, told milk producers, 31 out of the past 36days since October 1, had seen record volume milk production in the UK. This compares to just one day in May for the remainder of the year.

Milk volumes have also been increasing on the continent, in France, Germany, Netherlands, Poland and Ireland.

"November milk prices have held up due to commodity prices, but butter and cream values are falling and the New Zealand price is also dragging down prices, while the increased volumes in Europe are spooking the buyers," he said.

To date, recent declines in the Global Dairy Trade (GDT) auction price have been focussed on milk powder in contrast to cheese and butter values which have been holding steady.

Figures from AHDB show a 4% drop in skimmed milk powder in October, while butter slipped 2% and cheese prices were unchanged. However, butter, cream and Cheddar prices were all more than 50% higher than the previous year while skimmed milk powder was 28% lower.

Mr Walkland added that while prices below 40p per litre would not support milk volumes going forward, he warned producers to budget for a 42-43p by the flush of 2023 – almost 10p per litre less than the current value.

On a more optimistic note, Paul Savage, UK agricultural director of the Arla Group, told farmers how the company has earmarked up to €500m annually for rewarding climate activities on farm to its producers.

From next year, the milk price that the individual Arla farmer will receive from the dairy co-operative will depend on his or her activities related to environmental sustainability.

The co-operative is introducing a point-based Sustainability Incentive model, building on the figures from the Climate Check data in 2020 from 8000 farms across seven European countries. .

In the first full year, at least €270m is expected to be distributed through the monthly milk price based on what the farmers are doing on 19 levers in the model.

"Between 2015 and 2019, we saw a 7% reduction in emissions from our producers and while the past three years have not seen a marked improvement, we have been gathering data and now understand how producers can improve their carbon footprint.

"Sustainability is in the top three of consumers requests and as a leading co-operative, we and our producers have to recognise this. We want a long-term future for dairy and this way we can show our consumers and government, we can provide a solution and a force for good."

Arla Foods scope 3 target is to reduce GHG emissions 30% per tonne of standardised raw milk and whey by 2030 from a 2015 base year.

Mr Savage added that one simple way producers can reduce emissions is to reduce the percentage of protein in their concentrate feeds.

"Case studies show that you will get the same milk quality with a 14% protein feed compared to a 16-18% protein feed. It's all about measuring what you are already feeding in the diet."

Arla's big 5 lever categories that farmers can score points on include:

1. Feed efficiency

2. Fertiliser use

3. Land use

4. Protein efficiency

5. Animal robustness

• Manure handling

• Use of sustainable feed

• Use of renewable electricity (on-farm production or purchase of certificates)

• Biodiversity & Carbon farming activities

• Knowledge building