A year of unexpected, record-breaking milk prices looks set to be marred by increased volatility, higher costs of production and falling dairy values.

That was the stark warning from Chris Walkland, industry commentator, who in spectacular fashion, addressed the Semex Conference as an undertaker for 'The death of Mr High Milk Price.'

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He said that the industry had enjoyed unexpected but very welcome high milk prices since the autumn of 2021, which had resulted in record breaking monthly incomes throughout 2022. Prices he said ranged from 32p per litre to just over 50p, with Arla at the top of the tree as the best payer followed by Dale Farm. Interestingly five of the top 10 players were liquid milk buyers.

However, increased milk prices soon resulted in higher production, and it wasn't long before the country was 'drowning in milk.'

"The goose that laid the golden egg has been goosed," said Mr Walkland.

"There is hope for a resurrection, but when the price of cream, butter and cheese is falling, and the cost to make such commodities is increasing, things are not looking too good for milk producers.

"It's time to get real about milk prices with the biggest danger being that milk processors go bust as the gap between the milk price and market returns widen and if that happens there will be carnage."

Mr Walkland added that commodity markets had reacted sharply to increased milk supplies on a global scale with several reductions in the fortnightly Global Dairy Trade indexes, which coupled with the cost of living crisis and lockdown in China, has resulted in reduced consumer demand.

And, while liquid milk values have held up, prices for butter, cream, Gouda and Mozzarella cheeses had fallen dramatically by 35%, 45%, 50% and 40%. This compares to a milk price drop of just 1.5 per cent so far on average to February.

Milk prices are already on the wane with December estimations for the south of Ireland of 49c/litre (equivalent to 40p) looking 5p too high already, while in New Zealand and America, Fonterra and USDA are quoting prices of 34-38p and 40p per litre, respectively.

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Hence, Mr Walkland predicts milk prices could well fall to 39-42p per litre by April from their current average of 48p. However, he said much will depend on what the supermarkets do and whether they drop their prices in return. Up until early 2022, a standard four pint carton of milk in the supermarket was valued at £1.15, whereas now that same carton is priced at £1.65.

Richard Collins, head of agriculture for Muller for the UK and Ireland, also stressed milk prices have to fall.

"Never before has the difference between the cost of milk per litre been greater than the cost of production of commodities. Milk prices have to come down," said Mr Collins who also believes supermarkets recognise the need to maintain production in the UK.