CHAIRMAN’S Update
My concluding comments from the January newsletter were that 2024 would be the year of milk price increases. In the first half of 2024 there have been two increases for conventional and three for organic.
Conventional Organic
April + 1ppl – 37.5ppl + 1ppl – 48.5ppl
May Hold – 37.5ppl + 1ppl – 49.5ppl
June + 0.5ppl – 38ppl +1 ppl – 50.5ppl
*prices include Müller Advantage Premium
With National milk volumes always high in Q2 (April, May & June), it was the strong working relationship between Müller & MMG that enabled these price increases to be agreed.
To discourage additional volumes in the Spring, the April increase was agreed subject to the ingredients cap being raised to 15% (from 12.5%) and seasonality deductions commencing at 102% rather than 105%. The confirmed percentage for April ingredients volume is 13.46% and UKMFE for April finished the month at 31.06ppl.
The rainfall and weather conditions during the first four months of 2024 have undoubtedly had an effect not only on milk volumes, but more importantly the workload and additional costs to our dairy farming businesses. National milk production is now running 2.5% below 2023, and peak volumes are now likely to be passed. With grazing conditions described at best as ‘challenging’, milk production is likely to fall at a steeper rate than usual.
Organic National volumes are now 11.% lower than 2023 due to the pressures this sector has experienced over the last few years. With demand for organic growing, the prospects for organic dairy are encouraging.
The first 6 months of each year tend to be ‘cash demanding’ for our MMG members, with seeds, fertilisers and sprays requiring funding, in addition to the usual feed, rents and other variable and fixed costs. Interest rates are being felt to the full effect with bank base rate at 5.25%.
Despite the 1.5ppl increase in the conventional milk price so far in 2024, the MMG Board aim to achieve a cost of production price for all milk in the short term as a minimum. I continue in my confidence that milk prices will go on increasing during 2024.