It’s an old complaint that dairy farmers are the first to feel the pressure of challenging market conditions, and the last to see any benefit from reversals of fortune. On Tuesday, the NFU backed these claims, announcing that market indicators suggest that Britain’s dairy farmers are being short-changed to the tune of £200 million. The union is calling on milk buyers to recognise the strength of current markets and start paying fair, sustainable prices to their milk suppliers.

After two years of turmoil in the dairy sector, during which time milk prices for many farmers have been, and continue to be, below the cost of production, commodity markets have now quickly turned on reduced production. Evidence shows market signals are pointing skywards with spot prices for milk now approaching 40ppl and quotes for next month hitting 50ppl.

Speaking on the eve of The Dairy Show on Wednesday (October 5), NFU dairy board chair Michael Oakes said that milk buyers are lagging behind in passing on the huge lifts in market prices to their suppliers. Mr Oakes said, “Since May this year market indicators have started to show a massive differential between what prices dairy farmers should have got compared to what they actually did get – between June and September this adds up to around £200 million.”

Dairy analyst Chris Walkland has made the calculations behind the union’s claims. According to the market analyst, back in August AHDB’s AMPE and MCVE indicators were 26ppl and 28ppl respectively while future price indicators continue to be positive. Even today most non-aligned prices are still receiving less than 20ppl with the August Defra average milk price, which included aligned prices only reaching 21.34ppl.

On Tuesday, NFU’s Mr Oakes said, “Farmers have been patient, understanding the time lag that is part of dairy trade. But that reason is starting to wear thin, as we need to start considering increased costs of winter housing and feeding. Our message is clear – until milk buyers start backing British dairy farmers and start paying fair, sustainable milk prices, volumes will not recover. Dairy farmers want to produce milk and the only way milk buyers can pull the dairy sector out of this nose dive is to quickly pay them a profitable price for their milk.”