Farmgate milk prices and processor profits both on the up

Dairy farmers supplying Meadow and Freshways will receive a higher milk price this autumn, following the wider industry trend.

Commodity markets continue to look strong with price gains for cream, butter and mild cheddar in the past month, providing a boost to manufacturing contracts.

Milk supplies on the other hand remain tight and continue to track below last year’s level at 31.9m litres a day, which has helped to support prices further.

See also: Farmgate milk prices lift to 43p/litre as demand for dairy grows

Meadow suppliers will receive a 1p/litre increase in October, taking its milk price to 41p/litre for a standard liquid litre.

Jonathan Evans, head of farms at Meadow, said: “We are committed to supporting our dairy farmers and are pleased to announce this latest increase in our farmgate milk price, which follows a 1.5p/litre increase for September.

“We will continue to closely monitor the situation and hope for a period of sustained positivity in the marketplace.”

Meanwhile, Freshways has confirmed a rise of 1p/litre for its suppliers to 41p/litre in October and a further 1p/litre increase in November to 42p/litre.

Bali Nijjar, managing director at Freshways, said the increases reflected the favourable changes in demand and overall market trends we have recently observed.

“We believe that this adjustment not only rewards dairy farmers for their hard work and commitment but also contributes to the sustainability of our farming practices,” he added.

The processor also confirmed it was progressing well with the development of its new site in West Bromwich.

Processor profits

In the first half of 2024, Arla Foods made a net profit of $167m (£141m), up from €123m (£104m) during the same period in 2023.

Arla has seen an 11% growth in volume sales of its branded products in the UK, with branded revenue up by 5.4%. It also has experienced volume growth in the food service sector. However, total net revenue was down on the year by 11%.

Bas Padberg, managing director of Arla Foods UK, said: “Following the high levels of inflation that we saw back in 2023, Arla has continuously reinvested back into our brands, to deliver value for our shoppers and ensure the necessary growth needed to return the highest possible milk price to our farmer owners.

“This combined with increased consumer buying power in the first half of the year has led to a strong performance across our branded range.

“Whilst we expect consumer confidence to remain into the second half of the year, trading conditions will be more challenging than we have seen in recent months as commodity markets rise again and we balance reduced global supply with the increasing demand for dairy.”

First Milk

Farmer-owned co-operative First Milk increased its operating profit to £16.8m for the year ending 31 March 2024, up from £5.1m in the previous financial year.

First Milk chief executive, Shelagh Hancock said: “This year has seen us broadening our capability with capital investment to access the specialist protein market, and the strategic acquisition of BV Dairy, extending our market reach into the food service sector and product mix, into fermented products and creams.”

Leprino Foods

US-owned Leprino Foods, which purchased UK mozzarella manufacturer Glanbia Cheese last year, is an exception, with profits down on the year in 2023.

Leprino Foods made a profit for the 2023 calendar year of £7.7m, down from £24m in 2022, however trade is likely to have picked up since.