Nick Holt-Martyn: it would be “criminal” for retailers not to return more of their gross margin down the supply chain to farmers

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In the Farmers Weekly, Gemma Wainwright reports that dairy processors need to pay at least 35p/litre to secure milk supplies. Although UK farmgate milk prices have recently risen on the back of improved global commodity markets, further increases are needed to offset higher production costs, which have now reach an average of 34p/litre.

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At 10p/litre, purchased feed price was 25% higher in January this year than in 2012 for the average 197-cow herd costed

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Nick Holt-Martyn, senior consultant of The Dairy Group, notes that in the past three weeks, European dairy markets had increased by 7-8%, while southern hemisphere prices were up 30%:

“Globally there is a shortage of milk, and there is a commodity boom taking place in the southern hemisphere.

“If the price goes up in one part of the world, it has to go up in another part of the world”..

Unethical?

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He added that milk prices don’t rise in response to [production] costs, but to market pressures.

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We agree with Mr Holt-Martyn’s statement that it would be “criminal” for retailers not to return more of their gross margin down the supply chain to farmers.