All eyes on Arla and to a lesser extent Meadow foods

Posted on: 19/11/21

Next week Arla will declare its 1st December member milk price expected at noon/midday on Monday or Tuesday details of which will be posted on our website and Facebook page.


As it stands Arla’s November manufacturing standard litre price weighs in at 33.52ppl and on a liquid standard litre at 32.26ppl which already puts their farmers at over 32ppl (1st January Muller price) two months before their largest UK rivals. Having said that even the current Arla price at 32.26ppl will not guarantee the Arla members will be able to provide all the milk they require in 2022.


Meanwhile Meadow Foods appear to be regularly following Muller and for November are paying a liquid standard litre price of 30ppl.  For sure the days when Meadow was bold and lead the market up have long gone.  Ian recalls Meadow, under the rule of Simon Chantler, regularly reading the market and been the first out with seismic farmgate increases which others followed.  That baton has passed to Arla and more recently to Freshways leaving Meadow as price followers. 


The recent Kite report clearly confirms farmgate milk prices need to be at 35ppl plus so what’s the log jam some processors face in getting the extra for both farmers and for themselves as processors from retailers?  Is it contractual, is it incompetent commercial teams who lack balls, is it processors who think they can ride out a storm and prices will dip in spring or is it stubborn retailers.


Well, it’s not looking like a blip.  This is a global supply issue and demand from Asia/China is outstripping supply which is declining.  Farmers are highly unlikely to repeat the logic used on previous occasions and ramp up production in 2022 to spread costs.


There are clear signs this is structural and the new low farmgate milk price could be 30p plus.

High fertilizer costs and labour shortages will lead to less milk in 2022 and processors will fail to reverse that.  The sooner all processors get to 35p plus the sooner they stand a chance of securing supplies for 2022 especially next winter for which lower fertilizer purchases now will drop silage stocks for winter 2022!! The smart money is on dairy farmers using less fertilizer and shrinking their herds unless farmgate prices move to 35p plus very soon.

In short global demand is very strong and supplies can’t keep up including New Zealand and Australia where production is down.  In addition, the cost inflation does not look like a short-term spike.


Globally we will see all-time record farmgate milk prices but will they be profitable at farm level?

Less single farm payment next month, labour problems, an attractive government exit scheme (due any day), escalating on farm costs and an unprofitable milk price could result in a UK dairy farming revolution coming soon and one some processors failed to spot coming.

Some processors had better point their prayer mats towards Arla and some of our more trusted cheese and liquid processors and hope farm suppliers don’t decline to the point they need to recruit because if those doors open some processors could be closing their own doors or slimming down their operation very quickly.