Milk Market Update September 8, 2016 12:00 am GDT Prices The GDT average price index has risen by a further 7.7% at the latest auction held on 6th September. The event saw the price index for all products increase, although milk fats faired the best. The Anhydrous Milk Fat (AMF) rose by 15.4% and butter by 14.9%. Skimmed Milk Powder (SMP) and Whole Milk Powder (WMP) increased by 10% and 3.7% respectively. Once again demand was mainly from China. Chinese imports of WMP were up 5% in July compared to year earlier levels. Other bids were also from Oceania and South East Asia. Production UK milk deliveries stabilised over the first couple of weeks of August, but have once again started to decline. Latest data shows production for the two weeks ending 27th August at about 36.3 million litres per day; down 6.7% compared to the same period in 2015. According to the AHDB, EU milk production hit its lowest daily rate in June since milk quotas were abolished. This is the second month in a row that a reduction in production has been recorded and reports suggest this will have continued into July. Although not all of the figures are in for July, the UK, Poland and Denmark have all reported a year-on-year decrease with France and Germany, the two largest producing Member states also expected to record a reduction. Ireland and the Netherlands are still running ahead of 2015 levels although production in both countries is said to have slowed down over the last few months. Any thoughts of increasing production over the coming months may be tempered by the introduction of the EU’s new scheme to pay farmers for reducing their supply – see below. Support Package Our article of 17th August gave details of the scheme to pay dairy farmers for reducing production. The scheme, worth about 12p per every litre reduced, is due to open on 11th September. The Rural Payments Agency (RPA) will be administering the scheme for the whole of the UK and application forms should be available from the RPA’s website at https://www.gov.uk/guidance/milk-production-reduction-scheme-how-to-apply shortly. Producers will have until 21st September to return their applications. Perhaps a couple of points to note is that it is a first-come-first-served scheme. If the scheme is over-subscribed, the volumes will have to be scaled back; the threshold is 1.07m tonnes. It is possible that the scheme will not be available for the future periods. Secondly, payments will be based on the planned reduction or actual reduction whichever is less. To be eligible producers must have been delivering milk to a buyer in July 2016.
