This week there are no reports of milk having not been collected from the farmers. Any excess milk in the country has gone into storable products. However, this is not sustainable over the next few months – so prices are expected to rise again. Arla have put prices up to all their retail customers and all the other major dairy processors are doing the same. One of our major suppliers has been losing a considerable amount of money over the last few weeks, partly due to the increase in delivery costs.
The uncertainty surrounding both supply and demand will undoubtedly continue. Milk production at this time of year is typically unpredictable due to the weather. On the demand side, consumers and their purchasing habits have not fallen into a set pattern, keeping retailers uncertain over what and how much product to stock – and therefore how much milk will end up on spot market is uncertain. The recent announcement that some fast food outlets will resume delivery services will help the demand side of the dairy industry.
The Government have announced this week they are relaxing competition law within the dairy industry, and all farmers that are struggling financially can now access the Coronavirus Business Interruption Loan Scheme, if they need too. This should help with immediate cash flow problems as payments can start in six working days after their application forms have been received.
Eggs are still in short supply, with EU demand outstripping production. Feed costs are rising by 10-15% across the country, which is equivalent to £25 a tonne. This is having the inevitable effect of prices rising across the UK. The good news is that initial tests results have shown that chickens are not affected by Covid-19 and therefore do not pose a potential risk to human health. We should know the final test results by next month.
The situation is unchanged for most of our dairy supply partners and there have been reports of more drivers been furloughed due to volumes on the vehicles reducing further. We will continue to support the dairy industry and help our suppliers to deliver the best option for our customers, but to do this we need to increase prices. These are very tough times in the industry, and it looks like it will continue for the foreseeable future.