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The Grocer Talking Retail

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Rising production costs could push up retail dairy prices

Large parts of the dairy sector remain on a knife-edge of profitability, and some processors may soon have to pass on rising costs to their retail customers, industry ­figures have warned.

Processors have been gradually increasing farmgate prices over the past month in response to strong global dairy commodity demand and a lower-than-expected spring flush in the UK.

Liquid milk players such as Müller recently increased its June price for liquid milk by 1p to 28.25ppl, while Medina Dairy upped its price for July by 2.7p to 28.24ppl, and Freshways increased its July price by 2.5p to 28.5ppl.

With Defra’s UK average milk price for March standing at 29.72ppl, up 4.1% on the same time last year, the expectation was that prices would remain robust, suggested AHDB head of market specialists for dairy and livestock Chris Gooderham.

With this year’s flush also later than expected due to frost, and hospitality now reopening, Gooderham said he couldn’t “see any downward pressure on prices for the next two to three months”.

It comes in contrast to this time last year, when an oversupply caused by the closure of the hospitality sector during the first Covid lockdown led prices to collapse.

Source: The Grocer Apr 29 | Competitor News | What's Trending