Defra and AHDB publish the monthly ‘farmgate milk price’, summarised above. The peak monthly price reached recently was 31.59ppl in November 2018. To assist in conservative business planning and investment appraisal, I feel that the five-year rolling milk price must always be the most important figure to consider.
If you look at milk prices over a recent short term (say, just over the last year), one can get a distorted view of long-term price. After all, an investment in a new or re-vamped dairy unit is hardly a short- term venture.
Last autumn, the UK ‘farmgate milk price’ fell below the bottom of its usual range, from 27.0 – 28 ppl. It has now moved up a little from the trough it reached of 26.77ppl in October 2019, to 26.82ppl. The high prices for late 2014 are now dropping off the five-year figures. In the summer of 2014 farmgate milk prices were very strong at over 30ppl. So, our rolling 5-year farmgate prices now are a little stronger.
Clearly, some dairy businesses can justify using a higher milk price figure because of, for instance, volume or quality bonuses, or their own added value opportunity. The important point is to be able to justify your milk price prediction to yourself and your advisors.