Milk & Cheese
Costs for feed, fuel and fertiliser are impacting milk production causing milk shortages and price rises across the dairy industry.
Milk production in the UK is falling as farmers struggle to cope with rising costs. Arla, the largest dairy co-operative in Britain, warned that farmers' financial squeeze could threaten future milk supplies. This crisis is also having a direct impact on the price of cheese and other dairy products, which are also rapidly increasing.
The average farm-gate price of cows' milk has soared by 20% in the past year, driven by a surge in fertiliser, feed and fuel costs linked to Covid-19, Brexit and the war in Ukraine. In February 2022, the price stood at just under 36p per litre, up from 29p a year before. However, according to some experts, prices are predicted to hit as much as 45p by the summer.
Just as farmers cannot absorb these additional costs to dairy production, independent retailers such as farm shops, delis, and cheesemongers are also struggling to mitigate these rises. Small cheesemakers have been particularly affected because they do not have the economies of scale or negotiating power of more prominent manufacturers. The increases are now too significant for them to absorb, as they need to maintain margins to cover the rises affecting all overheads - electricity, waste contracts, and packaging, to name but a few.
With upwards pressure coming from all these different aspects, it is becoming more likely that dairy products will become more expensive over the coming months.