Farmgate milk price increases have continued through March and April, although there were fewer announcements than in the previous two months. Increases for March ranged from 0.25ppl to 3.0ppl and were applied pretty evenly to liquid and manufacturing contracts. This milk increase has had a direct increase for yoghurts and cheese.
Further announcements have also been made for April, including a 2.0ppl increase by Saputo, negotiated by DCD. Wyke Farms have increased its price by 1.81ppl, and Belton and Barbers have announced increases of 1.5ppl and 1.29ppl respectively. Other announced increases include 1.5ppl for Meadow Foods and Müller non-aligned suppliers, 1.0ppl for South Caernarfon Creameries and First Milk, and 0.5ppl for Crediton suppliers. There will be surely more to follow the above list.
With the Russian invasion of Ukraine, global natural gas and fertiliser prices will likely increase, but the scale of any increase is uncertain. The same is true for the impact of increased fertiliser and (partly indirectly) total energy prices on the cost of production on dairy farms. But, even without knowing exactly how post-invasion gas prices may develop, and the magnitude of any resulting increase in farm input cost, some conclusions can still be drawn.
Farm input costs may well increase faster and relatively more severely than dairy commodity prices and, therefore, raw milk prices.
Natural gas export volumes from Russia to the EU will, at least partly, be reduced due to pipelines through Ukraine being blocked. As a result, a sharp increase in global energy prices will mean dairy farm margins being hit directly, through rising on-farm energy and fertiliser costs.