Milk price to go up by just under 5p

Thursday 08 March 2018

Guernsey Dairy is increasing the wholesale price of its milk by £0.0475, or 4.75p, a litre as a result of negotiations between it and the Guernsey Farmers' Association.

The move comes after the States' Trading Supervisory Board has "carefully considered" the annual reduction in the payment dairy farmers receive from the States for meeting environmental and welfare standards and increasing farm costs.

An independent price reviewer has supported the settlement terms.

The wholesale price of milk is what shops and other stockists, along with the hospitality industry, buy the milk at. In the past when it has been increased, shops have passed the added cost onto customers, increasing the retail price by the same or a similar margin.

STSB said that the retail price of milk was no longer fixed by the States, however, so it would be up to retailers to decide whether to absorb the increase or pass it on. 

The Dairy last increased the wholesale price by 7.5%, or approximately 9p, at the start of April 2017. Before that, a litre of milk was around £1.18, but now, it is around £1.27. This increase will put it up to around £1.31 a litre.

Of the 4.75p price increase that is being implemented now, farmers will receive 4.066p per litre - 2.560p for the next slice of the Dairy Farm Management Payment reduction and 1.506p to cover increased costs.

That payment has reduced by £200,000 a year since 2014, having started at £2.085m., with the aim of it being reduced to £1.085m. over the five year period between then and 2019.

Guernsey Dairy General Manager Andrew Tabel said he was pleased that they had been able to reach a settlement with the Guernsey Farmers’ Association.

"Whilst this is likely to see an increase in the retail price of milk the agreement has other aspects to it that will further improve the analysis on which price changes are determined in the future with an emphasis on efficiency across the industry," he said.

"The GFA is pleased that it has reached a settlement for the revised producer price for 2018," a Guernsey Farmers Association representative said.

"The Farmers put forward a fair case for this increase which covers costs (RPI) as well as the next reduction of the Dairy Farm Management Payment. The Farmers are always conscious of the impact a price rise has on customers and therefore try to keep their costs to a minimum being as efficient as they possibly can within the constraints of farming on an Island."