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63 About this deal
However, family businesses often see this as a price worth paying, providing flexibility and an acceptable lifestyle on what is effectively a 24/7 operation. Legislation However, legislation is based on fixed dates, with no reference to efficiency of slurry use by bespoke crops and application procedures. Emissions The summit delivered four days of dynamic programming, including eight main sessions and 21 break-out sessions focused on policy, scientific and technical insights and exclusive market analysis. IDF also released the World Dairy Situation Report 2023 , its 2022-23 annual report and announced the winners of its second annual IDF Dairy Innovation Awards, which celebrate and encourage innovative practices across the world.
Even with the promised cap in energy prices, many businesses will see a doubling in the cost of red diesel and a trebling for electricity. A much greater understanding of energy consumption on dairy farms will be key. EU are forecasting a drop of 0.2%in milk production for 2023. This is in response to a declining dairy herd and lower prices forecast to drive a decline in production in the second half of the year, despite good yield growth. In contrast to the volatility seen in yields as farmers reacted to cost pressures and forage shortages, the GB milking herd has remained relatively stable. The long-term trend of gradual decline continues – though the latest data showed the smallest annual contraction in the October herd since 2017. Overall, the number of cows in the milking herd at the time of the December forecast was marginally up on the previous projection, contributing slightly to the lift in forecasted volumes– but this had a minor impact compared to changes in yields. Nevertheless, there will be good opportunities for those who see a long-term future in the industry. According to the latest delivery data for the key milk producing regions [1], global production returned to growth in September 2022 after 12 consecutive months of declines. Recovery in production in European countries, combined with growth in the US, was at the centre of the turnaround as southern hemisphere regions continue to record year on year drops.GB milk production is forecast to reach 12.44bn litres for the 2022/23 season, up 0.7% on the previous season, according to the December forecast update. On a calendar year basis, GB production is expected to total 12.43bn litres. This is a 0.3% improvement on 2022, equivalent to an additional 39m litres.
Much will hinge on cow numbers. The rate of decline in the GB milking herd has been slowing according to BCMS data, only declining by 0.5% in April, or 8,900 head per annum. However, with pressures on margins we may see this accelerating in the Autumn. Unseasonably high grass growth is supporting cow numbers for now but farmers may need to act soon to take advantage of high cull cow prices. Current market signals are for beef prices to fall going forwards.
Friesian Farm – summary figures (p/litre)
August saw prices soften on global dairy wholesale markets barring some gains in butter, WMP and cheese markets in US. Milk production remains seasonally low with demand continuing to be weak. Some revival of demand is hoped for after the summer holidays. Milk from forage reduced for 2022-23 to reflect drought – less silage made and some already fed, higher concentrate use On non-aligned liquid contracts most announcements were for holds, with Crediton, Freshways, Grahams and Muller Direct making no change in October. However, Payne’s Dairies announced a price drop of 1.00ppl for the month. Global Leaders Forum featuring Piercristiano Brazzale, President (International Dairy Federation); Barbara O’Brien, President and Chief Executive Officer (Dairy Management Inc.); Yohichi Ohnuki, President (Morinaga Milk Industry Co., Ltd.), and Chairman (J-MILK); Miles Hurrell, Chief Executive Officer (Fonterra Cooperative Group Ltd.); Patricia Stroup, Chief Procurement Officer (Nestlé); and, Jayen Mehta, Managing Director (Amul – Gujarat Co-operative Milk Marketing).
An anticipated increase in the number of in-home lunch and breakfast occasions could provide opportunities for butter in sandwiches and on toast. However, the price gap between butter and margarine has increased and there is also heightened consumer awareness of the price of butter due to previous media coverage. We expect this to result in shoppers switching from butter and dairy spreads into margarine and alternatives. In the last recession, baking boomed as people sought out more affordable leisure activities. Whilst this could be replicated in 2023, butter is still seen as substitutable in baking occasions, and it will therefore need to fight to remain relevant. As a result, we expect butter retail volumes in 2023 to be down 3%, however this would still result in category volumes being 3% higher than in 2019. Yogurt: Looking further ahead, Andersons predicts the number of dairy farmers will continue to decline over the next decade, as will cow numbers.
Legislation
Suppressed demand and increasing supplies continued to push farmgate prices on a downwards trajectory. After the peak seen in January 2023, prices have been consistently falling: in June the average farmgate milk price reached 36.48 ppl according to Defra. Since then, announcements for July and August have continued to fall, although August was a more stable month. There were a continuation of falls in aligned contracts in August with all retailers dropping their prices. The company believes these trends will continue, although yield increases may slow significantly, resulting in a small decline in UK output. Our current projections for domestic demand expect retail sales of cheese, butter and yoghurt to fall by around 3% in 2023. Liquid milk sales are expected to revert to the long-term trend of a 1% annual decline (see full analysis below). In some areas of the UK, grass grows every day of the year and using slurry little and often may well be much more sustainable and efficient than storing it for long periods.
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