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Cream Income to a Liquid Processor
Published 26 August 16
Cream Income to a Liquid Processor
- The bulk cream price increased by £100/tonne (7%) between July and August to an average of £1,470/tonne.
- The estimated cream income to a liquid processor consequently increased by 0.62ppl (8%) to 8.60ppl in August. It is now 3.80ppl higher than in August 2015.
1 Month Before
12 Months previously
Note: ppl change and percentage difference may differ due to rounding
Note: Jan-Mar 16 cream income to a liquid processor has been revised due to revisions in the amount of fat used up in liquid milk retail sales. As a result, cream income increased slightly in Jan-16 compared to Dec-15, despite a reduction in the cream wholesale price. From July 2016, new % splits for milk purchases by fat type are used and these are updated quarterly.
For further information on wholesale prices please click here.
The price indicates the trend in incomes, rather than an absolute value. The actual income effect and a precise increase in ppl will be difficult to obtain as this requires knowledge, on a daily or monthly basis, of the following:
- Butterfat levels (which will tend to vary and be higher over the winter period).
- Exact prices for bulk cream.
- An exact breakdown of what product they are producing (i.e. whole, skimmed, semi-skimmed etc.).
- The amount of cream wasted in the manufacturing process.
For historical information on cream income please see Cream Income Sheet.
As part of the calculation for cream income to a liquid processor, the split of purchases of Whole, Semi-skimmed, Skimmed and low fat milk is calculated to estimate the level of butterfat required in the retail sector. This is now being updated quarterly with data from Kantar Worldpanel.
All liquid processors generate surplus cream as little liquid milk is now sold as whole milk. This surplus cream has a value with some sold to supermarkets in small pots and some sold in bulk, to be manufactured into other products.
Below is an outline of the trend in cream prices in terms of pence per litre for liquid milk processors.
Outline of how cream income is calculated
- The bulk cream wholesale price is based on the average price from 1 to 25 August 2016
- Prices have been compiled by talking to dairy product sellers, traders and buyers. Views were taken for the period 1 to 25 August 2016. The published prices will not necessarily match the actual price received by a milk processor as this will depend, amongst other things, on the proportion of product that is sold on the spot market and the proportion sold under longer term contracts and at what price this is done.
- The cream income to a liquid processor is based on the excess cream between the rolling butterfat average for a particular year (previous 12 months, not including the current month) and the average level of fat in liquid milk sold through the retail market (supermarkets, local stores and doorstep) for that particular year.
- The value of the excess butterfat is then calculated on the basis of a litre of cream at 40%.
- Calculation excludes any estimation of wastage in the manufacturing process.
The weighted average level of fat (whole, skimmed, low-fat and semi-skimmed) in retail liquid milk is calculated based on Kantar retail liquid data.