Archive: NZ milk price shows what volatility UK farmers could expect

Published 19 January 15

This page has been archived and no longer updated. more info

Volatility is expected to become more prominent in the UK dairy industry as the link between the UK and global wholesale prices gets stronger. This means having a cost effective and efficient supply chain will be more crucial going forward than maybe in previous years. For UK farmers, it might be worth looking at New Zealand farmgate prices to see just how volatile they can be with volatility becoming more prominent in the UK.

NZ/UK farmgate comparison

The graph shows NZ farmers have been experiencing more volatile farmgate prices than the UK for a number of years. Between November 2012 and 2013, NZ and UK farmgate prices increased 44% and 15% respectively, while decreasing 42% and 16% between November 2013 and 2014. This is mainly because NZ export the vast majority of their dairy products, although net-importers (such as the UK) will also be impacted by global prices – as explained here.

Since the UK will continue to have a strong domestic liquid demand (providing a guaranteed market for at least 7bn litres each year) it is unlikely it will see the same degree of price movements as the link with global wholesale prices gets stronger. However, movements will still be more prominent than previously experienced.

*converted from NZ$/100kg, therefore currency will have an impact on NZ ppl