View on future changes to farmgate prices now available

Published 4 April 18

Projected changes to farmgate milk prices, based on how markets have moved, will now be published monthly on the AHDB website. The aim is to improve transparency around price changes, and give some indication of where farmgate milk prices may go over the next few months. This will therefore help to reduce the uncertainty around what dairy farmers will be paid month to month.

The changes to farmgate milk prices are estimated based on their historical relationship to changes in the Milk Market Value[1] (MMV). On average, it was found that a 1ppl change in the MMV will lead to around a 0.6ppl change in the overall GB average milk price, generally three months’ later.

The improvements seen in the MMV in February and March suggest an easing of cuts to farmgate milk prices.

It is important to note that the publishedfigures only provide an indication of the direction and size of expected milk price movements. They may not equate to the actual price changes made by individual milk buyers as these will be also impacted by other factors – such as the mechanism they use to set prices, competition for milk supplies and/or contract negotiations.

Projected Farmgate Price Changes Table
*figures may not add up due to rounding
Source: AHDB Dairy estimates

 



[1] The Milk Market Value (MMV) is a weighted average of AMPE and MCVE on a 20:80 basis. This was found to be the best predictor of movements in farmgate prices based on historical data. The analysis was done excluding prices paid on retailer-aligned contracts.