Money in meeting buyer milk specifications

Published 8 March 17

The price farmers can achieve for the milk they produce will differ depending not only on who they sell to, but also how well it matches the buyers’ requirements. An assessment of just how much can be gained by aligning milk components to buyers’ needs can be done using the AHDB Milk Price Calculator (MPC). From early March, the MPC will be easier to use and feature a regional filter, to make the results more specific to your local area.

Analysis done by AHDB, looking at the impact of different milk quality bands on price (see end of article), found prices on the same contract could differ by more than 6.1ppl due to the composition of the milk and 1.3ppl for different levels of hygiene. 

On average, the main impact of hygiene on prices comes from penalties applied to milk which fails to meet specified levels rather than from bonuses for higher quality. On average, milk with lower hygiene levels (see below for specifications) loses between 0.5ppl and 0.7ppl compared to the average, with aligned liquid pricing schedules applying the highest deductions.

The impact of milk composition on prices was much larger, with prices paid on milk for manufacturing more affected than those for milk going to the liquid market. Milk delivered with lower levels of solids was paid, on average, between 0.8 and 2.4ppl less than the average depending on the type of contract. Milk with higher solids achieved between 0.5ppl-1.8ppl more than the average.

While it remains important to avoid penalties by meeting minimum hygiene standards, in general, there appears to be more potential to improve milk prices by adjusting composition.

The analysis undertaken has looked at the general penalties and premiums for milk into different markets. Farmers are encouraged to use the MPC to look at their own specific situation. Using the MPC can highlight if there is potential to improve your milk price by better aligning your milk to your customer’s requirements. Using this information, alongside the investment cost of making the improvement, can help farmers decide what will give them the most beneficial return on their investment.

Milk quality bands:

The data used in each band were based on the top and bottom 25% for hygiene levels and for composition of a sample of milk deliveries from 368 farms and are summarised in the table. Averages were calculated using monthly data for butterfat, protein, bactoscan and SCC levels for 2016. The AHDB Standard Litre delivery profile for 2016 was used for all groups to exclude any seasonality impacts.