UK milk from cheese value languishing behind pack

Published 14 November 18

Last month AHDB published MCVE (milk for cheese value equivalent) figures for the main milk producing countries of the EU. This data allows us to compare how the UK is performing against our key dairy competitors, understand the key drivers behind farmgate price movements, and see where the UK has a competitive advantage or disadvantage.

In September 2018, the UK was sitting fifth out of six countries monitored, ahead of Ireland, but some way behind the indicators for Denmark, the Netherlands, Germany and France. In fact, over the last three years (October 2015 to September 2018), the UK has out-performed Ireland, been on a par with Germany but been significantly behind the other three nations.

The EU MCVE calculations are bespoke for each country, taking into consideration typical cheese types, process, prices and costs. The table below shows where the UK wins (positive) and loses (negative) against its key competitors in the MCVE calculation:

 EU MCVE v UK Nov18

One of the key drivers for the overall value of MCVE are yields, and in particular how much cheese can be produced from the milk. As previously reported, compositional quality in the UK tends to be lower than the other nations, apart from France, and this is reflected in the yields.

Cheese type and the market price for cheese tend to go hand-in-hand, so those two lines from the table should be assessed together. For example, Gouda has a better yield than Cheddar due to the lower solids in the cheese, but this is then reflected in the market value for Gouda. However, the analysis suggests that Denmark, Netherlands and France have a competitive advantage over the UK from the type of cheese they produce.

From a cost perspective, the UK actually does very well. Lower labour costs than any other country, and lower energy costs than most (other than the Netherlands), help the UK be more competitive.

The EU MCVE indicators are now available as a webpage, which will be updated monthly as new market returns become available. The webpage also includes a technical note showing how the values have been developed. AHDB will continue to monitor the indicators going forward, allowing us to determine how the UK is performing against its main competitors in Europe.