UK farmgate milk price held back by lower milk solids

Published 9 May 18

We recently published analysis that showed the UK tends to be at the bottom of the EU farmgate milk price league table. AHDB analysis suggests that this is mainly a result of lower milk solids in the milk. 

As previously reported, the UK’s average milk solids are lower than the other main EU milk producing nations, apart from France. 

The EU farmgate milk price league table (published by DG Agri) uses average prices actually paid in the month. They are calculated by adding up payments made to farmers and dividing by the volume of milk collected and paid for. The main milk buyers of all of the countries in our comparison pay for fat and protein. As a result, if the milk solids in one country are higher than another, the actual price paid will be higher in order to pay for those additional solids.

As an alternative to quoting price in pence per litre, we can re-base the DG Agri prices to show them in £’s per kg of solids.

 EU v UK farm price pplEU v UK milk price £'s p kg May18

The result moves the UK up from sixth to third, on average over the last 3 years. France sees a significant increase in its relative performance due to its low level of milk solids. Of the remaining five countries there is only 1% between the top and bottom payers. By comparison, in pence per litre terms, the bottom five have a price gap of 6%.

The calculation is rudimentary because fat and protein will have different values depending on the markets they are entering, and certainly in the UK a large proportion of milk is destined for liquid markets where protein is less important. However, what the calculation suggests is that lower milk solids is one of the main reasons why the UK lags behind the other main milk producing nations in the EU in terms of farmgate milk price.