Farmers fear the market for uncontracted milk in the UK could completely disappeared as milk sales outside retailers disappear.

This week, spot prices for surplus milk in the UK have fallen dramatically, with some quoting a price of 0p/l. Millions of litres of milk are now being produced in the UK that nobody wants, which has forced some farmers in England to dump their milk.

There are industry discussions about temporarily reducing milk output on farms to limit the crash in price as many fear it could take some time for prices to recover to pre-pandemic levels if left in freefall.

Such a collapse in demand is unprecedented for the UK’s dairy market. The sheer pace of its collapse has caught many UK dairy farmers off-guard and left them with no option but to dispose of milk. Some milk is even being used as a feedstock for anaerobic digester (AD) plants. As much as 12m litres of milk is being produced in the UK every week that doesn’t have a home any more.

The COVID-19 pandemic has played havoc with the UK’s dairy market, which is different to Ireland as it is mostly based around supplying liquid milk to the huge UK consumer market. The shutdown of restaurants, cafés, takeaways and other food service outlets has crippled a vital route to market for many UK dairy companies, forcing them to slash milk prices and ask farmers to reduce milk supply.

Concerns

In a frank and honest letter to milk suppliers, Robert Graham, managing director of Graham’s Family Dairy in Scotland, said he had “significant concern” around the company’s ability to pick up milk from farms this week.

“Once ‘lockdown’ arrived, 1,500 accounts such as restaurants and coffee shops closed. Although some of this volume went into retail, what we are now seeing in retail is a hangover from stockpiling and people visiting stores less often, leading to reduced volumes,” wrote Graham.