Dale Farm chief executive Nick Whelan has confirmed that, despite dairy markets being relatively strong, milk volumes coming into processers across Europe are falling.
Dale Farm paid a base price of 31.8 pence per litre (ppl) for October milk with producers also receiving an additional 2ppl winter bonus.
“Inflationary price increases across the entire gamut of inputs are now having a real impact on farm margins,” said Whelan.
“Estimates of Dale Farm suppliers’ costs indicate that average production costs have increased by 4.5ppl over the past 12 months.
Fertiliser price hikes have probably accounted for 2.2ppl of an increase with feed and energy accounting for 1.4 and 0.8ppl respectively.
“Labour availability is now becoming an issue of major concern, particularly in Great Britain," the Dale Farm representative continued.
“International dairy markets are presently supply driven. And, on this basis alone, the outlook for prices remains strong into the new year.”
According to Whelan, delivering sustainability – both at processing and farm level - is an absolute priority for Dale Farm at the present time.
“Approximately 40% of the time allocated to discussion at our recent AGM was taken up with this one issue," he said.
“We are already working with a number of independent agencies to determine the carbon footprint of our farms, and this work will continue apace in 2022.
“Our farmers know that they must develop sustainable business models and are totally committed to this end.
But we are starting off from a relatively strong position. The most recent figures indicate that 1.12kg of carbon dioxide is created per litre of milk produced here in Dale Farm. The comparable figure for the UK as a whole is 1.23kg.”
“But we also need our politicians to come up with sensible climate change legislation - and critical in this regard is the need for the carbon sequestration that takes place on farms to be fully recognised," he said.
“We still have a fair distance to go in coming up with accurate sequestration figures. But as soon as these become available they must be officially integrated into the carbon footprint that is determined for the dairy and other farming sectors.”
Meanwhile, Dale Farm is to write out to all of its farmer-suppliers within the next week, detailing proposed changes to the co-op’s current milk pricing structures.
“This is a sensitive issue for us,” Whelan added.
“We operate one of the largest cheddar cheese manufacturing businesses in the UK. However, we also have a more than significant liquid milk business.
“In addition, Dale farm products feature strongly across a very wide range of dairy categories," he said.
“Board members have discussed the issue of milk pricing in depth over a prolonged period of time.
And they fully recognise that change is required. But it must be change that delivers in terms of maximising the returns that can be delivered back to farmers across all our products and brands.
“Dale Farm is a co-op, fully owned by its farmer shareholders. We as a business take very seriously the responsibility of delivering for every producer-supplier in a fair and equitable manner," he concluded.