dairy statistics 2014

Dairy statisticsAn insiders guide 2014

Contents

Introduction 4

Farm inputs UK feed prices 5UK fertiliser prices 6Oil prices 7GB land prices 8Rent prices in England and Wales 9

On-farm data UK dairy farm numbers 10Producer numbers by region 11EU dairy producer numbers 12UK dairy cow numbers 15UK average herd size 16EU dairy cow numbers 17UK average milk yield 18TB incidences in cattle in Great Britain 19Profitability of dairy production systems 20

Milk supply GB and UK wholesale milk deliveries 22Milk deliveries by nation (Butterfat adjusted) 24EU-28 wholesale deliveries 25World production 27UK milk flow 29

Milk prices and contractsUK annual average farmgate price 30UK monthly average farmgate price 31UK milk producer league table 33Market indicators 35EU annual average farmgate price 37UK wholesale prices 39EU wholesale prices 40

World wholesale prices 41Fonterra auction prices 42

Dairy processing and trade UK milk utilisation 43EU dairy product production 44UK mild Cheddar margins 45UK mature Cheddar margins 47EU market management measures 49UK quota position 51UK dairy trade balance 52EU dairy balance sheet 54World dairy trade 55

Consumer UK average household consumption 57Liquid milk retail prices 59Branded vs private label liquid milk retail prices 60Liquid milk sales 61Pasteurised milk 62Organic and filtered milk sales 63Modified and UHT milk sales 64Milk purchases by container type 65Cheese market 66Cheddar market 68EU butter consumption 70EU liquid milk consumption 71EU cheese consumption 72

Useful information Conversion tables 73UK dairy industry organisations 74Internet sites for sourcing agricultural information 76About DairyCo 78

Introduction

This guide has been designed to give answers to the most frequently asked questions about the dairy industry in the UK and the world.

It provides data stretching from the farmgate to consumers and, this snapshot of the dairy industry, is increasingly used by the media and farmer groups to improve bargaining power and start informed debates.

In addition to the information provided in this guide, please find details of web addresses on page 76 which explain the areas discussed in more detail.

We would like to express our gratitude to the many individuals and organisations who have provided some of the statistics found in this publication. This support is gratefully acknowledged.

To receive free, regular market updates emailed to you every week, call the MI team on 024 7647 8685 or email [email protected] and ask for the free DairyCo Dairy Market Weekly.

Further information on these topics can be found at dairyco.org.uk/market-information

Market Intelligence Team

DairyCo

4

Farm inputs

UK feed prices

5

Global grain prices fell in 2013 on increased grain supplies, however, the smallest UK wheat harvest since 2001 meant UK wheat prices declined by a lesser extent.

The price of feed wheat fell by 6/tonne (3.1%) and the price of intensive energy dairy feed rose 23/tonne (8.8%).

Average price (/tonne)

2008 2012 2013

Feed Wheat 143 193 187

Soyameal Argentine 262 351 386

Intensive Energy Dairy Rations 206 261 284

Note: Prices are from different outlets: Feed Wheat (Delivered), Soyameal (Ex-Store), Intensive Energy Dairy Rations (On Farm).

Source: FARM BRIEF, AHDB/HGCA.

This data is protected under the various copyright acts. No reproduction in whole or in part is permitted by any means whether printed, photocopied, sound or visual broadcast without the express permission of FARM BRIEF.

UK feed prices

450

400

350

300

250

200

150

100

50

0

Intensive EnergyDairy Rations

Soyameal(Argentine)

Feed Wheat

08 09 10 11 12 13

/to

nne

Source: FARM BRIEF, AHDB/HGCA.

Farm inputs

UK fertiliser prices

Average prices for AN (Ammonium Nitrate) fell by 9.5% between 2012 and 2013 to 277/tonne, due to lower global Urea prices.

Average price (/tonne)

2008 2012 2013

20.10.10 Blended bags 379 316 293

Granular Urea (bags) 353 356 308

AN (UK - Bags) 337 306 277

Source: FARM BRIEF.

UK fertiliser prices

400

380

360

340

320

300

280

260

240

220

200

AN(UK - bags)

Granular Urea(bags)

20.10.10Blended bags

08 09 10 11 12 13

/to

nne

Note: Urea data prior to Jan 2012 is based upon Prilled Urea as Granular prices were not available.

Source: FARM BRIEF.

This data is protected under the various copyright acts. No reproduction in whole or in part is permitted by any means whether printed, photocopied, sound or visual broadcast without the express permission of FARM BRIEF.

6

Farm inputs

Oil prices

Oil prices fell in 2013 on the previous year to an average price of $105.87/barrel. However, this price was still up 276.8% on the average price a decade ago.

The average price in 2013 of 67.74/barrel was 1.9% lower than 2012.

Average oil price

2003 2012 2013

US$/barrel 28.10 109.45 105.87

/barrel 17.17 69.07 67.74

Source: OPEC. Prices have been converted from US$/barrel using average annual exchange rates.

Oil prices

7

80

70

60

50

40

30

20

1004 06 08 10 1203 05 07 09 11 13

/ba

rrel

Source: OPEC. Prices have been converted from US$/barrel using average annual exchange rates.

The average price for pasture land in England and Wales stood at 17,191/hectare in H2-2013, an increase of 661 (4.0%) from H1-2013. The average price for arable land was 21,129/hectare in H2-2013, up 883 on H1-2013 (4.4%).

The highest pasture land price in H2-2013 was 21,313/hectare in the North West, unchanged on H1-2013. The lowest price was in Scotland at 6,178/hectare, down 9.1% on H1-2013 but unchanged on H2-2012.

The highest price for arable land was 22,239/hectare, which was recorded in both the North West and South East in H2-2013. The lowest price was in Scotland at 12,355/hectare, down 18.4% on H1-2013, unchanged on H2-2012.

Land prices for dairy farms (pasture land) in England and Wales

/ac /ha

H2-2013 6,957 17,191

Source: RICS Farmland Market Survey.

Land prices England and Wales

Farm inputs

GB land prices

8

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

per hectacre per acre

08 09 10 11 12 13

Note: The above graph shows annual average prices for pasture land.

Source: AHDB/DairyCo, RICS Farmland Market Survey.

Farm inputs

Rent prices in England and Wales

Rent levels across England and Wales have been quite variable between H2-2012 and H2-2013. The average rent for pasture land in England and Wales (ATA 95) rose by 4/hectare (1.9%) from 241/hectare in H2-2012 to 245/hectare in H2-2013. There was, however, a 24/hectare (9.0%) half-yearly decrease between H1-2013 and H2-2013.

The average rent price for arable land in England and Wales (ATA 95) rose by 14/hectare (3.9%) to 387/hectare between H2-2012 and H2-2013. Land rented under AHA 86 also showed a 3.9% increase to 201/hectare.

Land rent levels for dairy farms (pasture land) in England and Wales

AHA 86 ATA 95

/ac /ha /ac /ha

H2-2013 57 141 99 245

Note: AHA 86 The Agricultural Holdings Act 1986, ATA 95 The Agricultural Tenancies Act 1995.

Source: RICS Farmland Market Survey.

Land rent levels England and Wales

9

300

250

200

150

100

50

0

/ha

ATA 95AHA 86

08 09 10 11 12 13

Note: The above graph shows annual average rental prices for pasture land.

AHA 86 The Agricultural Holdings Act 1986. ATA 95 The Agricultural Tenancies Act 1995.

Source: AHDB/DairyCo, RICS Farmland Market Survey.

On-farm data

UK dairy farm numbers

10

In June 2013, there were 13,265 dairy farms in the UK 8.8% (1,284) less than in 2012.

In the past ten years, the number of dairy farms in England and Wales has fallen by 37.7%. In Scotland, the number of dairy farms has fallen by 43.6% and in Northern Ireland by 39.6%.

June census

2003 2012 2013

England & Wales 16,977 10,724 10,581

Scotland 1,590 1,163 896

Northern Ireland 4,425 2,662* 2,684*

UK 22,992 14,549 13,265

Note: England and Wales producer number figure for 2012 is a May figure as June data was not available.

For England and Wales, all premises where milk is produced are referred to as Production Holdings; this includes holdings with sheep, goats and buffalo.

*Change in methodology in Northern Ireland in 2012 with data revised back to 2006.Figures for Scotland are for dairy type holdings where dairy farming contributes more than two-thirds of the holding standard gross margins up until 2012. As of June 2013, Scotland has changed its typology which is now based on 11 farm types and uses the cattle tracing scheme resulting in a significant fall in the number of holdings compared with 2012.

Source: DHI, DARD, SEERAD.

UK dairy farm numbers

25,000

20,000

15,000

10,000

5,000

003 04 05 06* 07* 08* 09* 10* 11* 12* 13*


On-farm data

Producer numbers by region

Figures are for May unless otherwise stated.

11

Note: September figures were used for 2003. Therefore figures do not tally exactly with the farm numbers table on page 10.

*Figures for Scotland are for dairy type holdings where dairy farming contributes more than two-thirds of the holding standard gross margins up until 2012. As of June 2013, Scotland has changed its typology which is now based on 11 farm types and uses the cattle tracing scheme resulting in a significant fall in the number of holdings compared with 2012.


Scot

land

2003 1,590

2012 1,163

2013* 896

Nor

th

2003 3,217

2012 2,141

2013 2,120

Mid

land

s 2003 4,524

2012 2,850

2013 2,780

Sout

h W

est

2003 4,772

2012 3,209

2013 3,182

Sout

h Ea

st 2003 1,144

2012 620

2013 616

Wal

es

2003 2,909

2012 1,904

2013 1,895

Scotland

North

Midlands

Wal

es

South West

SouthEast

On-farm data

EU dairy producer numbers

12

In 2012/13, there were 922,000 dairy farmers in the 27 EU member states.

The population of dairy farmers in the EU-15 fell by 20.5% (91,300 farmers) between 2007/08 and 2012/13 approximately 50 farmers per day left the industry.

EU dairy producer numbers

Thousand dairy farmers

07/08 10/11 11/12 12/13

Austria 58.0 49.9 48.8 46.5

Belgium 13.0 10.7 10.3 9.8

Denmark 5.0 4.2 4.0 3.8

Finland 14.0 11.7 10.9 10.2

France 99.0 83.8 80.3 77.2

Germany 99.0 88.7 83.9 80.8

Greece 6.0 4.3 3.9 3.7

Ireland 21.0 19.0 19.2 18.5

Italy 46.0 40.4 38.8 37.4

Luxembourg 1.0 0.8 0.8 0.8

Netherlands 21.0 19.4 18.9 18.5

Portugal 11.0 8.1 7.5 7.0

Spain 26.0 21.9 20.7 19.6

Sweden 8.0 6.1 5.8 5.4

UK 18.0 15.5 15.0 14.5

EU-15 445.1 384.3 368.6 353.8

Cyprus 0.0 0.2 0.2 0.2

Czech Republic 3.0 2.5 2.4 2.3

Estonia 1.0 1.1 1.0 0.9

13

Source: Eurostat.

Thousand dairy farmers

07/08 10/11 11/12 12/13

Hungary 6.0 5.8 4.7 4.3

Latvia 20.0 12.2 11.6 11.2

Lithuania 69.0 46.6 44.4 41.3

Malta 0.0 0.1 0.1 0.1

Poland 232.0 173.3 162.1 153.0

Slovakia 1.0 0.9 0.9 0.8

Slovenia 10.0 8.9 8.5 8.2

EU-25 789.0 635.7 604.3 576.1

Bulgaria 109.0 18.1 13.8 10.8

Romania 663.0 385.0 368.0 335.0

EU-27 1,561.1 1,038.8 986.2 922.0

Source: Eurostat.

EU-15 dairy producer numbers

120

100

80

60

40

20

0

Tho

usan

d da

iry

prod

ucer

s

2012/132007/08

UK

Swed

enSp

ain

Portu

gal

Luxe

mbou

rgIta

ly

Nethe

rland

s

Irelan

d

Gree

ce

Germ

any

Franc

e

Finlan

d

Denm

ark

Belgi

um

Austr

ia

14

Change in number of dairy producers per country between 2011/12 and 2012/13 (%)

0%-5%-10%-15%-20%-25%

MaltaCyprus

NetherlandsSlovakia

Czech RepublicUK

LatviaIreland

ItalyGermany

FranceLuxembourg

SloveniaBelgium

DenmarkAustria

SpainPolandFinlandGreece

SwedenEstonia

LithuaniaPortugalHungaryRomaniaBulgaria

Source: Eurostat.

On-farm data

UK dairy cow numbers

15

While the number of cows in the UK fell slightly, down 1.7% in 2013 on 2012, the distribution of cows saw larger losses in both England and Northern Ireland.

Thousand head

2003 2012 2013

England 1,435 1,121 1,113

Wales 268 224 223

Scotland 198 163 167

Northern Ireland 290 285 280

UK 2,191 1,812 1,782

Note: Dairy cow numbers refer to dairy female cattle aged two years or more with offspring.

England and Wales figures have been sourced through CTS (cattle tracing system), Northern Ireland data has been sourced through APHIS, Scotland use survey data. CTS/APHIS uses breed of cattle to identify purpose. Therefore, cannot be used for a direct comparison with previous years.

Source: Defra, DARD, Welsh Government, SEERAD.

UK dairy cow numbers

2,250

2,000

1,750

1,500

1,250

1,000

750

500

250

0

Tho

usan

d he

ad

NorthernIreland

England Wales Scotland UK

2003 2012 2013

Source: Defra, DARD, Welsh Government, SEERAD.

16

The percentage reduction in cow numbers was less than the reduction in herds. Therefore, average herd size continued to increase between 2012 and 2013.

June census

2003 2012 2013

England 102 127 128

Wales 91 118 118

Scotland 125 157 185

Northern Ireland 66 107 104

UK 95 125 126

Note: Averages have been worked out according to figures found in the dairy farm numbers and dairy cow numbers tables. Scotland 2013 figures affected by change in holdings methodology.

Source: Defra, DARD, DHI, SEERAD, Welsh Government.

UK average herd size in 2013

200

180

160

140

120

100

80

60

40

20

0

Cow

hea

d/he

rd

NorthernIreland

England Wales Scotland UK

Source: Defra, DARD, DHI, SEERAD, Welsh Government.

On-farm data

UK average herd size

On-farm data

EU dairy cow numbers

17

The EU-15 had 76.9% of dairy cows in the EU-28 in 2013 with the UK herd representing 7.7% of the total EU-28 dairy cow population.

Thousand head

2003 2012* 2013*

UK 2,207 1,786 1,817

EU-15 19,217 17,703 18,050

EU-25 23,923 21,555 21,832

EU-27 24,285 23,012 23,314

EU-28 n/a 23,193 23,482

UK% (EU-28) n/a 7.7% 7.7%

*Provisional.

Note: Eurostat figures for the UK are different from the UK dairy cow numbers on page 15 since figures are collated from different sources.

Croatia data unavailable for 2003.

Source: Eurostat.

18

In 2013, the UK annual average milk yield rose by 93 litres/cow. The 2013 yield of 7,535/cow/annum was 1.2% higher than in 2012 and 13.8% more than in 2003.

Litres/cow/annum

2003 6,621

2010 7,273

2011 7,528

2012 7,442

2013* 7,535

*Provisional.

Source: Defra.

UK average milk yield

8,000

7,500

7,000

6,500

Litr

es/c

ow/a

nnum

04 06 08 10 1203 05 07 09 11 13**Provisional.

Source: Defra.

On-farm data

UK average milk yield

On-farm data

TB incidences in cattle in Great Britain

19

The number of cattle being slaughtered due to TB decreased by 13.6% (5,115) between 2012 and 2013.

Number of cattle slaughtered for TB in GB

2003 23,972

2011 34,238

2012* 37,734

2013* 32,619

*Provisional.

Note: Statistics above are for all cattle slaughtered due to TB not just dairy cattle.

Source: Defra.

Number of cattle slaughtered for TB in GB

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

004 06 08 10 12*03 05 07 09 11 13*

Num

ber

of c

attle

*Provisional.

Source: Defra.

20

Milkbench+ analysis has, again, identified and analysed three enterprise types:

Cows at grass. Predominantly grass-based and operating at lower yield levels

Composite. Maximum use of family labour and a mixed approach to feeding and housing

High-output cows. Generally housed for more of the year with more intensive use of major inputs.

DairyCos Milkbench+ Evidence Report 2014 highlights the following findings:

Due to difficult weather conditions and increasing feed prices, the average net margin in 2012/13 was negative and 2.3 pence per litre (ppl) less than in 2011/12 at -0.9 (ppl)

Despite this, the top 25% of producers in all three enterprise types achieved a positive net margin, with the top 25% in Cows at grass earning the highest net margin overall

The top 25% of dairy farms achieved a slightly higher milk yield, but, importantly, used significantly fewer resources at cheaper prices, which resulted in lower production costs and a higher net margin

The difference in performance is much larger between the top 25% and bottom 25% of producers within each enterprise type, than it is across farm types

Four drivers explained a minimum of 60% of the difference in cost of production between the top and bottom 25% in each of the three enterprise types. These drivers are:

On-farm data

Profitability of dairy production systems

21

Feed cost

Labour cost

Power and machinery cost

Depreciation.

These drivers are similar to previous year results apart from the inclusion of depreciation instead of herd replacement cost.

According to the international dairy network IFCN, UK dairy farms have, on average, larger herds and slightly lower milk yields, together with lower production costs and higher profitability than the average for Western Europe.

Cows at grass Composite

High-output cows

Number of farms 120 130 72

Average herd size (cows) 168 185 266

Total non-forage feed (kg dry matter per cow per year)

1,326 2,745 2,853

Yield (litres per cow per year) 5,890 7,885 8,619

Labour (hours/cow/year) 36 37 34

Revenue (pence per litre) 31.5 31.0 31.4

Total variable costs (pence per litre) 11.4 14.7 14.8

Total fixed costs (pence per litre) 17.4 14.1 14.0

Total cost of production (pence per litre) 32.3 32.4 31.9

Net margin (pence per litre) -0.8 -1.4 -0.5

Net margin ( per hectare per year) -12 -89 -33

Note: Milkbench+ is an Internet-based benchmarking service that allows British dairy farmers to compare how their enterprise is performing against other dairy farms.

Source: AHDB/DairyCo, analysis of the Milkbench+ 2012/13 sample containing 322 dairy enterprises.

22

In 2013/14, UK milk production was 5.4% (705 million litres) higher than the previous milk year.

GB milk production rose by 5.3% in 2013/14 versus the previous milk year.

Northern Ireland milk production also increased in 2013/14 but by a slightly higher percentage of 6.1% (118 million litres).

The strength in production during 2013/14 was encouraged by favourable weather conditions throughout the year and positivity in the industry, helped by stronger farmgate milk prices.

Million litres

GB UK

03/04 12/13 13/14 03/04 12/13 13/14

Apr 1,098 1,015 932 1,271 1,204 1,112

May 1,171 1,048 1,034 1,367 1,252 1,234

Jun 1,087 997 987 1,266 1,186 1,177

Jul 1,061 944 963 1,232 1,116 1,144

Aug 1,028 910 954 1,181 1,063 1,116

Sep 969 864 919 1,101 997 1,063

Oct 989 865 941 1,116 994 1,088

Nov 954 843 920 1,071 974 1,067

Dec 1,002 894 979 1,127 1,039 1,144

Jan 998 897 1,004 1,127 1,059 1,179

Feb 926 824 931 1,054 978 1,099

Mar 1,005 934 1,061 1,152 1,112 1,257

Total 12,288 11,036 11,624 14,063 12,974 13,680

Note: Figures are subject to rounding.

Source: RPA, DARD.

Milk supply

GB and UK wholesale milk deliveries

23

UK wholesale milk deliveries

UK wholesale deliveries by milk years (April-March)

1,400

1,350

1,300

1,250

1,200

1,150

1,100

1,050

1,000

950

900

2013/142012/132003/04

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Mill

ion

litre

s

14,500

14,000

13,500

13,000

12,500

Mill

ion

litre

s

2003

/04

2004

/05

2005

/06

2006

/07

2007

/08

2008

/09

2009

/10

2010

/11

2011

/12

2012

/13

2013

/14

Source: RPA.

Source: RPA.

24

Milk supply

Milk deliveries by nation (Butterfat adjusted)

Between the 2011/12 and 2012/13 milk years, butterfat-adjusted milk deliveries fell by an average of 3.5% across all nations in the UK.

It decreased by 4.7% in England, 3.4% in Wales and 0.7% in Northern Ireland but increased marginally in Scotland.

Million litres

2010/11 2011/12 2012/13

England 8,639 8,640 8,234

Wales 1,537 1,595 1,540

Scotland 1,268 1,279 1,280

Northern Ireland 1,921 2,004 1,990

UK 13,365 13,518 13,044

Note: Figures are subject to rounding.

Source: RPA.

Butterfat-adjusted milk deliveries by nation

10,000

8,000

6,000

4,000

2,000

0

Mill

ion

litre

s

NorthernIreland

England Wales Scotland

2010/11 2011/12 2012/13

Source: RPA.

25

Milk supply

EU-28 wholesale deliveries

Milk deliveries in the EU-28 were 2.8% higher in 2013/14 than in 2012/13. Eighteen countries increased their production including Germany, France, UK, Netherlands and Poland.

The UK, which saw its milk deliveries increase 5.4% between 2012/13 and 2013/14, remains the third largest producing country in the EU.

EU-28 wholesale deliveries

Thousand tonnes

2003/04 2012/13 2013/14

Germany 27,270 29,706 30,631

France 23,122 24,189 24,677

UK 14,481 13,359 14,086

Netherlands 10,590 11,671 12,344

Poland n/a 9,817 10,092

Italy 9,963 9,791 9,721

Spain 5,958 5,948 6,008

Ireland 5,288 5,353 5,581

Denmark 4,507 4,914 5,074

Belgium 2,820 3,120 3,534

Austria 2,658 2,947 2,972

Sweden 3,226 2,850 2,890

Czech Republic 632 2,431 2,365

Finland 2,411 2,246 2,309

Portugal 1,842 1,825 1,791

Hungary 1,661 1,398 1,370

Lithuania 1,039 1,356 1,357

Romania 180 870 904

26

Thousand tonnes

2003/04 2012/13 2013/14

Slovakia 961 847 826

Latvia 438 722 755

Estonia 494 673 721

Greece 644 669 643

Slovenia 505 532 518

Bulgaria n/a 499 494

Luxembourg 258 277 290

Cyprus 149 153 159

Croatia 549 573 506

EU-15 115,038 118,863 122,551

EU-27 121,097 138,161 142,111

EU-28 n/a 138,734 142,617

Note: Figures do not include Malta, however, it is estimated they only produce around 3,000 - 6,000 tonnes per month which would not substantially affect any percentage changes.

*Croatia joined the EU on 1 July 2013, historic data was available and has been included for reference.

Source: Eurostat.

27

Milk supply

World production

World milk production continues to increase and reached 603 billion litres in 2012.

Although the EU-27 accounted for nearly a quarter (24.2%) of the total world milk supply in 2012, this is down from 29.4% a decade earlier.

The UK is currently the tenth largest milk producer in the world.

Billion litres

2002 2011 2012

World 495.8 589.9 602.5

EU-15 118.8 118.7 118.8

EU-25 140.2 139.9 140.6

EU-27 146.0 145.4 145.9

UK 14.4 13.4 13.5

EU-27% 29.4 24.7 24.2

UK% 2.9 2.3 2.2

Source: Faostat FAO.

28

World milk production

Top 10 milk-producing countries in 2012

650

600

550

500

45005 06 0702 03 04 08 09 10 11 12

Billi

on li

tres

100

80

60

40

20

0

Billi

on li

tres

USInd

iaCh

ina

Germ

any

Braz

il

Russi

an Fe

dera

tion

Franc

e

New

Zeala

ndUKTur

key



6,791

13,431

6,179

2271

45

29

Milk supply

UK milk flow

The UK milk market was approximately 13.6 billion litres in 2013. Milk for liquid consumption accounted for 6.9 billion litres.

UK milk flow 2013 (million litres) (a)

(a) Figures are provisional.

(b) Excludes any suckled milk.

(c) Includes 7 million litres of milk produced by the beef herd.

Note: Totals may not agree due to rounding.

Source: Defra.

Dairy herd production (b)

13,540

Beef herd production

7

Raw milk imports

132

Raw milk exports

473

Direct sales 116

Consumed on farm (c)

22

Delivered to dairies 12,952

Dairy wastage and stock change

-17

Total cows milk production (b)

13,547

Available for human consumption (c)

13,563

For liquid consumption (c)

6,885

Used in manufacture

6,223

Fed to stock/ waste on-farm

115

30

Average UK farmgate prices increased 12.7% compared to 2012, due to increasing wholesale prices and competition between buyers for milk. Farmgate prices reached record highs in 2013 as the UK recovered from the loss of production in 2012.

Average price pplYear-on-year price

difference ppl

2003 18.03 0.92

2004 18.47 0.44

2005 18.47 0.00

2006 17.95 -0.51

2007 20.67 2.72

2008 25.93 5.25

2009 23.73 -2.20

2010 24.67 0.94

2011 27.36 2.69

2012 28.08 0.72

2013 31.64 3.56Source: Defra (Including bonus payments).

Milk prices and contracts

UK annual average farmgate price

UK average farmgate price

35

30

25

20

15

10

5

0

-5

Year-on-year price diff.Average farmgate prices

03 04 05 06 07 08 09 10 11 12 13

ppl

Source: Defra (including bonus payments).

31

UK farmgate prices were consistently over 30ppl for 2013/14, apart from May due to seasonal reductions. Increasing wholesale prices and competition for milk between buyers drove prices to record levels over the year.

Average price ppl

2003/04 2012/13 2013/14

Apr 16.85 27.84 30.11

May 16.00 26.95 29.98

Jun 16.52 26.13 30.72

Jul 18.22 26.43 31.38

Aug 18.95 26.69 32.08

Sep 19.25 27.62 32.98

Oct 19.60 29.12 33.62

Nov 19.83 30.05 34.55

Dec 19.16 30.14 34.25

Jan 18.77 30.05 33.85

Feb 18.69 30.09 33.93

Mar 18.48 30.09 33.68

Average 18.36 28.43 32.59

Note: The annual average price given is unweighted and, therefore, not comparable with the annual Defra price.



UK monthly average farmgate price

32

Monthly average farmgate prices

35

30

25

20

15

Ave

rage

pric

e pp

l

2003/4 2012/13 2013/14

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar


33

Prices are based on the DairyCo Standard Litre. This is based on a 1 million litre/year producer on Every Other Day Collection with monthly variations for constituents, volume and hygiene, based on UK averages over the past three milk years.

2013/14 annual average price (ppl) by company (from our DairyCo standard litre)

Dairy Crest M&S Profile1 34.21

Dairy Crest M&S Variable1 34.12

Mller Wiseman Dairies Tesco2 33.04

United Dairy Farmers (NI) 32.96

First Milk Tesco2 32.90

Parkham Farms 32.85

Mller Wiseman Dairies Sainsburys 32.82

Dairy Crest Sainsburys Profile1 32.73

Dairy Crest Sainsburys Variable1 32.53

Arla Foods Tesco2 32.51

Arla Milk Link London Liquid 32.40

Arla Foods Sainsburys 32.40

Arla Milk Link Northern Manufacturing Seasonal 32.32

Paynes Dairies 32.25

Mller Wiseman Dairies Cooperative 32.23

Arla Milk Link Manufacturing Seasonal 32.22

Arla Milk Link Manufacturing A&B 32.01

Lactalis/Caledonian Cheese Profile 31.96

Arla Milk Link Northern Manufacturing A&B 31.89

Dairy Crest cheese Davidstow Profile 31.81

Grahams Dairies 31.73


UK milk producer league table

34

2013/14 annual average price (ppl) by company (from our DairyCo standard litre)

Dairy Crest cheese Davidstow Variable 31.72

Wensleydale 31.65

Barber A.J & R.G 31.58

Lactalis/Caledonian Cheese Seasonal 31.51

Mller Wiseman Dairies Milk Partnership 31.47

Pattemores Dairy Ingredients 31.47

Wyke Farms 31.44

Meadow Foods Compositional Level 31.44

Meadow Foods Compositional Seasonal 31.38

Lactalis/Caledonian Cheese 31.32

South Caernarfon Creameries 31.25

Dairy Crest Liquid Profile 31.20

Dairy Crest Liquid Variable 31.18

Glanbia Llangefni 31.08

First Milk Liquid A 30.84

First Milk Liquid B (Manufacturing pool) 30.60

Arla Milk Link Llandyrnog Direct Seasonal 30.55

First Milk Highlands & Islands Area 30.55

First Milk Compositional 30.48

Arla Milk Link Llandyrnog Direct A&B 30.35

1 Milk prices listed above will vary according to the amount of milk that is required by each retailer; additional milk will be paid for at Dairy Crests standard liquid milk contract price; the milk price above assumes that all litres produced are sold into the dedicated milk pools.

2 Farmers signed up with the Promar costings survey get an additional 0.50ppl.

Note: Prices listed above are exclusive of: Capital Retentions, Administration Charges, Farmer Group Subscriptions and VAT but are inclusive of: DairyCo Levy and Seasonality.

Only contracts live for the full duration of the 2013/14 milk year are included.

Source: AHDB/DairyCo.

35

In June 2013, AHDB/DairyCo began the process of conducting a review of the market indicators Actual Milk Price Equivalent (AMPE) and Milk for Cheese Value Equivalent (MCVE). AHDB/DairyCo decided to instigate an independent review of the method of calculation to establish how UK processor costs and yields have changed, having noted some processing costs (most notably energy) have increased in recent years. The results of this change were published in April 2014, alongside the new AMPE 2014 and MCVE 2014 indicators. The full report of the review can be found on the DairyCo website dairyco.org.uk

Strong increases in UK wholesale prices for the majority of the year allowed for AMPE 2014, MCVE 2014 and cream income to increase, on average up 37.2%, 17.5% and 32.0%, respectively, for 2013/14. Weakening markets at the start of 2014 were reflected in the market indicators as levels began to drop sharply.

Average price (ppl)

3-yr average 2012/13 2013/14

AMPE 2014 29.76 28.06 38.49

MCVE 2014 30.82 31.28 36.75

Cream income 7.84 6.96 9.19



Market indicators

36

Market indicators

45

40

35

30

25

20

15

12

10

8

6

4

Cream incomeMCVE 2014AMPE 2014

Apr

10

Jul 1

0

Oct 1

0

Jan

11

Apr

11

Jul 1

1

Oct 1

1

Jan

12

Apr

12

Jul 1

2

Oct 1

2

Jan

13

Apr

13

Jul 1

3

Oct 1

3

Jan

14

ppl

ppl

The cream income to a liquid processor indicator measures trends in potential returns arising from the sale of surplus cream and not an absolute value. Actual returns will vary according to butterfat levels, exact prices for bulk cream and the fat content of actual milk production.

AMPE (Actual Milk Price Equivalent) and MCVE (Milk for Cheese Value Equivalent) provide a benchmark for the value returned from milk (at the factory gate) when used for a range of dairy products butter and powders for AMPE and mild Cheddar and other by-products for MCVE.


37


EU annual average farmgate price

With commodity markets strengthening in 2013 compared with 2012, the EU-27 average price increased by 4.60ppl (16.9%) to 31.91ppl.

At 31.70ppl, UK dairy producers received 0.21ppl less than the EU-27 weighted average price.

ppl

2003 2012 2013

Austria 21.18 28.29 32.88

Belgium 19.42 25.24 32.52

Denmark 23.25 28.45 33.75

Finland 25.80 37.56 40.04

France 21.63 26.70 30.29

Germany 21.15 26.78 32.73

Greece 24.52 37.67 38.83

Ireland 19.63 27.00 33.47

Italy 25.05 30.90 33.94

Luxembourg 23.29 26.06 31.93

Netherlands 22.47 28.26 34.48

Portugal 23.43 25.57 29.32

Spain 20.43 25.82 29.99

Sweden 24.08 29.88 34.61

UK 18.13 28.12 31.70

Weighted EU-15 average 21.52 27.79 32.50

Cyprus 26.19 44.02 50.28

Czech Republic 16.97 24.86 28.56

Estonia 13.20 25.13 29.43

Hungary 19.51 24.94 28.27

38

ppl

2003 2012 2013

Latvia 9.63 23.12 26.71

Lithuania 9.92 22.20 27.67

Malta 29.41 40.72 45.79

Poland 11.30 24.03 27.74

Slovenia 20.97 25.20 28.23

Slovakia 15.34 24.65 28.58

Bulgaria n/a 25.48 29.43

Romania n/a 22.84 26.21

Weighted EU-27 average n/a 27.31 31.91

Note: Prices have been converted into ppl using annual average exchange rates.

UK prices are calculated on a different basis to the Defra farmgate price.

Croatia not included due to insufficient data.

Source: DG AGRI-C4, AHDB/DairyCo.

Average EU-15 farmgate prices in 2013 (ppl)

42

40

38

36

34

32

30

28

Finlan

d

Gree

ce

Swed

en

Nethe

rland

sIta

ly

Denm

ark

Irelan

d

Austr

ia

Germ

any

Belgi

um

Luxe

mbou

rg UKFra

nceSp

ain

Portu

gal

ppl

Source: DG AGRI-C4, AHDB/DairyCo.

39

Although domestic production recovered well in 2013, manufacturers needed to rebuild depleted stocks. With limited supplies, competition between buyers drove prices higher through the year. UK wholesale prices reached record, or near record, prices during the summer of 2013.

/tonne

Butter (Unsalted) Cream SMP*

Mild Cheddar

2003 2,044 974 1,407 1,985

2012 2,531 1,157 2,017 2,906

2013 3,375 1,588 2,667 3,252

*Skimmed Milk Powder.

Source: AHDB/DairyCo, DIN.

UK average wholesale prices


UK wholesale prices

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

SMP*BulkCream

MildCheddar

Butter(unsalted)

00 01 02 03 04 05 06 07 08 09 10 11 12 13

/to

nne


Source: AHDB/DairyCo, DIN.

40


EU wholesale prices

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0

Dutchwhey powder

German SMP(food quality)

Germanemmental

Dutchbutter

00 01 02 03 04 05 06 07 08 09 10 11 12 13

/to

nne

Source: Dutch Dairy Board/DIN.

Average prices rose significantly in 2013 compared to the previous year as stocks failed to recover from low levels of production in 2012. While global milk production recovered during the year, strong growth in demand added further upward pressure on wholesale prices.

/tonne*

Dutch butter

German SMP** (food

quality)

Dutch whey

powderGerman

emmental

2003 2,110 1,405 243

2012 2,432 1,931 745 3,223

2013 3,363 2,638 822 3,579

*Monthly prices have been converted from /tonne using average monthly exchange rates and then averaged out for the year.

**Skimmed Milk Powder.

Source: Dutch Dairy Board/DIN.

EU wholesale prices

41

Milk production was badly affected by adverse weather during 2012 in most major exporting countries. This continued through into the beginning of 2013, when production began to recover. Despite this, supplies were not able to keep up with demand, especially from China, placing further upward pressure on prices.

/tonne*

Butter SMP** WMP***Cheddar cheese

2003 1,060 1,073 1,228 1,453

2012 2,259 1,923 2,180 2,393

2013 2,689 2,612 2,870 2,654

*Monthly prices have been converted from US$/tonne using average monthly exchange rates and then averaged out for the year.


***Whole Milk Powder.

Source: USDA.

World average wholesale prices


World wholesale prices

3,500

3,000

2,500

2,000

1,500

1,000

500

WMPSMP Cheddar cheeseButter

00 01 02 03 04 05 06 07 08 09 10 11 12 13

/to

nne

Source: USDA.

42


Fonterra auction prices

4,500

4,000

3,500

3,000

2,500

2,000

1,500

WMPSMPAMF

Apr

10

Aug

10

Dec

10

Apr

11

Aug

11

Dec

11

Apr

12

Aug

12

Dec

12

Apr

13

Aug

13

Dec

13

ppl

Source: GlobalDairyTrade, AHDB/DairyCo.

The Fonterra auction takes place fortnightly on an online trading platform called GlobalDairyTrade.

Despite an increase in global milk production during the year, dairy commodity prices rose through most of 2013/14 as exportable supplies were not sufficient to meet demand. Prices spiked early in 2013 as concern over global milk production hit the market and buyers competed to secure supplies. For the majority of 2013, prices were maintained at high levels before supplies recovered sufficiently by the start of 2014 to reduce pressure on the market.

/tonne

2012/13 2013/14

WMP* 2,027 3,105

AMF** 2,026 3,158

SMP*** 2,032 2,873

*Whole Milk Powder.

**Anhydrous Milk Fat.

***Skimmed Milk Powder.

Weighted annual average prices which have been converted from $/tonne using average exchange rates.

Source: GlobalDairyTrade, AHDB/DairyCo.

Fonterra auction prices

43

In 2013/14, just under half (49.6%) of raw milk produced in the UK went into the production of liquid milk and 26.2% into cheese compared with 23.1% in 2003/04. The share of condensed milk and powders fell from 17.7% to 11.1% over this ten-year period.

Volume (million litres)

2003/4 2012/13 2013/14*

Total milk available 14,339 13,220 13,935

Milk used for liquid 6,761 6,756 6,914

Cheese 3,315 3,618 3,654

Condensed milk and powders 2,533 1,142 1,546

Exports 405 466 486

Yogurt 226 272 273

Cream 323 263 295

Butter 261 289 304

Other 380 343 429

Stock change and wastage 134 70 34

*Provisional.

Note: Total milk available = UK milk production + imports.

Milk utilisation includes exports.

Source: Defra.

Dairy processing and trade

UK milk utilisation


EU dairy product production

44

In 2013/14, liquid milk made up 57% of the EU-28 dairy product production, with cheese and fermented products making up 16% and 14% each, respectively.

Dairy product production is not to be confused with milk utilisation. It refers to how many tonnes of each end product have been produced. While milk utilisation shows how much milk has been used for the manufacture and production of each product.

Thousand tonnes 2013/14

Drinking milk 31,154

Fermented products 7,848

Cheese 8,548

Butter 1,936

SMP* 1,141

WMP** 616

Condensed milk 1,071

Cream 2,611

Note: Cheese data excludes processed cheese.

Data subject to retrospective amendment.


**Whole Milk Powder.

Source: Eurostat.

45

Processor gross margins on mild Cheddar increased by 0.5ppl between 2012/13 and 2013/14 and are 0.2ppl lower than in 2003/04.

Retail gross margins on mild Cheddar decreased by 4.8ppl between 2012/13 and 2013/14 and have increased by 12.4ppl in the past 10 years.

Margins (M) and prices for mild Cheddar

2003/04 2012/13 2013/14

ppl M ppl M ppl M

Farmgate price 18.3 28.4 32.6

Processor gross margin 3.3 15% 2.6 9% 3.1 9%

Processor selling price 21.7 31.1 35.7

Retail gross margin 12.5 37% 29.7 49% 24.9 41%

Retail price 34.1 60.7 60.5

Note: All figures are estimates and subject to rounding.

Source: AHDB/DairyCo Cheddar Supply Chain Margins 2014.


UK mild Cheddar margins

46

Prices and gross margins* for mild Cheddar** 2000 to 2014

70

60

50

40

30

20

10

0

Farmgatemilk price

Mild Cheddarprocessorgross margin*

Mild Cheddarretailergross margin*

Apr

00

Apr

01

Apr

02

Apr

03

Apr

04

Apr

05

Apr

06

Apr

07

Apr

08

Apr

09

Apr

10

Apr

11

Apr

12

Apr

13

Apr

14

penc

e pe

r lit

re

*The gross margin equals the difference between the selling price and buying price.

**Retailer private label, excludes branded products.

Data for the past 2 years has been revised based on the latest figures and may not exactly match past reports.


47

Processor gross margins on mature Cheddar decreased by 0.3ppl between 2012/13 and 2013/14, although they are 0.6ppl higher than ten years ago. Retail gross margins on mature Cheddar have decreased by 4.4ppl between 2012/13 and 2013/14 and have decreased by 4.8ppl in the past 10 years.

Margins (M) and prices for mature Cheddar

2003/04 2012/13 2013/14

ppl M ppl M ppl M

Farmgate price 18.3 28.4 32.6

Processor gross margin 4.7 21% 5.6 16% 5.3 14%

Processor selling price 23.1 34.0 37.7

Retail gross margin 31.9 58% 31.5 48% 27.1 42%

Retail price 55.0 65.6 64.8

Note: All figures are estimates and subject to rounding.



UK mature Cheddar margins

48

Prices and gross margins* for mature Cheddar** 2000 to 2014

80

70

60

50

40

30

20

10

0

Farmgatemilk price

Mature Cheddarprocessor margin*

Mature Cheddarretailer margin*

Apr

00

Apr

01

Apr

02

Apr

03

Apr

04

Apr

05

Apr

06

Apr

07

Apr

08

Apr

09

Apr

10

Apr

11

Apr

12

Apr

13

Apr

14

penc

e pe

r lit

re

*The gross margin equals the difference between the selling price and buying price.

**Retailer private label, excludes branded products.

Data for the past 2 years has been revised based on the latest figures and may not exactly match past reports.


49

Milk Marketing Observatory

The European Milk Market Observatory (MMO) was set up in April 2014 to strengthen the EU Commissions ability to monitor the dairy market and assist the industry in adapting to life after quota. The aim of the MMO is to provide the EU dairy sector with more transparency by means of disseminating market data and short-term analysis in a timely manner.

Private Storage Aid

The 2013 Private Storage Aid (PSA) scheme closed in August with 89,615 tonnes of butter placed into storage, 33% less than 2012 and 15% less than 2011. The PSA scheme for butter is not currently open although remains available to the EU as a market management tool.

140,000

120,000

100,000

80,000

60,000

40,000

20,000

0

Tonn

es

2013 2012 2011

AprMar May Jun Jul Aug

Source: EU Commission.


EU market management measures

50

Common Agricultural Policy (CAP)

From 1 January 2015, the latest CAP reform will come into effect. Implementation will vary across GB based on decisions made by each of the devolved governments. For full details, please check the following websites:

For England:

gov.uk/government/collections/common-agricultural-policy-reform

For Scotland:

scotland.gov.uk/Topics/farmingrural/Agriculture/CAP

For Wales:

wales.gov.uk/topics/environmentcountryside/farmingandcountryside/cap/?lang=en

51


UK quota position

UK quota position (butterfat adjusted) 2012/13 (million litres)

Note: These figures are taken from information provided by the RPA which list: Quota (million litres) by region, Butterfat (BF) adjusted volumes delivered, difference between butterfat adjusted deliveries and quota in litres and % difference of butterfat adjusted volumes to quota.

Source: RPA.

Scot

land

Quota 1,332

BF Vol 1,280

Diff. -52

% Diff -3.9%

Nor

th

Quota 2,104

BF Vol 1,878

Diff. -226

% Diff -10.7%

Mid

land

s

Quota 3,071

BF Vol 2,618

Diff. -452

% Diff -14.7%

Sout

h W

est Quota 3,554

BF Vol 3,080

Diff. -474

% Diff -13.3%

Sout

h Ea

st

Quota 823

BF Vol 657

Diff. -166

% Diff -20.1%

Wal

es

Quota 1,710

BF Vol 1,540

Diff. -170

% Diff -9.9%

Scotland

North

Midlands

Wal

es

South West

SouthEast

52

Lower milk production during the 2012/13 milk year will have reduced stocks of dairy product. Imports of some products will have increased to meet domestic consumer demand, while there will have been limited availability of product for export. Milk production in the latter part of 2013 allowed for increased dairy product production, with the production volume of all products increasing on 2012, with the exception of cheese. However, exports did not necessarily reflect this as some product will have been used to build up stocks.

Production Imports Exports Domestic use

Raw milk (a) (million litres)

2003 14,583 105 399 14,290

2012 13,451 129 466 13,113

2013* 13,546 132 473 13,205

Butter (b) (000 tonnes)

2003 131 118 44 207 (c)

2012 145 104 38 211

2013* 145 105 45 205

Cheese (000 tonnes)

2003 351 316 90 577

2012 397 444 126 715

2013* 388 469 125 732

Cream (d) (000 tonnes)

2003 321 15 114 222

2012 250 31 69 212

2013* 304 22 44 282

Milk powders (e) (000 tonnes)

2003 216 45 173 65 (c)

2012 89 72 89 86 (c)

2013* 110 67 86 91


UK dairy trade balance

*Provisional.

53

(a) Raw milk data is aggregated from surveys run by Defra, RERAD and DARD, on the utilisation of milk by dairies.

(b) Includes butterfat and oil, dehydrated butter and ghee.

(c) Includes stock changes.

(d) Fresh, frozen and sterilised.

(e) Includes full cream powder, whole milk powder, partially skimmed milk powder and skimmed milk powder.

Note: Butter and cream includes production from the residual fat of low fat milk products.

Butter, cream and cheese production includes farmhouse manufacture.

Source: Defra, AHDB/DairyCo.

UK dairy imports and exports

500

400

300

200

100

0

Tho

usan

d to

nnes

2012 2013*2003

Butte

r imp

ort

Butte

r exp

ort

Chee

se im

port

Chee

se ex

port

Crea

m im

port

Crea

m ex

port

Milk

powd

ers im

port

Milk

powd

ers ex

port

*Provisional.

Source: Defra, AHDB/DairyCo.

54

The European Dairy Association has forecast a 34% rise in EU SMP exports in 2014. Butter exports are also forecast to increase while cheese exports are expected to decline by around 1%.

Production Imports Exports Use (a)

Liquid milk (000 tonnes)

2010 EU-27 32,703 3 173 32,533

2013 EU-28* 32,700 5 410 32,295

2014 EU-28** 32,800 5 480 32,325

Butter (000 tonnes)

2010 EU-27 2,010 40 161 1,974

2013 EU-28* 2,110 44 128 2,027

2014 EU-28** 2,180 45 140 2,045

Cheese (000 tonnes)

2010 EU-27 9,237 83 676 8,908

2013 EU-28* 9,595 76 788 9,128

2014 EU-28** 9,725 75 780 9,230

SMP*** (000 tonnes)

2010 EU-27 1,080 4 379 800

2013 EU-28* 1,190 5 410 783

2014 EU-28** 1,350 5 550 780

(a) includes use from stocks.

*Provisional.

**Forecast.

***Skimmed Milk Powder.

Note: These figures ignore trade between EU member states.

Source: EDA.


EU dairy balance sheet

55

Exports from North America are forecast to fall in 2014, according to the USDA, while exports from other regions are expected to increase. New Zealand Whole Milk Powder (WMP) exports are still expected to increase as Asian and African countries maintain a healthy demand for milk powders while the EUs Skimmed Milk Powder (SMP) trade is also expected to increase.

Exports by selected countries (000 tonnes)

2010 2013* 2014 (f)

Butter/Butteroil (a) 000 tonnes

N. America 60 98 75

S. America 20 22 24

EU-28 154 120 120

New Zealand 487 530 572

SMP** (b) 000 tonnes

N. America 390 571 550

S. America 20 16 15

EU-28 379 415 475


WMP*** 000 tonnes

N. America 10 12 12

S. America 142 202 224

EU-28 445 370 375

New Zealand 1,064 1,365 1,450


World dairy trade

56

2010 2013* 2014 (f)

Cheese (c) 000 tonnes

N. America 188 321 316

S. America 53 49 53

EU-28 676 800 825


(a) Includes AMF equivalent.

(b) Includes Non-fat Dry Milk.

(c) Excludes fresh cheese.

*Provisional.



(f) forecast.

Source: USDA Foreign Agricultural Service.

Exports for selected countries

2,500

2,000

1,500

1,000

500

0

Tho

usan

d to

nnes

SMP** (b)

2010 2013* 2014 (f)

WMP*** Cheese (c)Butter/Butteroil (a)

*Provisional.



(f) forecast.

Source: USDA Foreign Agricultural Service.

57

Consumer

UK average household consumption

The annual average consumption of liquid milk fell by 8.1% between 2002 and 2012 while yogurt and fromage frais consumption increased by 19.2%.

Average purchase (quantity/head/annum)

Unit 2002 2011 2012

Total liquid milk

Litres

85.3 78.3 78.3

Whole milk* 28.9 18.5 15.4

Semi-skimmed milk 47.8 51.1 54.7

Skimmed milk 8.6 8.7 8.2

Yogurt and fromage frais 8.5 10.4 10.1

Cream 1.0 1.2 1.3

ButterKg

1.9 2.1 2.1

Cheese 5.8 6.2 5.9

Expenditure (/head/annum)

2002 2011 2012

Total liquid milk 43.7 50.5 49.0

Whole milk* 15.0 11.5 9.3

Semi-skimmed milk 24.5 33.3 34.4

Skimmed milk 4.1 5.7 5.3

Yogurt and fromage frais 17.4 25.8 27.1

Cream 2.8 4.2 4.4

Butter 5.7 9.6 10.4

Cheese 30.1 41.8 41.9

*Includes full price whole milk and excludes school & welfare milk, includes UHT (Ultra Heat Treated).

Note: These figures only measure dairy products consumed in the home. It does not include those consumed out of the home or as an ingredient, eg cheese in a ready meal.

Source: Defra family food survey, AHDB/DairyCo.

58

60

50

40

30

20

10

0

Litr

es/h

ead/

annu

m

2011

Wholemilk*

Semi-skimmedmilk

Skimmedmilk

Yogurt andfromage frais

Cream

20122002

*Includes full price whole milk and excludes school and welfare milk, includes UHT.

Source: Defra family food survey, AHDB/DairyCo.

UK average household consumption

59

Consumer

Liquid milk retail prices

140

120

100

80

60

40

DoorstepTotal retailTotal market

Apr

12

Jun

12

Aug

12

Oct 1

2

Dec

12

Feb

13

Apr

13

Jun

13

Aug

13

Oct 1

3

Dec

13

Feb

14

Apr

14

ppl

In the year ending April 2014, the average price of liquid milk increased by 0.4% compared to the previous 52-week period. The average price for doorstep milk increased by 9.0% year-on-year.

ppl for 52-week period ending

Apr-13 Apr-14 % change

Total 61.6 61.8 0.4

Retail 59.3 59.4 0.3

Doorstep 119.3 130.0 9.0

Source: Kantar Worldpanel.

Retail prices for liquid milk


60

Consumer

Branded vs private label liquid milk retail prices

For the year ending April 2014, private label accounted for 80.4% of the total GB liquid milk market in volume terms.

Branded liquid milk

52-w/e Apr-13 52-w/e Apr-14

Volume (million litres) 898.0 858.2

Expenditure ( million) 666.0 666.4

Average price (ppl) 74.0 78.0

Private label liquid milk

52-w/e Apr-13 52-w/e Apr-14

Volume (million litres) 4,110.7 4,256.2

Expenditure ( million) 2,302.8 2,373.8


Other liquid milk*

52-w/e Apr-13 52-w/e Apr-14

Volume (million litres) 202.1 179.1

Expenditure ( million) 241.4 233.0


Note: Branded and Private Label liquid milk is based on Kantar definition.

*The majority (99.96%) of other milk is doorstep delivered milk.


61

Consumer

Liquid milk sales

5,400

5,300

5,200

5,100

5,000

4,900

May

10

Aug

10

Nov

10

Feb

11

May

11

Aug

11

Nov

11

Feb

12

May

12

Aug

12

Nov

12

Feb

13

May

13

Aug

13

Nov

13

Feb

14

Mill

ion

litre

s


The total liquid milk market in GB grew to almost 5.3 billion litres in the year ending April 2014.

Doorstep market share has fallen to 3.4% for the year ending April 2014.

52-week period ending

Apr-13 Apr-14 % Change

Liquid milk volume sales

Volume (million litres) 5,210.7 5,293.5 1.6%

Expenditure ( million) 3,210.2 3,273.1 2.0%

% market share (volume)

Retail 96.1% 96.6%

Doorstep 3.9% 3.4%


Liquid milk market volume

62

Consumer

Pasteurised milk

Semi-skimmed milk purchases represent almost 62% of the total GB pasteurised milk market in volume terms for the year ending April 2014.

Pasteurised milk volume sales


Apr-13 Apr-14

Whole milk 22.6% 22.2%

Semi-skimmed 61.7% 61.8%

Low % fat milk 5.4% 5.5%

Skimmed 10.3% 10.5%

Total (million litres) 4,448.7 4,584.7

Note: % will not add up to 100% as pasteurised includes other types.


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Consumer

Organic and filtered milk sales

The volume of organic milk sales increased by 4.7% between April 2013 and April 2014. Over this period, the average price increased by 3.1% to 86.2ppl.

Organic milk has a 2.7% volume share of the total GB retail liquid milk market.

Organic milk sales



Volume (million litres) 134.5 140.8 4.7%

Expenditure ( million) 112.4 121.4 7.9%

Average price (ppl) 83.6 86.2 3.1%


Filtered milk sales

The filtered milk market saw volumes fall by 11.0% between April 2013 and April 2014.

In volume terms, filtered milk accounts for 5.5% of the total GB retail liquid milk market.



Volume (million litres) 326.2 290.2 -11.0%

Expenditure ( million) 252.2 236.9 -6.1%



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Consumer

Modified and UHT milk sales

Modified milk currently accounts for 0.1% of the total GB liquid milk market in terms of volume.

Modified milk is classified as milk with additives to provide further nutritional benefits.

Modified milk sales







UHT milk sales

Volume sales of UHT milk fell by 7.9% between April 2013 and April 2014 to 280.5 million litres. UHT milk sales represented 5.3% of the total GB liquid milk market in volume terms.

The average price of UHT milk increased by 5.5% to 66.9ppl in April 2014.







Other6 pint

4 pint2 pint

2 litre

1 pint

1 litre

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Consumer

Milk purchases by container type

Nearly half of milk purchased by consumers in GB was in a 4-pint container in the year ending April 2014.

Container size Milk volume (million litres) % share

1 litre 453.1 8.6%

1 pint 303.7 5.7%

2 litre 820.0 15.5%

2 pint 517.5 9.8%

4 pint 2,641.6 49.9%

6 pint 451.0 8.5%

Other 110.2 2.1%

Total 5,297.1 100.0%

Note: Data for the 52 weeks ending April 2014.


Milk purchases (%) by container size for the year ending April 2014

Source: Kantar Worldpanel, AHDB/DairyCo.

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Consumer

Cheese market

GB volume sales in the cheese market increased by 0.3% between 2013 and 2014.

The average cheese price rose by 2.8% between 2013 and 2014.

Cheese sales


May-12 May-13 May-14

Volume (tonnes) 408,703 415,834 417,263

Expenditure (million) 2,626 2,703 2,788

Average price (/kg) 6.43 6.50 6.68


Volume sales by cheese type (tonnes)



Total Cheddar 225,739 228,273 227,058

Hard continental 16,986 18,893 18,848

Soft continental 25,962 26,977 30,438

Territorials ex. blue 32,664 32,329 30,002

Processed 40,609 40,182 39,096


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420

400

380

360

340

Thou

sand

tonn

es

20132010 2011 2012 2014

250

200

150

100

50

0

Thou

sand

tonn

es

2013

TotalCheddar

Hardcontinental

Softcontinental

Territorialsex. blue

Processed

20142012

Note: Data for the 52 weeks ending May.


Volume sales by cheese type



Average cheese price (/kg)



Cheddar 6.37 6.44 6.58

Hard continental 9.18 8.86 9.42

Soft continental 6.38 6.29 6.55

Territorials ex.Blue 6.79 6.70 6.95

Processed 6.51 6.66 6.87


Cheese volumes sales

68

Consumer

Cheddar market

Volume sales of Cheddar in GB fell by 0.5% from 2013 to 2014.

The average price of Cheddar (all types) increased by 2.2% to 6.58/kg between 2013 and 2014.

Volume sales by cheese type (tonnes)



Mild 39,014 35,826 36,694

Medium 16,244 16,739 7,167

Mature 109,043 106,457 111,833

Extra mature 39,981 44,390 40,900

Vintage 5,015 5,642 4,916

Farmhouse 5,379 4,781 3,665

Other and full flavour 11,062 14,438 11,882

Total Cheddar 225,739 228,273 227,058


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Source: Kantar Worldpanel, AHDB/DairyCo.

Average price (/kg)



Mild 5.64 5.76 5.81

Medium 6.47 6.37 6.46

Mature 6.41 6.47 6.58

Extra mature 6.70 6.83 7.06

Vintage 7.52 7.73 8.49

Farmhouse 6.64 7.01 7.85

Other and full flavour 6.65 6.10 6.35

Total Cheddar 6.37 6.44 6.58


120

100

80

60

40

20

0

Thou

sand

tonn

es

2013

Mild

Mediu

m

Matur

e

Extra

matu

re

Vintag

e

Farm

hous

e

Othe

r and

full fl

avou

r

20142012

Cheddar volume sales

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Consumer

EU butter consumption

UK butter consumption, at 3.4kg/capita/annum in 2012, was less than half that consumed in France.

Kg/capita/annum

2008 2011 2012

EU-27 3.6 3.6 3.7

Denmark 1.8 1.8 1.8

Germany 6.2 6.1 6.2

France 7.5 7.6 7.4

Ireland 2.4 2.4 2.4

Italy 2.4 2.3 2.3

Netherlands 3.3 3.3 3.3

Poland 4.3 4.2 4.1

Spain 0.5 0.5 0.6

UK 2.8 3.1 3.4

Sweden 1.5 1.7 1.8

Note: Figures may include butter produced from other animals.

Source: Dutch Dairy Board.

71

Consumer

EU liquid milk consumption

The UK is one of the highest consuming countries of liquid milk in the EU-27, with approximately 103 litres consumed/capita/annum in 2012.

Litres/capita/annum

2008 2011 2012

EU-27 63.0 62.4 62.2

Denmark 87.8 85.9 87.4

Germany 53.4 53.1 53.4

France 57.3 52.8 52.7

Ireland 139.0 135.9 135.9

Italy 52.6 54.3 52.8


Poland 42.7 41.2 41.0

Spain 81.7 81.7 80.8

UK 100.6 104.3 103.1

Sweden 100.4 89.2 89.4

Note: Figures may include milk from other animals.


72

Consumer

EU cheese consumption

Cheese consumption in the UK was around 11kg/capita/annum in 2012 approximately 6kg less than the EU-27 average.

Kg/capita/annum

2008 2011 2012

EU-27 16.8 17.3 17.2

Denmark 16.4 16.6 16.4

Germany 22.2 24.2 24.3

France 26.9 26.3 26.2

Ireland 6.0 6.7 6.7

Italy 20.6 21.8 20.9


Poland 10.7 11.4 11.4

Spain 7.6 9.5 9.3

UK 11.8 11.0 11.2

Sweden 18.4 19.0 19.7

Note: Figures may include cheese from other animals.


73

Useful information

Conversion tables

Converting volumes/weights

1 litre = 35.1950 fluid ounces

= 1.75975 pints

= 0.21997 gallons

1 pint = 20 fluid ounces

= 0.56825 litres

1 kg = 35.2740 ounces

= 2.20462 pounds

1 tonne = 1,000 kg

= 2,204.62 pounds

= 0.98421 long ton

Converting volumes/weights of milk

1 litre of whole milk = 1.02969 kg

1 kg of whole milk = 0.97116 litres

Note: Due to rounding, there may be instances where individual figures differ slightly from the total given.

74

Useful information

UK dairy industry organisations

DairyCo

Agriculture and Horticulture Development Board Stoneleigh Park Kenilworth Warwickshire CV8 2TL

T: 024 7669 2051 email: [email protected] web: dairyco.org.uk

Dairy UK

93 Baker Street London W1U 6QQ

T: 020 7486 7244 F: 020 7487 4734 email: [email protected] web: dairyuk.org

The Dairy Council

93 Baker Street London W1U 6QQ

T: 020 7467 2629 F: 020 7935 3920 email: [email protected] web: milk.co.uk

75

Dairy Council for Northern Ireland

Shaftesbury House Edgewater Business Park Edgewater Road Belfast BT3 9JQ

T: 02890 770 113 F: 02890 781 224 email: [email protected] web: dairycouncil.co.uk

National Farmers Union

Agriculture House Stoneleigh Park Stoneleigh Warwickshire CV8 2TZ

T: 024 7685 8500 F: 024 7685 8501 web: nfuonline.com

Royal Association of British Dairy Farmers

Dairy House Unit 31 Abbey Park Stareton Kenilworth Warwickshire CV8 2LY

T: 0845 458 2711 F: 0845 458 2755 email: [email protected] web: rabdf.co.uk

76

Useful information

Internet sites for sourcing agricultural information

British Cheese Boardbritishcheese.com

Canadian Dairy Information Centredairyinfo.gc.ca

Dairy Australiadairyaustralia.com.au

DairyCodairyco.org.uk dairyco.org.uk/market-information/

Department for Environment, Food and Rural Affairs (Defra)gov.uk/defra

Department of Agriculture and Rural Development (DARD)dardni.gov.uk

Dutch Dairy Boardprodzuivel.nl

European Commission Agricultural Directorateec.europa.eu/dgs/agriculture/index_en.htm

Eurostat (Statistical Office of the European Union)epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/

Fonterra Co-operative Group(incorporating New Zealand Dairy Board) fonterra.com

Fonterra GlobalDairyTradeglobaldairytrade.info/

Food and Agricultural Organisation (FAO)fao.org

FAOSTAT Databasefaostat.fao.org

Ian Potter Associatesipaquotas.com

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International Dairy Federation (IDF)fil-idf.org

National Farmers Unionnfuonline.com

Organisation for Economic Co-operation and Development (OECD)oecd.org

Organisation of Petroleum Exporting Countries (OPEC)opec.org

Royal Institution of Chartered Surveyorsrics.org/

Rural Payments Agency (RPA)rpa.gov.uk

Scottish Government Statisticsscotland.gov.uk/Topics/Statistics/Browse/Agriculture-Fisheries

Statistics Canadastatcan.gc.ca

UK National Statisticsstatistics.gov.uk/hub

United Dairy Farmers (UDF)utdni.co.uk

United States Department of Agriculture (USDA)usda.gov/wps/portal/usdahome

University of Wisconsin Dairy Marketing and Risk Management Programfuture.aae.wisc.edu

Welsh Governmentwales.gov.uk/topics/statistics/?lang=en

World Trade Organisationwto.org

78

Useful information

About DairyCo

DairyCo is a levy-funded, not-for-profit organisation working on behalf of Britains dairy farmers. Our remit is to solve market failure in the dairy industry to tackle issues not currently being dealt with sufficiently to meet the needs of the industry.

Our four main strategies:

The provision of a world-class information service

Helping dairy farmers meet and manage environment needs and regulatory requirements

Helping dairy farmers increase their profitability through better business management

Promoting the positive perception of dairy farming with the general public

DairyCo is a division of the Agriculture and Horticulture Development Board (AHDB).

DairyCo is funded entirely by milk producers, via a statutory levy on all milk sold off-farm, at the rate of 0.06p per litre. This provides an annual income of around 6.9m.

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The Agriculture and Horticulture Development Board (AHDB) operating through its DairyCo division, seeks to ensure that the information contained within this document is accurate at the time of printing. No warranty is given in respect thereof and, to the maximum extent permitted by law, the Agriculture and Horticulture Development Board accepts no liability for loss, damage or injury howsoever caused (including that caused by negligence) or suffered directly or indirectly in relation to information and opinions contained in or omitted from this document

Agriculture and Horticulture Development Board 2014. All rights reserved. No part of this publication may be reproduced in any material form (including by photocopy or storage in any medium by electronic means) or any copy or adaptation stored, published or distributed (by physical, electronic or other means) without the prior permission in writing of the Agriculture and Horticulture Development Board, other than by reproduction in an unmodified form for the sole purpose of use as information resource when the Agriculture and Horticulture Development Board (Or DairyCo) is clearly acknowledged as the source, or in accordance with the provisions of the Copyright, Designs and Patents Act 1988. All rights reserved.

AHDB (logo) is a registered trademark of the Agriculture and Horticulture Development Board.

Agriculture and Horticulture Development Board Stoneleigh Park Kenilworth Warwickshire CV8 2TL

T: 024 7669 2051 E: [email protected]

dairyco.org.uk

Additional copies of this publication can be ordered from:

dairyco.org.uk or 024 7669 2051 (ask for DairyCo publications)

It can also be downloaded from dairyco.org.uk

Sign up to receive regular dairy market updates by email at dairyco.org.uk/sign-up

dairy statistics 2014

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