There's only one winner in the milk price casino
Published 26/08/2015 | 02:30
An interesting analysis dropped in the email last Friday evening from the ICMSA.
They looked at the fluctuation in dairy prices at both the farmgate and on the supermarket shelf.
While the farmgate prices have oscillated by over 30pc since 2012, supermarket prices have only varied by 12pc in the case of cheese, 9pc for milk, and 7pc for butter.
It could be argued that this is ok if the average price throughout the four-year period was consistent, but again we find the farmer is falling behind.
While the average price for the litre of milk dropped by 5pc compared to the January 2012 base, the average retail price for cheese crept up 2pc, while butter and milk stayed static.
We should not be surprised that retailers managed to protect their margins by preventing prices slipping over time - they are the price setters after all.
And farmers won't like being told that their sale price is gradually sliding as costs rise relentlessly. However, this tends to be the nature of primary production.
As science delivers additional efficiencies in terms of breeding, feed production, and data capture, producers tend to slug it out until the most efficient are left standing.