The wholesale price of a litre of milk is to rise by 3p from Monday 4 November.
All of the increase, together with a further 2p per litre from Jersey Dairy, will be passed directly back to the 23 farms that supply the dairy, who are struggling to combat the effects of increased production costs, particularly imported animal feed.
Independent UK experts Kite Consulting, who for many years have audited the Jersey Dairy Costings Scheme, recently identified a 5p per litre shortfall in the price paid to local milk producers ‘to achieve a sustainable level of dairy farm profitability’, noting that industry earnings are at record lows. UK milk producers have received a 5p per litre increase over the last year.
‘Our production costs have risen appreciably in the past 12 months,’ explained Andrew Le Gallais, chairman of the Jersey Milk Marketing Board and owner of one of the Island’s largest herds. ‘In addition, an extremely wet winter, a late cold spring and a hot dry summer have combined to significantly reduce stocks of forage to feed our cows, forcing us to import costly feed from the UK.’
This latest increase means that the wholesale price of milk – the price at which the dairy supplies Island retailers – will have risen by 18% since 2002, less than half the rate of increase experienced in the UK. During that same time the Jersey RPI has increased by 45%.
The average local retail price of a litre of milk is currently 109p (including 5% GST) though prices do vary, from 99p upwards. Milk sourced from herds of Jersey and Guernsey cattle in the UK retails there for 110p (where milk is not subject to the application of either GST or VAT).
‘No one wants to increase prices in the current economic climate but it’s vital that our farmers receive a fair return to ensure the future of the Island’s dairy industry,’ said Jersey Dairy managing director Eamon Fenlon.
‘Islanders can take some comfort from the fact that the dairy has been able to fund 40% of the extra 5p per litre that producers will receive thanks to improved efficiencies and growing export sales, not just to the UK but to Spain, Japan, India and, shortly, to China.
‘The high quality of our milk – 18% higher in calcium and 20% higher in protein than the standard Holstein milk supplied in the UK – is what is driving those export sales, which is why it is vital that we give farmers this extra 5p now to ensure the viability of a successful dairy industry of which all Islanders can be proud.’