2 May 2013

2 minute read

Europe

Some of the key trends that have been identified in DairyCo’s 2013 Guide to Milk Buyers review highlight how the milk buyers are dealing with the challenges and opportunities facing the dairy industry.

“Three years ago, when we first looked into the strategy and performance of Britain’s largest milk buyers, most companies were pursuing very similar and largely indistinguishable business strategies,” explains AHDB/DairyCo analyst Julie MacLeod. “This report shows, how, over the last three years, the major milk buyers in GB are responding to increasing input costs coupled with greater market volatility. The biggest buyers are seeking to secure greater control of milk supply (the biggest input cost), production process costs and end market destinations.”

This strategy is seen as being critical to a sustainable future for the whole supply chain. “Milk producers who supply companies that are able to exploit growth in emerging and higher-value markets may gain through improved milk prices and by being less exposed to market volatility,” says Mrs MacLeod.

“Milk supply contracts have been developing to reflect the greater end market diversity. From this, dairy farmers have more opportunities to develop specific production systems which optimise milk composition and seasonality for their contract and hence income.

The impact of these changes on dairy farmers was reflected in the recent DairyCo Farmer Intentions Survey, which was conducted before the recent sustained rise in commodity prices, where those farmers who supplied milk for manufactured products showed the highest confidence ranking for the next 12 months.

“In addition to determining which sector of the market in which a buyer operates it and what impact this may have on the dairy farming business, it is also important for producers to look at whether these markets are in growth or decline,” says Mrs MacLeod. “A profitable but declining market does not necessarily offer security in the future and buyers must ensure they are adapting to market changes. How the companies are investing to match opportunities and how their main market segments are performing in terms of volume and value is discussed in the individual company reports.”