Milk prices to increase by 12.6% this month

The increase, which was announced by the States yesterday, is intended to offset higher costs being faced by farmers while reducing – but not eliminating – financial losses at Guernsey Dairy.

Currently, the States said a litre of milk typically retails for between £1.40 and £1.55. However, with the cost of a litre at the dairy gate rising from £1.21 to £1.36 from 12 March, retailers may be expected to put up their prices by as much as 15p to maintain margins.

Farmers will receive 10% more from the dairy for the milk they supply.

The price hike is separate from the £723,000 of taxpayer funding provided to dairy farmers over the past six months, which was provided from the Budget Reserve specifically to offset large increases in the costs of fertiliser and feed caused by the Russian invasion of Ukraine. That support worked out at about 6.4p per litre of milk supplied over that period.

Dairy Management Board chairman Stuart Falla highlighted the significant decrease in standard public subsidies for dairy farming in Guernsey over recent years, but accepted that this had led to higher prices than were seen elsewhere.

‘If we compare ourselves with other jurisdictions, we typically look at the prices on the supermarket shelves,’ he said.

‘But government support for the dairy industry is way, way higher in the UK, EU, Jersey or Isle of Man compared to here.’

States funding through the annual dairy farm management payment was reduced from £2.025m. in 2014 to £1.025m. in 2019, which was partially offset by above-inflation milk price increases during the same period – 7.5% in 2017, 4.8% in 2018 and 6.2% in 2019, with inflation running at around 1-3% during that time.

The wholesale price was increased by 2% in January 2020, which was less than inflation of 2.4%.

There was no increase in 2021, followed by a 4.8% rise in January 2022, following a two-year period in which cumulative inflation had been 6.2%.