Milk prices across 2017 were approximately 8.5p/l higher than those paid in 2016 based on milk league data.

Across the eight processors featured in the one million-litre monthly milk league, the average price paid for good quality milk in 2017 was 30.16p/l compared with 21.76p/l in 2016.

For a one million-litre producer, the increase in milk price is worth an additional £85,000 in annual income.

Costs of production have still to be deducted from this extra income, as do financial commitments on outstanding loans and overdrafts used to fund dairy businesses during the most recent downturn.

The parameters used to calculate the value of good quality milk are outlined in Table 1.

The final prices also include any additional bonus payments offered by processors for meeting the outlined TBC and SCC values.

At the outlined milk solids and hygiene levels, it would be realistic to expect just a small percentage of farmers to have realised the milk prices on good quality milk during the 2017 year.

Average quality

Therefore, the prices outlined for average quality milk are much more reflective of farm gate prices.

The parameters used to calculate the price for average quality milk are broadly in line with those for the average farm participating in CAFRE’s benchmarking programme (fat 4.01%, protein 3.23%).

Across all processors in 2017, the price for average-quality milk was 28.9p/l compared with 20.53p/l for 2016.

The price differential between good-quality and average-quality milk is worth an additional £12,600 in annual income for a one million-litre producer.

It is a significant increase and highlights the potential monetary reward from improving milk solids, and implementing good hygiene practices.

Base price

Milk prices from January to December 2017 had an average base price of 27.79p/l, up from 20.11p/l in 2016, but still falling short of 28.71p/l for 2014 and 31.27p/l for 2013.

Base prices started off in January 2017 on an average 25.28p/l, rising to 30.56p/l by December, which includes all winter bonus payments.

From February to April 2017, base prices continued to hold at an average of 25.28p/l.

However, with dairy commodities such as butter performing strongly, milk prices began to gain upward momentum from May onwards.

Base prices rose to 25.84p/l in May and 26.84p/l by June. In July, base prices hit 27.91p and as commodity markets experienced record prices for butterfat, base prices jumped to 29.28p/l for August.

September saw base prices reach 29.84p/l, increasing to 30.96p/l in October. Base prices reached their peak in November on 31.15p/l.