Falling prices and increased volumes are challenging the dairy sector. First Milk has cut its price to producers due to “downward pressure on dairy markets”, and UK production has been hitting a 20-year high every month this year. Meanwhile, Graham’s The Family Dairy has struggled to cope.

“Our milk production was up by 10% this year, compared with last year. This is a real challenge for us as an independent family dairy business, as milk volumes must be in line with our customers’ needs,” said Robert Graham, managing director.

“We are having positive conversations with our dairy partners and colleagues to address these ongoing challenges, working together on the best way to understand what the milk supply needs to be, and deliver on it.”

As processing capacity is outstripped by supply, excess milk will be put on the market, having a downward effect on prices. Average UK price is 29p/l, slightly above the five-year average of 27.5p/l.

The UK milk future projections are also indicating an encouraging upward trend

First Milk has announced that its price will reduce by 0.3p/l from 1 June to 27.45p/l for liquid milk and 28.37p/l for manufacturing milk.

Jim Baird, First Milk vice-chair and farmer director, said: “Unfortunately, we now need to make this adjustment in light of the downward pressure on UK dairy markets. Looking forward, global dairy markets are looking more positive and, with peak largely behind us, the UK milk future projections are also indicating an encouraging upward trend.”

Market for dairy calves

Finding a market for male dairy calves was the subject of conversation at the Exiles dairy discussion group meeting in Dumfries last Tuesday.

Up until now, the only real market for these low beef-merit Holstein Friesian and Jersey-cross calves was for pet food production

The discussion group – primarily made up of spring-calving, grass-based dairy farmers in southwest Scotland and northwest England, are trying to find alternatives to slaughter for male dairy-bred calves.

Up until now, the only real market for these low beef-merit Holstein Friesian and Jersey-cross calves was for pet food production. But milk buyers, responding to concerns from the public, are beginning to enforce rules around minimum age for slaughter.

The dairy farmers say that finding an alternative market for these calves is difficult and that an industry-wide initiative needs to be put in place to reduce the number of low beef-merit calves, but also to find a market for beef calves from the dairy herd.

One farmer said it cost him £12/head to transport three-week-old Hereford-cross calves from his dairy herd near Dumfries to a market at Carlisle, only for the calves to make an average of £28 in the ring – below the cost of feed and transport.