Milk sales tumble by £240m amid superstore price wars
Sales of fresh milk have fallen by £240 million in the past two years amid price wars in supermarkets and a decline in consumption.
While prices at the farm gate are beginning to rise amid falling supply of liquid milk, the latest figures demonstrate that the overall value of sales of liquid milk have fallen significantly because of the fight for low prices.
Total fresh milk sales fell by £180 million in 2015, and another £54 million this year, according to data from Neilsen for trade magazine The Grocer.
Own-label milk drew £80.5 million of the decline in value, as supermarkets fought to offer value in one of their most important products.
At the same time, dairy substitutes such as soya milk grew in value – with Alpro notching up a 19.7 per cent increase in sales to £114.3 million.
Shropshire NFU spokesman Oliver Cartwright said the dairy sector was working to mitigate the effects of falling prices on shelves.
"Shropshire dairy farmers have had it tough over the past couple of years," he said.
"The price was on the floor for far too long but the industry is resilient and our members have been buoyed by price improvements in the past few months.
"The NFU has been lobbying hard to get a better deal for the sector and the recent improvements are really encouraging, price rises have also been driven by the drop-off in supply and of course what is happening globally.
"Farmers are also thinking more about price volatility and how to manage the lows and the NFU has done a serious amount of work in the supply chain to improve contracts and champion the sector."
The study also found good news on the shelves of stores, as more space is now being given over to higher-priced products which pay a premium to farmers, including Arla's farmer-supporting products sold in Asda and Morrisons.
Mr Cartwright said: "Shoppers across the region are very supportive of British dairying and what is a great product, British food and drink will grace tables this Christmas and help to make the festivities extra special.
"We are also very encouraged by the news that premium dairy products are faring well in the market, as always though there needs to be a fair return at farm gate so we have a dynamic and sustainable sector in 2017 and beyond."
Milk prices paid at the farm gate have begun to grow in recent months as the balance of supply and demand in the market has shifted.
That has seen some dairy companies set their prices at about 30p per litre, although farmers will be on the lookout for a more long-term solution giving a consistently strong price after a devastating period of decline.
