Some processors are playing Russian Roulette whilst others are understandably frightened

Escalating inflation at both processor and farm level appears unstoppable.  There are reports that some of our largest producers are cutting milk output due to labour shortages whilst those who have labour are facing cost inflations particularly if they were paying relatively low rates to skilled operators.

Three processors Ian has spoken to this week have basically said either customers accept price increases or risk not having the milk this winter.

The cost to processors of 4-pint poly cartons has increased by more than 2ppl and according to independent statistics Ian has received both wholesale gas and electricity prices have doubled in the past month.

A number of dairy farmers Ian’s staff have spoken to, are really struggling with increased costs and claim they can’t become more efficient.

When the reduced single farm payment hits their bank account in December many will realise its going to be very tough to make any profit if they are with a processor who is slow to increase farmgate milk prices.  Throw into the mix the certainty that in the next few weeks government will announce effectively a lump sum payment outgoers scheme based on previous BPS payments and overnight some processors could see farmers hang the clusters up in droves.

Ian says its getting perilously close to a lethal cocktail for those who suddenly decide enough is enough and leave their processor short of milk.