Kite Consulting’s report confirms consumers will simply have to pay more for dairy products

Kite Consulting have released a very thought provoking 25-page report today which clearly confirms cost inflation at both farm and processor level has to be immediately recovered and passed up stream to consumers or risk product leaving the UK as exports.

 

“Farmers and processors simply cannot carry these costs”.

 

The report analyses both on farm and processor costs including energy, packaging, transport and other on farm costs, including feed, fuel, labour and fertilizer.

 

Kite have calculated to achieve just a breakeven price of 33/34ppl today the butter price will need to rise to north of £4,000 tonne (Today circa £3,200) and bulk cheddar to £3,500 tonne plus (today circa £3,00) 

 

In terms of AMPE and MCVE the report points to an urgent requirement for AHDB Dairy to immediately review its figures and assumptions.

 

Without these increases Kite anticipate UK milk production will fall in addition product will inevitably be diverted to more profitable export markets.

 

“Given the slim margins made by UK processors these costs cannot be absorbed by processors, and nor can they be passed back down the line to farmers, as they are facing their own inflationary challenges.  There is no choice but to pass these costs on to consumers through higher prices, and this will result in “new reset” prices for liquid milk, cheese and butter.”

It’s a great call to arms and balanced approach confirming both farmers and processors have to row in the same direction to find a profitable outcome for all.

 

To view the report, click on https://www.kiteconsulting.com/2021/11/01/project-reset-why-we-face-a-new-normal-in-dairy-product-prices/