Most people involved in dairy farming have a good sense of how milk production ebbs and flows through the seasons. To support this understanding, AHDB (Agriculture and Horticulture Development Board) tracks national production through its daily milk delivery survey and publishes results every week, together with forecasts of future output.
Although not every processor contributes to the data, the survey has proved accurate when compared with Defra’s official statistics, which are released slightly later.
For farmers, tracking this data can be useful.
By comparing current deliveries with previous years’ or with other milk-producing regions, it’s possible to understand whether we’re collectively producing more than the market needs or whether supply is tightening.
While these figures provide a good read-out on the UK market overall, it’s worth digging deeper into your own milk pool and supply chain.
Each milk buyer needs to balance their own supply and demand flows. Understanding these flows can help anticipate and explain price moves more clearly than national trends ever could.
“Milk buyers have always had the ability to set volume limits and to agree whether to collect some or all of the milk produced. The only change FDOM has brought in is the requirement to offer a non-exclusive contract to producers should a processor wish to set a volume limit on the milk their collect.”
NFU Dairy Board Chair Paul Tompkins
Clearer rules
Before the FDOM regulations came into force, most milk buyers managed volumes through discretionary price changes, using mechanisms like seasonal bonuses or deduction payments to nudge production up or down, often with little to no transparency to producers on which factors were being followed or how they were weighted.
Producers could also never be sure how much price movements were related to market trends or the result of deals further along the supply chain which could be financed through a milk-price drop to producers.
That informal approach has now been replaced by clearer rules. Under FDOM, buyers must by law set out clearly and follow an agreed milk pricing schedule, which can only be changed by agreement from both parties, otherwise the initial contract must stand.
The overall purpose of the legislation is not to set milk prices, but to deliver transparency, fairness, and a better understanding – and ultimately a closer relationship – between farmers and their milk buyers, rather than relying on purchaser’s discretion alone to management the production and flow of milk.
