Jersey Dairy is increasing the wholesale price of its milk by 8p per litre this morning in a bid to address what it describes as “significant” increases in costs - but it says that smaller farms will still be running at a loss.
The dairy, which is served by 13 farms providing 14 million litres of milk a year, said it had not seen “inflationary cost pressures of such a magnitude” for many years.
“The level of dairy farm cost increases, particularly fuel, purchased feed, fertiliser and wages are hitting farms hard and are set to erode all of the gains that our farmers have made in the past twelve months,” Jersey Dairy said in a statement,
The increase is the third in a row after a 6p rise in 2020 and a 5p wholesale price increase in 2021, the latter of which was also caused by increasing costs for local farmers. At the time, Jersey Dairy said it had been hit hard by the UK lockdown’s impact on exports, as well as rising cattle feed and staff costs.
According to data from Statistics Jersey, the price of milk increased by 4.1% in 2021 and by 13.9% over the last five years.
Pictured: Jersey Dairy is served by 13 farms providing 14 million litres a year.
Jersey Dairy said the price of Jersey Dairy fresh milk have risen by 28% over the last ten years, including the latest increase, less than the RPI in the Island which increased by 31%.
The latest increase was brought forward after an independent review of the business case for the dairy farms found farmers needed it “urgently”.
“The Dairy is owned by the farmers, and if they are to have a sustainable commercial future and continue to meet the market requirements for the wide range of products processed at Jersey Dairy, the price of milk needs to rise and so, the wholesale price of Jersey Dairy milk will increase by 8p per litre today [Monday 14 February 2022],” Jersey Dairy added.
Eamon Fenlon, the Dairy’s Managing Director said that the income raised from the price increase would be passed back to the farmers.
“However, this will be insufficient to address in full, the farm profitability issue that has been identified,” he added. “Smaller farms will continue to run at a loss and the larger farms should reach breakeven.”
Jersey Dairy said it had also suffered significant increases to its packaging, ingredients and operating costs and increased prices on its export products to absorb some of these cost increases and to continue to distribute profits to our farmers.
Pictured: Jersey Dairy said it had also suffered significant increases to its packaging costs.
“We fully understand the challenging times that we are all experiencing at the present time in the island, however, it is essential that Jersey Dairy implements these increases now if we want to have a sustainable commercial future and continue the environmental stewardship on our farms, along with a significant contribution to local food security,” Andrew Le Gallais, Dairy farmer and Chairman of the Jersey Milk Marketing Board, commented.
Jersey Dairy said they had sought the opinion of the Assistant Minister for Economic Development, Deputy Kirsten Morel, who supported the price increase.
Mr Le Gallais added: “Our avowed intention remains to provide a consistent supply of a wide range of fresh, nutritious dairy products, along with a rich variety of public goods, to secure the continued enhancement of our iconic pedigree Jersey Cow within our beautiful countryside.”
Meanwhile, Guernsey Dairy put up the price it sells a litre of milk for by 4.8% whilst paying 5.9% more to farmers or the raw milk it then treats and sells either as pasteurised milk, or as milk products like butter and cheese.
This was the first increase in the 'producer price' in two years and it aimed to reflect the “unprecedented rises” in input costs since the last price rise in 2020.
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