Kite Consulting looks at what recent uncertainties in the milk market and over Brexit could mean to UK dairy farmers.
UK dairy prices are affected by supply, demand, currency changes, political pressures and competitive forces within the market. Global milk production is increasing currently at about 1-1.5% and the market has been relatively balanced.
UK has grown production and is likely to hit 15 billion litres in 2020. Growing production against a background of weakening domestic demand requires options to trade across borders to access new markets and remove seasonal surpluses.
Brexit created disturbance in those trade options in March as it was uncertain what rules would be in place on 30th March. Then came the delay to Brexit and the markets went back close to normal. We now face the prospect again of Brexit on 31st October, but this time the rhetoric is even stronger in favour of a “No Deal”. The political situation in Westminster is also so febrile that we may see an election this autumn as well, adding more uncertainty to the situation.