The Price of Milk: Should we be concerned?

Aug 10, 2015

As a coffee roaster based in a very rural area, it’s difficult not to be touched by happenings in the farming community, particularly when it involves a product intrinsically linked with our industry. During the past few days local dairy farmers have been hit by the news that Arla, Britain’s biggest milk co-operative, is cutting the price it pays for milk by 0.8p per litre. It now pays UK members 23.01p for each litre of milk. Since the announcement social media has been awash with comments and pleas for members of the public to buy local milk; this culminated in protests taking place across Cumbria this weekend, targeting some of the major supermarkets.

So should we be concerned about this? As an industry I think we should. And for those choosing to ply their trade in and around Cumbria, I also think they should be aware of these issues. Milk and coffee go hand in hand and although I now drink more black coffee than ever before, I still enjoy a flat white as part of my morning routine. Though I have no statistics in respect of this, the coffee industry must be a large consumer of milk. A 12oz latte, for example, is likely to use around 10oz of milk; a typical 4 pint (2.27 litre) bottle of milk is likely to produce 8 lattes. Over a busy weekend that is likely to be a substantial amount of milk consumed.

Looking back at the price of milk in the UK over the past few years it is easy to see why there is so much concern in the industry. The farm gate milk price[1] is as low as its been for the past 5 years and the price has been dropping since late 2013[2]:

Milk Prices

The reason being cited by DEFRA for this drop in price has been the adundance of supply in the market due to ‘consecutive months of high domestic milk production over the past year’. This reminds me of how the coffee futures market has affected the price of coffee: when there is a surplus of coffee in the world, or when bumper harvests are predicted, the price of coffee is likely to tumble. It was because of the fluctuating price of coffee that organisation such as Fairtrade were born with the aim of protecting farmers with a minimum price being paid for the coffee.

Cumbria is an ardent supporter of Fairtrade but I wonder how many establishments in the county are, on the one hand, serving Fairtrade branded products, and on the other using low-priced milk to produce their beverages?

For example, If I went shopping at Tesco today I would pay £1[3] for a 4 pint (2.27 litre) bottle of milk which translates to 12.5p per 12oz latte produced. If I shopped in Morrisons I would only pay 89p for the same amount of milk which is 11.1p per 12oz latte.

So can the coffee industry help in any way? I think we can. We can help simply by sourcing our milk more carefully. We might end up paying a bit more for it but then this might better reflect the true price of the products we are using. While not a huge user of milk, at Carvetii we are making a commitment to use the milk of two local producers:

Mawson’s of Bailey Ground are based in Seascale on the west coast of Cumbria. They process their own milk on site and deliver around the west coast and as far inland as Cockermouth. By my reckoning, if a coffee shop switches from supermarket priced milk to Mawson’s milk, the cost of producing a 12oz latte will increase by only 4p.

We have recently become involved with a second milk supplier, Stephensons Dairy of Morecambe. They currently produce a free range milk which guarantess a minimum welfare standard for cows. The milk is fully traceable to specific farms and is processed separately at the dairy. Having used the milk at a number of recent shows, I can atest to its quality and it is widely available across Cumbria. Again by my calculations, using milk of this quality would increase the production cost of a 12oz latte by around 4p.

It will be interesting to see the long term impact on the dairy industry in the UK, and in particular across Cumbria. It would be easy to sit back as a spectator, offering the occasional supportive Tweet. Better to get involved and at least try to make a difference.

  1. the average price paid to producers, net of delivery charges  ↩
  2. Source DEFRA  ↩
  3. Source My Supermarket  ↩