Market Update: Dairy price increases and Christmas supply chain challenges

23 November, 2021

Dairy price increases

We have referenced numerous categories within our previous blog posts covering the market price challenges, however one category that continues to be affected is dairy.

The UK dairy market produces in the region of 12.6 billion litres of milk per year. The dairy industry has been hugely affected by the current supply chain challenges, supply shortages and rising prices.

All input costs to the dairy supply chain have seen inflation; the rising costs of feed, fertiliser, energy and lubricants has resulted in the average milk prices rising above the five year average and these price increases are being passed on to consumers across all dairy products with so signs of letting up.

Milk prices are expected to rise by 15-20%, butter wholesale price is up by 10%, mild Cheddar up by 6% and bulk cream up by 12%.

Operators need to ensure they 'buy smart' by planning ahead as much as possible as dairy prices are predicted to continue to rise well into the first quarter of 2022.

We recommend you pay particular attention to your butter requirements as we predict further challenges ahead with potential further shortages.

Christmas supply chain challenges

The challenges we have been reporting throughout this year will only be compounded by increased volumes over the Christmas period.

Again, we suggest operators buy smarter by planning and placing Christmas orders as soon as possible to ensure deliveries reach you. It is also likely that Christmas products, such as crackers, will be on a one-delivery-only limit meaning that top-up orders and deliveries will not be available, further increasing the importance of planning ahead (wherever possible).

The fragile nature of the global supply chain has been realised over the last 18 months. We've seen the disastrous ripple effect that one disruption can cause across the entire supply chain and the knock-on affect this has to product cost and availability.

The food and drink supply chain has has always been a fast moving, time critical industry and this has been brought to almost a halt - and needless to say, with the seemingly never-ending challenges, we're continuing to feel the affects of each challenge.

And finally, it's important to mention that this is not just a UK issue - these challenges are being felt across the world.

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