Possible disruptions in milk supply chain is expected in Great Britain due to the restrictions related to environment

Cow Milk

United Kingdom

Regulation & Compliances

Market & Price Trends

Adrian Cojocaru

Published Jan 7, 2022

According to Kite Consulting, a dairy consultancy agency, the worldwide demand for dairy products has grown by 2.1% per annum for the past decade. It is expected to continue, especially in developing economies.

However, the latest trends related to an environmental re-set are likely to slow the overall productivity increase. To illustrate, the government policies in New Zealand and the EU – both major dairy production areas – are already imposing direct restrictions on the ability of dairy farmers to produce more.

One of the officials stated that new land could not be converted to dairy farms in New Zealand as Nitrogen applications are restricted to 190kg per hectare, and a carbon tax is to be implemented within five years. At the same time, the Netherland allocated EUR 24 billion for farmers to leave the livestock sector. Dutch milk production is already down by 4% in the current year.

This may lead to a turbulent time for the milk market in the UK. British retailers will not want to pass on any price increase to consumers this spring; at the same time, they need to be careful about their relationships with processors. Once better prices can be reached on export markets, there will be stiff competition for milk. Thus processors supplying retailers will be competing for milk supply, which could migrate away from those supply chains.