To ask the Minister of Agriculture, Environment and Rural Affairs for his assessment of the rise in the price of milk production price and the impact this will have on (i) farmers; and (ii) consumers.

The latest available data indicates that the NI milk producer price rose by 0.8 pence per litre in September compared to the previous month. This is 3.3 pence per litre higher (12%) compared to the same month in the previous year. It is also evident that there will be further upward pressure on the local producer milk price in the last quarter of 2021 as dairy commodity prices rose sharply in October and November due to tight supplies and strong demand. In particular, UK cheddar, skim milk powder, butter and bulk cream prices rose by 12%, 17%, 27% and 29% respectively between September and November.

Dairying is a key sector and contributes the largest share of total agricultural output in NI (30% in 2020). A 10% increase in the producer milk price over the course of the year would equate to an extra £66.7 million. However, input costs have also been rising, offsetting the impact of higher output prices. For more information on the impact of rises in input costs please see the responses to AQW 25849/17-22 and AQW 25693/17-22.

The extent to which the higher dairy commodity prices will be transmitted to consumers is unclear. For example, GB data indicates a mixed picture, with a 3% increase in the average retail 4 pint price of pasteurised milk between 5 September and 28 November but negligible changes in retail cheddar prices. This may reflect lags in the market but ultimately any rise in retail dairy prices would negatively impact consumer budgets.