UK – A report claims that retailer margins on dairy products have increased significantly over the past ten years, with the gross margin on mature Cheddar rising to as much as 60%.

According to the Milk Development Council’s (MDC) Dairy Supply Chain Margins 2003-04, there are industry concerns about the lack of transparency over supply chain margins and profits in the industry as a whole.
MDC chief executive Kevin Bellamy said: “The report confirms that weak commodity markets and processor competition have meant it is primarily retailers, and not farmers, who have benefited from improved liquid milk retail prices.” Bellamy pointed out that UK is a significant commodity producer of mild cheddar, skim milk powder and butter, and that it is these products which provide the base to the raw milk market. As with all commodities, they are sensitive to exchange rates and as sterling has strengthened, commodity prices have weakened and resulted in farmgate prices falling.
The report also states that the UK milk price is consistently the lowest in the EU, and that farmers should be able to obtain slightly higher prices out of a market that is working effectively.