Cream Income to a Liquid Processor

Published 27 June 14

 Cream Income to a Liquid Processor

  • The bulk cream price increased by £110/tonne (9%) between May and June to an average of £1,400/tonne.
  • The estimated cream income to a liquid processor increased by 0.62ppl (8.4%) to 7.98ppl in June. This is now 1.74ppl (17.9%) less than in June 2013.

(ppl)

June 2014

1 Month Before

12 Months previously

Cream income

7.98

7.36

9.73

Note: ppl change and percentage difference may differ due to rounding

Note: From April 2014, new % splits for milk purchases by fat type are used for the 2014/15 milk year.  Therefore the April figure has been re-adjusted  from the original figure of 7.50ppl

For further information on wholesale prices please click here

The price below indicates the trend in incomes, rather than an absolute value. The actual income effect and a precise increase in ppl will be difficult to obtain as this requires knowledge, on a daily or monthly basis, of the following:

  • Butterfat levels (which will tend to vary and be higher over the winter period).
  • Exact prices for bulk cream.
  • An exact breakdown of what product they are producing (i.e. whole, skimmed, semi-skimmed etc.).
  • The amount of cream wasted in the manufacturing process. 

For historical information on cream income please see Cream Income Sheet

Please note:

As part of the calculation for cream income to a liquid processor, the split of purchases of Whole, Semi-skimmed, Skimmed and low fat milk is calculated to estimate the level of butterfat required in the retail sector. This is updated annually with data from Kantar Worldpanel and the split for the 2013/14 milk year is now available.

This update takes place annually and the next update will be early in the 2014/15 milk year.

All liquid processors generate surplus cream as little liquid milk is now sold as whole milk. This surplus cream has a value with some sold to supermarkets in small pots and some sold in bulk, to be manufactured into other products.

Below is an outline of the trend in cream prices in terms of pence per litre for liquid milk processors.

Cream Income to a Liquid Processor 

Outline of how cream income is calculated 

  • The bulk cream wholesale price is based on the average price from 1 to 27 June 2014.
  • Prices have been compiled by talking to dairy product sellers, traders and buyers.  Views were taken for the period 1 to 27 June 2014. The published prices will not necessarily match the actual price received by a milk processor as this will depend, amongst other things, on the proportion of product that is sold on the spot market and the proportion sold under longer term contracts and at what price this is done.
  • The cream income to a liquid processor is based on the excess cream between the rolling butterfat average for a particular year (previous 12 months, not including the current month) and the average level of fat in liquid milk sold through the retail market (supermarkets, local stores and doorstep) for that particular year.
  • The value of the excess butterfat is then calculated on the basis of a litre of cream at 40%.
  • Calculation excludes any estimation of wastage in the manufacturing process.

The weighted average level of fat (whole, skimmed, low-fat and semi-skimmed) in retail liquid milk is calculated based on Kantar retail liquid data.