Liquid milk processor gross margins are based on the difference between the wholesale price of liquid milk (as estimated by MDC Datum) and the DEFRA farmgate price. The DEFRA farmgate price is an average of all farmgate prices and will lead to small discrepancies in the absolute level of the margin. However, discrepancies should remain relatively constant year on year therefore the change in margins over the past 10 years should be accurate. In addition, cream income is ignored from the calculation – this will increase the processor margin. To view the range of farmgate prices currently being paid please click here.

Retail Liquid milk retail gross margins are based on the difference between the wholesale price of liquid milk (as estimated by MDC Datum) and the average supermarket retail price of liquid milk (fully weighted from TNS data).

For the latest on margins in the dairy supply chain, please click here.

The reason for not trying to more accurately estimate the farmgate price is that although it is possible to estimate a standard litre direct milk price – it is not possible to know the actual average direct milk price and price paid for milk from co-operatives.