Cream income to a liquid processor
Updated 01 March 2021
This information shows the trends in incomes for liquid processors selling surplus cream. As little liquid milk is now sold as whole milk, all liquid processors generate surplus cream, which has a value. Some is sold to supermarkets, while some is sold in bulk to manufacturers of other products.
The price 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.
How it is calculated
- From January 2021, the bulk cream wholesale price is a weighted average of prices agreed on spot trades as reported in the AHDB wholesale price portal.
- Please note; the published price and the actual price may not match as this depends on a number of factors, including the proportion sold on the spot market as well as the proportion sold under long-term contracts.
- The cream income is based on the excess cream between the rolling butterfat average over the previous 12 months, and the average level of fat in liquid milk sold through the retail market.
- The value of the excess butterfat is then calculated on the basis of a litre of cream at 40%.
- Calculation does not include waste in the manufacturing process.
- 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 biannually with data from Kantar Worldpanel.