British Dairy Farmers Face Losses As Ukraine War Pushes Costs Up

(Bloomberg) -- British dairy farming is largely unprofitable after the cost of fertilizer, animal feed and fuel surged, the National Farmers Union said.

Moscow's invasion of Ukraine has boosted key input costs for farmers. Fertilizer shipments from Russia have stalled, putting pressure on prices, while exports of Ukrainian corn, used to feed cows, have declined to a trickle. That comes as European governments shift toward shoring up food security as high prices threaten an inflationary spiral.

“Rapid inflation of input costs, with fertilizer prices rising fourfold, animal feed rising by 70% and fuel costs continuing to soar, means that for most dairy farmers the cost of production is much higher than the price they are currently receiving for their milk,” said NFU Dairy Board Chair Michael Oakes.

Read: Wm Morrison Warns War and Inflation Could Hurt Profit and Sales

Retailers need to increase the price they pay to milk producers to 50 pence ($0.66) a liter, from 40 pence, to safeguard supplies, said John Allen, managing partner at Kite Consulting. That's the equivalent to just over 28 pence a pint. The price paid by consumers for a pint (0.57 liters) of pasteurized milk rose 17% to 49 pence in February from a year earlier, the biggest increase since 2008.

Read more: Britain's Food Sector Hit Hardest by Rocketing Energy Costs

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