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Cost of Milk and Dairy Products Increases

The Agricultural Pricing Committee has decided to increase the minimum price that milk can be bought from dairy farmers, alongside the wholesale price of milk and dairy products. The price hikes can be traced to cost increases in the production and processing of milk, the governments website notes.

Price hikes traced to cost increases in production and processing of dairy

In an announcement on the government’s website yesterday, the Ministry of Food, Agriculture, and Fisheries announced that the Agricultural Pricing Committee – which sets the price at which milk is bought from dairy farmers – had decided to raise the minimum price of milk alongside the wholesale prices of milk and dairy products.

As noted in the announcement, the following price change came into effect on April 1, 2023: “Minimum price for category 1 (i.e. 1.fl) milk to farmers increases by 4.33%, from ISK 119.77 per litre [$0.88/€0.80] to ISK 124.96 per litre [$0.91/€0.83].

Additionally, the following price change will take effect on April 12, 2023: “The wholesale price of milk and dairy products set by the committee will generally increase by 3.60%.”

The announcement traces the decision to increase prices to cost increases in the production and processing of milk; since the last price determination in December 2022, the expense items within the operational costs of dairy farms have increased by 4.33%. During the same period, the processing and distribution costs of agricultural processing plants have increased by 2.74%, which serves as the basis for the increase in wholesale prices, as well as the increase in product prices.

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