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AMPE and MCVE updated to reflect latest costs
Thursday, 6 April 2023
Processing costs for dairy products were subject to further inflationary pressures in the fourth quarter of 2022, reducing the value of our market indicators AMPE and MCVE. These changes will be implemented in the April update (due out 25 April).
In Q4 2022, electricity and gas costs were slightly down on the previous quarter, declining by 3.4% and 4.2% from the previous quarter. On the other hand, overall inflation (as measured by the Consumer Price Index) rose by 2.5% on the quarter.
When compared with year earlier figures, gas and electricity were respectively 10.3% and 20.4% higher in Q4 2022, while overall inflation was up by 9.4%.
While the net impact of the latest quarterly cost movements is for average processing costs within both AMPE and MCVE to move up, they were only marginal increases. Overall, AMPE costs are now 0.05ppl higher than in the previous quarter, while MCVE costs are up by slightly more at 0.13ppl.
With both gas and electric prices seeing only minor increases, the main change was due to the steady upward trend in general inflation impacting on raw materials, maintenance and general administration costs. When compared to average processing costs in Q4 2021, costs have moved up by 0.8ppl for both AMPE and MCVE.
Note that this latest update only reflects cost inflation to December 2022. The next update will be in July 2023 following the ONS release of the 2023 Q1 cost indexes. A breakdown of the latest costs is given below:
The new costs include changes in:
- Energy costs based on the movement in the average prices of gas and electricity purchased by the manufacturing industry in GB as quoted by BEIS, up to Q4 2022.
- Labour costs based on the movement in the unit labour cost for the whole economy as quoted by ONS– these currently only go up to Q2 2022.
- Other costs based on the movement in inflation (CPI)from the 2020 update to Q4 2022
For further changes and to see how costs impact your own business, we offer an online spreadsheet that allows you to enter bespoke costs and milk quality into the calculations. This will then calculate unique indicators based on your own circumstances.
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