18 January 2016

2 minute read

Europe

Müller said the reduction of 1ppl from 15 February reflects a further weakening in the market for dairy products caused by very high levels of supply from farms coupled with poor demand for dairy commodities.

Milk prices offered by the company from 15 February will be 21.35ppl for Müller Milk Group (ex Müller Wiseman Milk Group) and 20.69ppl for Müller Direct Milk (ex Dairy Crest Direct). 

Lyndsay Chapman, Agriculture Director of Müller Milk & Ingredients said: “Our strategy is to add value to the milk we buy from the 2,000 dairy farmers who supply us and we remain committed to offering competitive milk prices and contracts.

"We are very aware of the pressures on farm resulting from the depressed marketplace and have tried to provide stability by maintaining the milk price since September, despite very difficult and declining market conditions.

“However, we cannot fully protect our dairy farmer suppliers from the realities of the market which continues to be badly affected by high levels of supply and very weak commodity prices. We have therefore had to reduce the milk prices we pay to our farmers by 1ppl, providing the required 30 day notice period.”

The National Farmers Union (NFU) has expressed its disappointment at the price drop, but said it considers the drop in the context of Dairy Crest and Müller holding their prices during recent months of difficult markets conditions.

This is the first announcement the now merged liquid business has made. The NFU says it is unfortunate this has to be negative news for its 2000 suppliers.

NFU dairy board chairman Rob Harrison said: “Farmers must have some guarantee that milk buyers are doing all they can to manage price volatility for their own businesses as well as their suppliers.

“The Dairy Crest Direct formula was one way to manage this volatility – one that was welcomed and adopted by their farmers. It’s concerning that Müller has now given notice on the core and simplified formula contracts. We need more milk buyers to offer such mechanisms to help manage volatility for the primary producer and the end user.

“Over coming months Müller needs to work with its two farmer groups – Müller Direct Milk and Müller Milk Group – to develop initiatives that work for both the suppliers and the company in managing volatility going forward.

“With continued levels of high milk production in the UK and across the world we also need to encourage shoppers to buy British dairy products where possible – something the NFU is leading on with the Back British Farming campaign. We’d like to challenge retailers, food service and manufacturing to take responsibility in doing this too.”

TheCattleSite News Desk