Blow to Shropshire dairy farmers as Müller drops milk price
Dairy farmers have been dealt another significant blow after Mülller announced plans to cut 1p per litre from the price it pays for milk from next month.
The Market Drayton-based dairy giant blamed a further downturn in the market for dairy products for its decision to further cut its costs from February 15.
The move, which came about thanks to a combination of high levels of milk supply from farms and poor demand for dairy products, brings the price it will pay for a litre of milk to Müller Milk Group suppliers to 21.35p.
It also deals a blow to farmers who began supplying to the group following the acquisition of Dairy Crest's dairies operation on Boxing Day. Mülller Direct Milk suppliers – those who moved from Dairy Crest contracts – will now be paid 20.69p per litre.
Mülller's agriculture director, Lyndsay Chapman, 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 farms 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 hit out at the move, Mülller's first price drop in five months, and warned that that the company was also considering the future of the Dairy Crest Direct formula, which allows suppliers to sell a certain amount of milk for a fixed price to cover costs.
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."
