Muller offers further increase in milk prices to farmers

The Market Drayton-based dairy is to add 0.5p per litre to the price it pays to 700 Muller Direct farmers, taking the price per litre to 30.5p.

Muller agriculture director Rob Hutchison said: “Global markets for dairy commodities like butter and cream are easing following the recent and unprecedented surge, with supply increasing and demand softening.

"However, we remain committed to offering a competitive milk price at each stage in the global dairy market cycle and are investing heavily to add value to the milk we buy.

“We are also working with farmer suppliers to ensure that production is more closely aligned with the requirements of our customers, and to introduce and encourage the use of tools which are designed to help manage milk price volatility.”

Muller Direct farmers are those whose prices are not aligned to supermarkets.

The price they received has risen by about half since the slump which took the farm gate price to close to 20p per litre in the depths of the crisis last year.

The price being paid is a new three-year high, and keeps the price close to the cost of production, helping farmers stay afloat after a long period of contraction which forced some out of the dairy industry.

Farmers have since called for more long-term visibility on prices, and 130 farmers have also taken part in Muller's 100 million-litre Direct Futures Contract.

That deal allows dairy farmers to fix a monthly price for up to quarter of milk production for up to 12 months ahead, offering higher levels of certainty over future milk price returns.

Earlier this month it was revealed that the company is to invest £100 million to grow its range of yoghurts and desserts – meaning investment and expansion in its three Shropshire factories.

The company wants to develop new products to let it move into new market areas, while growing sales in those where it is already a significant player.

As part of that the company says it plans to increase capacity and capabilities at its three Shropshire sites, including with the 10,000 sq m extension of the former Nom factory it runs in Telford, revealed in July.

That will double output from the Telford operation, which currently makes private label products for customers such as supermarkets, but it will also invest in its headquarters at Market Drayton, where Muller makes its own-brand products.