UK dairy company Müller will ring in the New Year by adding 2.5ppl to the milk price it offers farmers, the company announced Wednesday.
It had previously raised the price 2ppl effective 1 December. These increases mean that dairy producers will see their headline milk price increase by 7ppl at the end of January.
Müller pays farmers on non-aligned contracts 26.54ppl, or 25.44ppl with an expected retailer supplement of 1.1ppl.
“We are delivering on our commitment to offer a competitive and stable milk price throughout the market cycle,” said Lyndsay Chapman, agriculture director at Müller Milk & Ingredients.
“We know that farmers place a high value on the security of a contract with a dairy company who is investing for the long term and not so directly linked to volatile commodity returns which can change rapidly, exposing them to high levels of downside risk.”
Müller is also winding up 16 meetings it's held across the country with dairy producers to discuss future milk contracts and 'farmer representation' proposals, hoping to align supply with demand. These discussions were sparked by the expansion of the company's milk supply after the acquisition of Dairy Crest's dairy operations in December 2015.
Chapman said the company had heard 'strong, considered and sometimes conflicting views' at these events.
"It’s clear that in the past few years the whole dairy sector has suffered from supply and demand imbalance. Real damage has been caused to farmers and processors as a result of having to dispose of large volumes of excess milk at very low values when production surges, or conversely having to buy from third parties at high values when production falls."
"Going forward we want to keep as much value as possible within our own farmer/processor supply chain by developing a closer working relationship with farmers, and moving away from current industry thinking which tends to be short term and reactive."
In November, Müller Milk & Ingredients announced that it proposed to invest £60 million to upgrade capabilities and operational efficiencies at its processing facilities at Severnside and Foston with further enhancements to dairies at Droitwich, Manchester and Bridgwater. The project will create up to 180 new jobs.
© 2016 European Supermarket Magazine – your source for the latest retail news. Article by Karen Henderson. To subscribe to ESM: The European Supermarket Magazine, click here.
