News

Müller ups milk price

7 Sep 2016

Müller has written to dairy farmers to confirm that its standard litre milk price will increase by an average of 1 penny per litre from October 1 2016.

Müller has written to dairy farmers to confirm that its standard litre milk price will increase by an average of 1 penny per litre from October 1 2016.

The company says the move reinforces Müller’s pledge to maintain a stable, competitive milk price at every point in the market cycle, and reflects a tightening of milk supply and a strengthening of global commodity markets.

At the request of its farmer board, Müller will start the process of aligning the milk price paid for its two liquid contracts, Müller Milk Group (ex- Müller Wiseman Dairies producers) and Direct Milk (ex-Dairy Crest producers).

The milk price harmonisation will be phased over time to ensure that all non-aligned dairy farmers supplying the business can benefit from the same standard liquid price.

“We are hopeful that dairy commodities markets have turned a corner and we will now see a sustained recovery,” said Lyndsay Chapman, Müller’s Agriculture Director. “Cream and butter values have shown improvements that are now starting to be realised in our business, although the latter is taking longer to recover due to the volumes of butter in storage. Better returns will lead to higher farm gate milk prices, and we are optimistic in this respect.”

The business has also reiterated its long held commitment to transparent farm gate pricing.

Müller says it will maintain a competitive standard milk price with a separate retailer supplementary payment aimed at its non-aligned producers (see notes to editors).

“It is important to stress that our standard price is competitive in its own right, but with the addition of the retailer supplement, actual realisations for Müller non-aligned farmers are substantially higher than those received by farmers supplying other processors who receive similar supplements but choose not to offer the same level of transparency,” said Chapman. “It is right that this additional and very welcome supplement is aimed at Müller farmers who aren’t already part of one of our supermarket aligned groups. We wouldn’t be able to achieve this if the supplement was simply absorbed into our standard litre price and, as a result, spread across all Müller suppliers including some aligned producers. Whether our farmers are in a supermarket group or not, it is our intention to optimise their actual returns each month.”

"Whilst there remains a long way to go before farmers' milk prices recover to a level which is sustainable, this is an important first step and acknowledgement that the markets are looking more positive,” said Roddy Catto, Chairman of the Müller Milk Group Farmer Board. “Müller's focus on adding value to milk meant that when the markets hit their lowest point we were not fully exposed to the very low returns being received by others in our industry. Nevertheless, this has been an extremely painful and challenging period for Müller suppliers and we now hope to see a sustained recovery. We will continue to work very closely with Müller to build on this positive first step. We are working as a combined farmer Board and we requested that Müller equalise the prices on its standard liquid contracts. The process has started this month, and the intention is to complete this as soon as possible."