MILK LINK has cut its October milk price by 0.5p/litre to 17.45p for a standard litre (4% butterfat and 3.3% protein).
Chief executive Barry Nicholls said the decrease bought the co-op into line with the rest of the market.
“Milk Link is the only major dairy business not to have reduced its milk price this year.
“In a letter to suppliers, Mr Nicholls added: “For the last six months the investment you have made in processing assets has enabled us to support your milk price.
“In contrast, over the last 12 months we have witnessed a decrease in commodity prices with IMPE having reduced by circa 1.5p/litre driven by the mid-term review and strength of sterling.”
Farmers representatives, who have been working to keep prices stable until at least the New Year, said the cut was totally incomprehensible and unjustified.
But despite the talk of market realignment, it seems all the money saved will be ploughed into Milk Link‘s processing businesses.
Mr Nicholls said: “The revenues resulting from the price adjustment will support Milk Link‘s ongoing investment programme and the growth and development of the business.
“We do not expect any reduction in the prices of our consumer and retail ingredients products.”
That has left many observers questioning why Mr Nicholls adopted a price-cutting approach, which could lead to further market destabilisation, when he could have asked members to contribute more money through the firm‘s capital raising scheme.
Gwyn Jones, NFU dairy board chairman, said: “I am more than angry, this has shafted everything we have been working for this autumn.
“The timing could not have been worse and I am appalled at the way it has been handled.”
Tom Hind, NFU chief dairy adviser, said: “As far as the commodity market is concerned it has been strengthening this year and sterling is weakening now.
“Commodity prices are not being driven by CAP reform and IMPE is totally irrelevant because nobody is intervening at the moment.
Independent consultant Mike Bessey said that prices for butter and skimmed milk powder had dipped slightly over the year but mild and mature cheddar values had risen.
Farmers for Action leader David Handley, whose organisation is trying to get Arla Foods‘ recent 0.4p/litre cut reversed, said: “This is absolutely disgusting. For five years we‘ve been fighting processors on this issue and now we’ve got a co-op that is even worse.”
Quota broker Ian Potter who was at the Welsh Dairy Event when the news broke said: “It put a dampener on the whole day. It came as a complete shock to the other co-ops, they were stunned.”