The race for milk stepped up a gear this week with Dairy Crest being the latest processor to offer an enhanced volume incentive to its producers.

The company also announced a 1.5p/litre price increase for producers on liquid contracts, bringing the standard litre price up to 31.5p/litre from 1 June.

There are about 600 producers on standard liquid contracts.

The enhanced liquid volume incentive scheme will take the 2012-13 milking year as its base line, with the trigger point for bonus payments reduced to 2% growth.

Producers who meet at least 2% volume growth will receive an extra 2p/litre on all litres produced above the base year, with payments made quarterly.

“We are pleased to be able to increase our liquid milk price at this time,” said group procurement director Mike Sheldon.

“The start of the new milk year has not been easy for farmers and milk supply is not surprisingly becoming tighter. Markets are now responding and this upward movement will also be reflected in the milk price generated through our formula contract over the coming months.”
Mike Sheldon, Dairy Crest’s group procurement director

“The start of the new milk year has not been easy for farmers and milk supply is not surprisingly becoming tighter. Markets are now responding and this upward movement will also be reflected in the milk price generated through our formula contract over the coming months.”

The company would continue discussions with its producer group Dairy Crest Direct regarding the milk price for its cheese business, he added.

The new 12-month formula contract, which was signed by 175 producers, started in April this year at a base price of 29.95p/litre.

The contract tracks five key costs – bulk cream, retail liquid milk (four pints), concentrates, fertiliser and red diesel – before calculating a monthly price.

The May price for the contract was confirmed last week, with a slight drop of 0.033p/litre.

Producers on the formula contract are also eligible for the liquid volume incentive.

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