Muller’s Direct Milk DPO has raised its formula milk prices by 1.247p/litre; registering record increases for the second consecutive month.
The price rise for October lifts core and simplified formula standard litre contracts to 27.442p/litre and 27.252p/litre respectively and is the largest formula increase since April 2013.
Direct Milk DPO, which has about 200 producer members on formula contracts has now seen prices rise by 2.871p/litre over the past quarter.
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The DPO has seen formula price rises for three consecutive months, following seven previous months of price drops.
Strong cream prices have been the fundamental driver behind rising prices, with the AHDB reporting cream markets up 86% between April and August.
The price also reflects high concentrates prices, up 1.2% and red diesel, up 3.7% on figures from May.
Muller Milk and Ingredients (MM&I) is carrying out a review of all farmers’ contracts and has served notice on the payment schedules for both core and simplified formula pricing schedules.
MM&I will announce new arrangements on the 1 February 2017.
Direct Milk DPO represents 650 farmers who moved from Dairy Crest when Muller purchased its liquid milk arm in December 2015.