First Milk flag© Tim Scrivener

Dairy co-op First Milk has reduced its milk price by 1p/litre from 1 February.

The price drop means its 900 suppliers will receive between 28.09p/litre and 28.4p/litre for standard litres at 4% butterfat and 3.3% protein.

Producers supplying the Lake District and Haverfordwest pools on a manufacturing contract of 4.2% butterfat and 3.4% protein will receive 29.45p/litre and 29.57p/litre, respectively.

See also: Farmer Focus: Milk price back on everyone’s mind again

The processor cited downward pressure in global commodity dairy markets in recent months as the reason for the cut and admitted a stronger business performance meant the price drop had initially been delayed from January.

The latest AHDB Dairy statistics show falls across the board for the average UK wholesale prices of dairy commodities in December.

Bulk cream and butter continued to fall in December 2017 from record highs seen last June, dropping by 14% to £1,800/t and 11% to £4,000/t on the month respectively.

Cheddar lost an average of £265/t to end the month at £3,000/t, while skimmed milk powder continued its slump, down 3% to an average of £1,230/t – with mountains of the milk powder in intervention stocks hanging over the market and squeezing prices.

Dairy market indicators Actual Milk Price Equivalent (Ampe) and Milk for Cheese Price Equivalent (MCVE) both dropped in the last month of 2017, down 9.6% and 8.6% to 26.4p/litre and 31.9p/litre, respectively.

January cut delayed

“Improvements in First Milk’s business performance meant we could delay a milk price reduction for January,” said Jim Baird, First Milk vice-chairman and farmer director.

“Recent market developments will affect our customer pricing mechanisms, however, and we can only pay a milk price linked to our returns.

“We understand this will be disappointing news for our members and remain completely committed to doing everything we can to reduce the impact of decreases in the market through our focus on quality and efficiency throughout our business, and through the development of our strong relationships with customers.

“Working together, we will deliver competitive returns to our members.”

Milk pool February 2018 price change  February 2018 price  
Midlands & east Wales
 
-1p/litre 28.40p/litre
Lake District*
 
-1p/litre 29.45p/litre
Scottish Mainland
 
-1p/litre 28.09p/litre
Haverfordwest*
 
-1p/litre 29.57p/litre
*Haverfordwest & Lake District prices are manufacturing standard litre (4.2% butterfat and 3.4% protein). Others are liquid standard litres (4% butterfat and 3.3% protein). Haverfordwest price quoted before Tesco supplement.