Four price drops in a row for Muller suppliers

Muller, the UK’s second-largest milk processor by producer numbers, has dropped its standard milk price by 0.5p/litre from 1 May.

The fall moves its farmgate milk price to 26.2p/litre for milk with constituents of 4% butterfat and 3.3% protein for its 700 Muller Direct farmers.

See also: Dairy wholesale markets stable as poor weather continues

Muller producers will benefit from a return of the retailer supplement, which will be worth 0.15p/litre in April and 0.2p/litre in May.

The move means the Muller price has fallen in four consecutive months, dropping by 4.3p/litre in 2018, equal to 14% of its value.

“Wholesale cream and butter values remain volatile and well below levels seen in the past few months, and although the weather has taken some of the edge off milk production, spring flush milk volumes for Muller Direct producers are expected to recover into May,” said Muller agriculture and milk supply director Rob Hutchison.

“Our strategy in the UK underpins a highly competitive milk price regardless of the short- or mid-term market conditions.

“Muller Direct farmers also have the option to benefit from some major initiatives designed to reduce the impact of market volatility. We look forward to discussing these directly with farmers over the coming weeks,” added Mr Hutchison.

Fixed price contract?

Last week, Muller hinted that its 700 Muller Direct farmers could see a fixed price element to milk contracts as a result of a supply deal struck with supermarket chain Lidl.

Muller Milk & Ingredients managing director Andrew McInnes said in a statement following the Lidl deal: “Locking a portion of [producers’] milk supply at a fixed price will significantly lower exposure to milk price volatility and we are confident that this move will be welcomed.”

Farmers Weekly understands that the deal could allow Muller’s 700 Muller Direct suppliers to lock in a proportion of milk at 28p/litre for a three-year period.

April milk price movers

Liquid litres (4% butterfat, 3.3% protein)

• First milk ⬇ 0.84p-1.4p to 26p/litre
• Dairy Crest ⬇ 1.25p to 27.92p/litre
• Yew Tree A litre ⬇ 1.5p to 26.5p/litre
• Friesland Campina ⬇ 1.073p to 29.288p/litre

Manufacturing litres (4.2% butterfat, 3.4% protein)

• Arla ⬆ 0.32p to 27.43p/litre
• Lactalis ⬇ 3.12p to 26.91p/litre
• Wyke ⬇ 1.04p to 28.62p/litre