Dairy cows in a field© John Eveson/FLPA/imageBROKER/REX/Shutterstock

The UK arm of dairy processor Lactalis (Fresh Milk Company) has committed to a minimum standard milk price of 27.5p/litre for the entirety of 2017.

The commitment is a 2.5p/litre increase on Lactalis’s current milk price and gives its 140 producers a 12-month guaranteed return for their milk.

See also: Huge Dutch cow cull could be good for UK dairy prices

The deal came about following negotiations with Scottish producer organisation the Milk Supply Association (MSA).  

The new deal will protect producers from volatile dairy markets next year, but will offer a higher price should a market-related basket of prices rise above 27.5p/litre.

It is believed Lactalis will also agree production profiling and volume targets in conjunction with MSA.

Producer confidence

George Jamieson, Milk policy manager at NFU Scotland, said both parties deserved great credit for their announcement.

 “Looking at the dairy market futures price predictions, it appears to be both fair and reasonable and the ‘basket’ agreement should allow producers some confidence going forward into 2017.

“There is a baseline determined by good market analysis which could still rise with the market.”

He added: “Other processors are trying developing new milk contracts which remain voluntary code compliant, but many are not even close.

“NFUS believes there should be little or no scope for enforced pricing or contract terms which are not negotiated and agreed with producers.”