Milk Link has become the latest processor to cut its farmgate price from next month, following 2p/litre cuts by Dairy Crest, Wiseman and Arla last week.
Members will see their June price cut by 1.5p/litre, although this will be held for three months to give some element of stability. The move, blamed on significantly weaker returns from dairy ingredients and fresh liquid milk markets, will take a standard litre to 27p/litre.
“Although our price cut is less than most other major milk buyers, we recognise that the resulting drop in farm income will increase further the financial pressure on our members’ dairy enterprises,” Milk Link chief executive Neil Kennedy said.
“As such, to give members some stability during this very volatile period, the board has agreed that the June price will be held for both July and August.”
To try and ease the blow for producers, Milk Link also confirmed that it would pay a total of £5.95m in a 2011/12 processing interest payment to members at the end of May.
The total is £2m more than the previous year and equates to a 12.8% return on members’ qualifying loan balances. On average it will be worth about 0.58p/litre across the total volume of milk supplied in the previous season.
“Although the increase in the processing interest payment is welcome, I would like to reiterate that our main focus is on returning a sustainable milk price to our members,” Mr Kennedy said.
“As such, I and the rest of the Milk Link board regard this as our absolute priority and we are determined to shelter our members from the impact of what are very challenging economic and trading conditions.”
Milk link’s direct supply price schedules will also be reduced by between 1.5-2p/litre from 1 June, while the price for organic milk suppliers will be in line with the OMSCo alliance price.