Speculation is growing that farm-gate milk prices could reach 30p/litre by the end of the year. But farmers must avoid the temptation to lose focus, says Dairy Crest.
Instead, milk producers should be using this chance to invest in meeting the exact requirements of their contracts, something which not only benefits processors, but alsoleads to financial reward for farmers.
“There’s a lot of scope for individuals to change what they do,” says Stuart Marsden, Dairy Crest’s technical controller of milk purchasing. “Some dairy farmers are benefiting from the extra payments that are tied to fulfilling their contractual requirements, but there are others who are not taking advantage of what processors are offering. The variation that exists between suppliers never ceases to surprise me.
“Suppliers on the same contract can return differences of up to 5p/litre. Part of that is due to volume payment, but there is still variation in composition and hygiene which farmers could work to change.”
Based on a link between cheese yield and butterfat and protein ratios, Dairy Crest has begun to reward farmers a premium over the base price for specific fat and protein content.
For a farmer whose milk contains 3.8% fat and 3.2% protein, they will get up to 1.5p/litre more than one with 4.3% fat and 3.5% protein.
“It’s important to get the balance of fat and protein right for cheese manufacture, so we offer a significant reward for those who get it right,” says Mr Marsden.
Collection volumes, low Bactoscan and cell counts are also rewarded. “If a dairy farmer has the potential to cut down to every-other-day collections we encourage that.
“While it may be an expense for a farmer to invest in storage facilities, it is cost-effective for us, so we will reward it. If we collect 4000 litres a day, that supplier receives 0.4p/litre, but if it’s 8000 litres every two days, that goes up to 0.8p/litre.”
Above all, says Mr Marsden, a level production profile will help make the most of a contract.
“Like most processors, Dairy Crest has monthly seasonal adjustments in a bid to discourage high spring yields. Farmers should look carefully at supplies and see where there is opportunity to change.”
- Dairy Event guide – free with this issue
Despite recent milk price rises, getting the most out of milk contracts will be one of the topics for discussion at the Dairy Event on 19-20 September.
Paul Blewitt – Cornwall
Don’t rush to bring in big changes