20 November 1998

0.4p/litre MM bonus

MILK Marque has announced a trading bonus for October supplies of 0.4p/litre, the first real price rise for three years.

Although this helps close the gap on its better paying rivals, prices stay among the lowest in the market.

The payment lifts the price for a standard litre (4.1% butterfat, 3.25% protein) from 18.2p to 18.6p/litre. A producer with 100 cows each averaging 6000 litres will receive just over £200 extra income for the month as a result.

The bonus was introduced after the uncertainty produced by the August selling round when dairy companies bid for just 83% of the 13.6m litres on offer. Rather than hold a further round at a lower price, MM added the unsold 2.3m litres to the 2m litre pool earmarked for more volatile short-term markets.

But much was sold in subsequent private contract deals at similar prices to those achieved in the actual round, thought to be about 20.7p/litre. The rest achieved a steadily improving spot price – daily values recently topped 28p/litre. Falling production and export of milk (by Milk Marque) for processing are thought to be behind the rise.

Payment is tailored to compositional values. For butterfat, this equates to 0.041p a %; for protein, 0.07p a %. The bonus will be reviewed each month – MM declined to forecast levels in November and December.

But industry consultant Mike Bessey suspects further decent bonuses ahead. "This months is better then I expected, and should have lifted producers spirits. And I would not have thought MM would want to raise everyones expectations without reason."

December spot supplies recently achieved 24-25p/litre, he says. "MM should have achieved decent prices through to the end of the year. After that, who knows?" &#42

Octobers bonus marks MMs first price rise for three years.