7 March 1997

Dairies pay less so milk cheque cuts on the way

By Phlip Clarke

DAIRY companies are pruning the prices they pay for direct supplies, leading to smaller milk cheques from April.

The moves follow the completion of the Milk Marque selling round which saw its rates to the trade drop by about 2p/litre (8%). With the prospect of cheaper milk from April, buyers are now realigning their direct contracts.

The biggest cuts so far come from Dairy Crest, which has taken almost 3p off its standard litre. Butterfat is to fall from 2.68p a % to 2.369p a % from Apr 1, and protein from 4.52p a % to 3.996p a %. For a standard litre of 4.1% butterfat and 3.25% protein, this takes the value down from 25.68p/litre to 22.70p/litre.

Quality premiums and group bonuses are not affected by the change, and the company is still guaranteeing to pay a 0.5p/litre premium over Milk Marque.

"I feel weve been conned," said one disgruntled producer supplying Dairy Crests Severnside dairy. "They painted a very rosy picture to tempt us away from Milk Marque and now theyve dropped us in it."

While he accepted some cuts were inevitable, the size of the reduction was way in excess of that justified by recent green £ revaluations.

Other leading buyers have also announced price cuts in the last few days.

Northern Milk Partnerships reductions take a 4.1% butterfat and 3.25% protein litre down by 1.9p to 22.80p/litre, before any quality or volume bonuses and before seasonality and haulage charges. This follows a more minor cut last December, when protein was also capped at 3.3%. Northern has also raised its premium for top quality milk from 0.3p to 0.5p/litre.

Unigate has announced a slightly more modest, but as yet provisional cut of 1.75p to 22.26p/litre from Apr 1 (again, before deductions and bonuses). It is also guaranteeing to maintain its "Milk Marque plus" premium of 0.8p/litre through to November.

Robert Wiseman Dairies, which pays on a flat rate rather than on a constituent basis, has also notified its suppliers of a 2p/litre fall. Milk of 4.1% butterfat and 3.25% protein will fetch 24p/litre from Apr 1, (before haulage) of which 1p is dependent on having a TBC below 15,000 and a cell count of less than 250,000.

Milk Marque members should hear in the next few days what their prices will be from April.