22 March 2002

Dairy Crest to cut milk price

DAIRY Crest, the UKs largest raw milk buyer, has announced it will cut its ex-farm milk price by 1.95p/ litre for three months from Apr 1.

The companys 1800 direct suppliers will receive 18.45-20.4p/litre.

Dairy Crest has held its prices through the winter, but overcapacity in the liquid milk sector and the collapse in commodity markets has hit hard. "The move reflects market-place pressures," said David Lattimore, managing director of direct supplies.

Maintaining prices through the winter, when other companies pruned theirs, cost Dairy Crest about £5m, he added. "We have been paying a significant premium to our direct suppliers. But when it starts to build towards 3p/litre, it is not sustainable."

Other big processors are still negotiating with farmer suppliers. But Dairy Crests move undercuts its rivals in the supermarket liquid milk business, and brings its prices into line with other cheese-makers.

One insider was surprised, and somewhat disappointed given the state of the market, that the cut had not been bigger. "They have done rather well for their suppliers – they must be selling into a different market than us."

Co-ops are also busy completing the last deals for April onwards, and expect to announce results in the next couple of weeks. "But it is clear they are going to have to adjust their prices again," was one industry comment. &#42