26 January 1996

MDs 1p/litre rise aims to tempt more dairymen

MD FOODS is raising the price it pays to dairy farmers by about 1p/litre as it aims to increase its direct supplies and lower its dependence on Milk Marque.

As such, it is also offering financial help to producers who face a fine for leaving their current buyer.

The price rise comes less than a week after Milk Marque announced it was increasing its rates to milk buyers by an average 3% from April – a move the dairies said could not be justified by trends in the product markets.

But MDs milk procurement director Roger Clarke said the company had no choice but to lift payments if it was to maintain a programme of recruiting more farmers and so achieve better control over the compositional quality of its raw materials.

"Milk prices are becoming increasingly detached from the realities of the market," he said. In particular, butter prices, which last year benefited hugely from Russian buying (rising from £2400/t to £3000/t), were starting to wane.

The new MD deal will pay 3.18p a percentage point for butterfat and 3.66p a percentage point for protein. Ignoring all bonuses, this would take the price for 4.1% butterfat, 3.35% protein milk to 25.30p/litre compared with 24.06p/litre under the old system.

Including group and loyalty bonuses (worth 0.45p/litre for Premier Milk Producers and 0.25p/litre for other groups), volume bonuses and hygeine payments, this would take the price to 26.25p/litre. There is no seasonality schedule.

MD is also putting an end to its "Milk Marque plus a penny" commitment from next milk year. &#42