11 January 2002

Milk price is cut as spot struggles

By Robert Harris

and Andrew Shirley

SEVERAL companies have announced milk price cuts as commodity markets come under pressure and spot milk prices continue to struggle.

But the main liquid milk processors are following Dairy Crests lead and are likely to hold prices until Apr 1. A spokesman for Robert Wiseman Dairies said he was not sure what would happen after that. Jonathan Ovens, chairman of Express Milk Partnership, said he had received no request from Express Dairies to look at prices. "As we talk the existing price is ongoing." Arla is understood to be following a similar line.

Nestlé has announced a standard litre cut of 1p to about 19.9p/litre for EODC from January. Senior milk buyer Will Mackereth could not rule out further price reductions either, blaming weak commodity prices, aggressive competition from New Zealand, and Argentina selling cheap skimmed milk powder into North Africa.

According to MDC Datums Dairy Market Update, ACC is to cut its price by 1p/litre at its Welsh creameries to around 19p/standard litre.

The Milk Group wrote to producers recently, warning that it was likely to cut prices from January, though meetings are still being held to finalise details.

Co-op Milk Link dropped its December farmgate price by 0.5p/standard litre, taking our EODC price to about 19.4p/litre. The company says more milk than expected had to be sold into lower-priced contracts.

First Milk maintained it had no definite plans to cut prices. "But there is extreme pressure. We have more milk than we expected, and the secondary market is appalling, with spot prices at 14-15p/litre," said a spokesman. "We are continuing to signal that January prices are under review."

Zenith expects to announce new prices "in the next few weeks".

While all of these changes come too late for our November Milk Price review, it does include several earlier cuts. Golden Vale reduced its standard litre price by 0.5p/litre. Midlands co-op lowered its base price by 0.6p/litre, and Lancs Dairies by 0.2p/litre. &#42