14 April 1995

Milk price rise is backdated

By Philip Clarke

MD FOODS is raising its milk price to suppliers by about 1p/litre from May 1, and backdating the increase to Nov 1.

The new schedule of payments is similar to the proposals published last month (Business, Mar 17) and follows consultations with MDs producer Forums.

The main changes are that a new top butterfat band of 4.4% paying 12.51p/litre has been introduced. The top protein level of 3.6% pays 12.75p/litre.

It has also been decided to soften the regime for somatic cell counts. The new deal pays a 0.2p/litre premium for 250,000 or less, compared with a 100,000 threshold under the original proposal.

The new payment scale will take an "average" MD Foods supplier, selling through a milk group, to over 25p/litre and should improve the companys standing in the various milk price league tables. This price is achieved as follows:

&#8226 4.1% butterfat content, paying 11.91p/litre.

&#8226 3.35% protein, paying 12.15p.

&#8226 TBC below 20,000, paying 0.2p.

&#8226 Cell count below 250,000, paying 0.2p.

&#8226 Group bonus, paying 0.5p.

&#8226 Volume bonus for 1500 litres/day, paying 0.3p.

"We have made the changes to keep us competitive," said commercial director Roger Clarke. "We were one of the first to come out with a price (at Smithfield 1993), but the market then moved away from us. It has taken several months for us to make a judgement on where it would settle down."

The retrospective element of the increase will be paid over three months. Milk groups under the Camelot umbrella have separate bonus arrangements. &#42