Dairy Crest and First Milk issue heavy January price cuts

Milk price pain has continued for dairy farmers, as two of the biggest processors issued more heavy cuts for January.

Dairy Crest has dropped both its liquid and manufacturing prices by 1.25p/litre, taking them to 25.79p/litre and 27.27p/litre, respectively.

First Milk has cut its liquid price by 1p/litre and its manufacturing contract by 1.1p/litre.

The co-op’s liquid milk producers will be paid 21.7p/litre while manufacturing farmers will receive 22.9p/litre.

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The almost 500 farmers on First Milk’s liquid contract will now be paid 10.8p/litre less than in May – a drop of more than one-third.

The news follows Arla’s decision to lower its member price by 1.63p/litre for December and cuts by smaller milk buyers such as Wyke Farms and Barber’s.

First Milk chairman Sir Jim Paice MP said the market indicators for the main dairy products have fallen further since the start of November.

“In order to put our milk prices in line with projected market returns, we need to reduce our milk prices further.”

Mr Paice added that First Milk was working on measures to manage future volatility and better align milk production with demand, with an announcement coming as soon as possible.

Big four processors milk price chart

World markets remain very weak, with yesterday’s fortnightly Global Dairy Trade auction seeing a 1.1% drop in average prices.

Butter, butter milk powder, cheddar and skim milk powder all recorded rises, but whole milk powder suffered a sharp decline.

This latest drop means the GDT average price has halved since early February.  

Dairy Crest group procurement director Mike Sheldon said he had been pleased to hold the price in December but high milk production and extreme market volatility meant it was impossible to maintain it again.

“While we are all operating in a very challenging market, I am confident our offer to farmers is competitive,” he said.

Day-by-day UK milk production is still running 4.7% up on the same time last year and is 8.7% higher than the three-year average.

Farmers across the EU produced 4.6% more milk in September than they did in 2013.