Dairy Crest formula milk price drops 0.324p/litre from June

Dairy Crest’s formula milk price has fallen by 0.324p/litre for June as the country’s bumper spring production continues to dampen cream prices.

Farmers with milk priced by the commodity tracker will be paid 31.991p/litre, more than half a penny lower than the company’s standard liquid price of 32.56p/litre.

The UK’s strong milk production saw cream prices weaken by £40/t in April after an Easter bounce, while the average four-pint retail milk price dropped by 1p.

British dairy farmers produced 1.28bn litres of milk in April, 14.86% more than in 2013 and the best for that month since Rural Payments Agency figures began 20 years ago.

The on-farm costs of feed, fuel and fertiliser costs remained very similar.

See also: Arla drops milk price by 1.27p/litre

Michael Masters, secretary of suppliers’ group Dairy Crest Direct, said the formula drop was expected but was less dramatic than the cuts of up to 2p/litre by some processors last month.

“As many UK competitor ex-farm milk price reductions have been announced recently, the increased stability in pricing by formula may potentially become more marked over the coming months,” he said.

“This reduction was anticipated and reported through the recently held member meetings where the softening recorded in all dairy markets including cream since the end of 2013 would continue to impact on the rolling sequencing within the formula continued to feed through.”

From 1 April, 160 Dairy Crest farmers producing 110m litres committed some of their milk to be priced by the commodity basket, down from 175 the year before.

The formula fell 0.435p/litre for May after being relaunched for its second year with a new starting price of 32.56p/litre from April.

Farmers on the core formula contract have to commit to Dairy Crest for 12 months when they sign up 25%, 50%, 75% or all of their milk.

Dairy Crest suppliers can still join the formula for the rest of this milk year from 1 July, 1 October or 1 January 2015, but will not receive the 0.19p/litre early sign-up bonus.

The formula was developed for Dairy Crest and Dairy Crest Direct by independent consultant Stephen Bradley.

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