Dairy Crest formula milk price drops back

Dairy Crest’s formula milk price has recorded the sharpest drop in its 18-month history, falling 0.843p/litre from November.

Farmers with milk committed to the cost-and-commodity-tracking formula will receive 30.391p/litre, before any early sign-up bonus.

It now carries a 3.231p/litre premium over the standard Dairy Crest liquid price, cut by 1.3p/litre for November.

See also: Iceland slammed for slashing milk to 89p for four pints

Prices for bulk cream and four-pints of supermarket milk dropped slightly in September, as did the cost of concentrate and red diesel.

But fertiliser prices rose, with ammonium nitrate up £6/t to £259.50/t.

Michael Masters, secretary of suppliers’ group Dairy Crest Direct, said the formula decrease was much more modest than those recently announced by milk processors setting prices by discretion.

“The formula independently sets [farmers’] milk price via a combined blend of markets and costs to potentially smooth out the effects of volatility, which had adversely impacted on virtually all dairy farmers not protected by retail-aligned ‘insured’ pricing,” he said.

“This position is in complete contrast to that faced by Dairy Crest non-aligned farmers during the SOS Dairy crisis in 2012, when pricing by discretion was the only show in town.”

Since the formula contract was re-launched in the spring, Dairy Crest liquid suppliers have had three chances to sign up a proportion of their milk.

The volume available in the most recent window in September was fully subscribed.

More than half of Dairy Crest’s 400 liquid producers have some of their milk priced by either the simplified or core formula.