Dairy Crest is to cut the price paid to 400 farmers that supply its Davidstow creamery by 0.75p/litre from 1 July.
The move takes the standard litre price for the contract to 28.24p/litre and ironically came at the same time the company said it was looking for more milk to meet higher demand for its leading Cathedral City brand.
Some 450m litres of milk is supplied at the moment and about 10% more is needed over the next year. “We know a reduction in price doesn’t help with this, but we have to remain competitive,” group milk procurement director Mike Sheldon said.
Dairy Crest had cut its price by less and later than other cheese processors and had also introduced a new volume incentive scheme to entice farmers to supply more milk, he said. The scheme runs until March 2014 and offers producers an extra 2p on every litre produced above last year’s (2011/12) total.
“We are extremely proud to be a British company, buying British milk from high-quality, professional dairy farms and will continue to drive our business forward,” Mr Sheldon said.
NFU dairy board chairman, Mansel Raymond, said news of Dairy Crest’s price cut would be a blow to farmers, but welcomed the fact it hadn’t “gone with the pack” and cut by more. He also said it was good that a month’s notice had been given and the price had been agreed with supplier group Dairy Crest Direct – unlike the 2p/litre cut for its non-aligned liquid suppliers last month.