Midlands dairy accused of ‘protecting margins’ with price changes

Midlands-based Wells Farm Dairy has been accused of sending out “conflicting narratives” after dropping the price paid to farmer suppliers just weeks after passing on price increases to consumers.

The processor, which is based in Staffordshire and has further depots in Ashbourne, Derby, Eccleshall and London, takes milk from about 50 farmers.

See also: Milk prices on the turn as commodity markets weaken

It is involved in processing, packaging and delivering fresh local milk and cream, along with “complementary products” such as yoghurts, desserts and butter, direct to customers.

Last week it wrote to farmer suppliers notifying them of a 3p/litre price cut to take effect from 1 November.

“During the last three weeks we have seen huge price pressures on a dairy market that has been oversupplied by 5% for nearly nine months,” wrote director Paul Holt.

“Cream has been significantly affected, losing 30% of its value in the space of two weeks.

“Spot milk is now trading at well below 30p/litre.

“The only way the market will recover is when ex-farm milk deliveries decline to a level that is more in balance with the demand.”

Customers charged more

However, the price cut to suppliers comes just a few weeks after the dairy put up the price it charges its liquid milk customers by 3p/litre for conventional milk and 4p/litre for organic milk – increases that took effect from Monday 6 October.

“Our farmers that supply the dairy with milk have been faced with extra feed costs as grass growth has been minimal during the last 10 weeks,” Mr Holt told customers.

“Many have already used a substantial part of their winter forage.

“To help them through this difficult period, we will need to move our conventional milk price by 3p/litre.

“We thank you for your continued loyalty and understanding of this distressing time for our rural community.”

Criticism

The contrast in letters has drawn some criticism from farmer suppliers.

“This means that within the space of a month, Wells Farm increased retail prices citing higher farm costs, but cut farmgate prices citing weaker markets.

“The effect is that customers are paying more, while farmers are receiving less,” said one.

“This raises real questions about transparency and whether processors are using conflicting narratives to protect their margins at both ends.”

The dairy has been approached for a comment.