Müller adds 2p/litre to farmgate milk price in rising market

Dairy farmers supplying Müller on its direct contracts will get a 2p/litre price rise from 1 January, taking their standard litre discretionary base price to 31p/litre.

This follows a 1p/litre rise for the current month and applies to the processor’s 600 Müller Direct producers.

It has about 1,500 suppliers in total, with the other 900 on contracts aligned to individual retail customers, each with their own pricing.

See also: Promar predicts another big jump in dairy cost of production

Commenting on the increase, Müller Milk & Ingredients chief operating officer Rob Hutchison said: “The whole dairy supply chain is facing increased inflationary pressure, and we know our supplying farmers are seeing rising production costs.

“With markets strengthening, we wanted to make farmers aware of this decision as early as possible, giving them the information to support forward planning over the winter period.”

Advantage premium

Almost all Müller Direct producers meet the conditions for the processor’s Müller Advantage premium, which qualifies them for an additional 1p/litre for supplies through the year, paid at the end of the milk year.

Müller Advantage aims to improve supply chain collaboration, herd health and reduce environmental effects. The 1p/litre premium is not available to those on contracts aligned to specific retail customers.

The announcement of the January price increase comes in the same week that the fortnightly New Zealand-based Global Dairy Trade auction of bulk dairy commodities saw its sixth upwards move out of the seven most recent sales.

Tightening supply

“The relatively low deliveries this autumn will be tightening the market, as demand builds on the back of the continued recovery in the food-service sector and the approaching holiday period,” said lead dairy analyst Patty Clayton.

“This is already playing out in rising wholesale market values and recent milk price increases. However, these price increases are unlikely to be enough to stimulate higher production while farmers continue to face escalating input costs.”

GB milk deliveries for October were 1.012m litres, 1.5% below the previous year’s volumes and 0.8% below AHDB Dairy’s forecast.

Deliveries varied through the month, but were consistently lower than in October 2020, said Ms Clayton. However, total GB deliveries so far this season are not dissimilar to last year.

Production in April-October this year was 7,365m litres, equivalent to a drop of 18.8m litres (0.3%) on the same period last year.