Muller Direct suppliers will be going into the autumn with a 1p/litre price drop to 25.25p/litre from 1 October.
Those who meet the conditions for the Muller Direct Premium 2019, which involves complying with three herd health schemes, will get an additional 0.5p/litre at the end of the milk year.
For farmers who chose Muller’s fixed-price contract option launched last year, enabling them to fix the price of up to 50% of their milk for up to three years, their price will stay at 28p/litre.
- Total number of Muller Direct suppliers – about 650
- More than 85% will qualify for the 0.5p/litre end-of-year premium
- About 250 of the 650 have signed up for and will receive the 28p/litre fixed price on up to 50% of their milk for October 2019
The reduction in the market value of farmgate milk reflects record levels of milk production by farms at a time when the industry is facing a marginal decline in demand for fresh milk and other dairy products, said a statement announcing the price cut.
“The misalignment has seen the value of commodity cream plummet by 37% in a year, with butter values also badly affected,” it said.
Muller’s milk supply director Rob Hutchinson said: “This is an extremely difficult period for the whole dairy supply chain in the UK, and while this supply and demand imbalance persists, it appears likely that market values will remain depressed.
“Muller Direct dairy farmers who chose to hedge against volatile market conditions by using our fixed-price option will be cushioned to a certain extent, but for the whole industry to move forward it must work more coherently and effectively together to align with the needs of customers and consumers.
“Muller is playing its part by ensuring that it has the dairy network capabilities, the fully recyclable and light-weighted packaging proposition and the herd health standards that consumers demand.
“We are confident that this will place our business and supplying farmers in a strong position as the sector emerges from this period of significant and fundamental change.”
The three herd health initiatives qualifying milk producers for the 0.5p/litre Muller Direct end-of-year premium are the Muller Direct Farm Insight Programme, the Muller Direct Antibiotic Programme and the National Johne’s Management Plan.