Yew Tree Dairy producers offered new contracts by Muller
Muller's Skelmersdale plant © Muller Farmers supplying Yew Tree Dairy will be offered new direct contracts by Muller, following its acquisition last year, with contracts due to be introduced from 1 November.
Producers will be able to choose between two contracts, either receiving a Muller ingredients price or a Muller direct Skelmersdale price.
Muller expects the majority of farmers on new contracts to receive higher returns for milk and greater price stability. However, some producers could end up worse off as a result of the changes.
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The Muller ingredients price will be calculated using global markets and indicators, with all milk supplied being used in the ingredients market, similar to many of the existing contracts for farmers supplying Skelmersdale.
Meanwhile, farmers who opt for the Muller direct Skelmersdale price will have their payments calculated based on 60% of their milk being allocated to the ingredients market and 40% to the liquid market.
Farmers supplying Skelmersdale will also join Muller’s Advantage programme, which offers an incentivised milk price to producers for taking part in initiatives that support environmental sustainability and animal health.
Cautious welcome
Farming groups have broadly welcomed the contracts being offered to Yew Tree Dairy farmers, but have advised all producers to get their new contracts checked.
NFU Dairy Board chairman Paul Tompkins said producers supplying the Skelmersdale site have seen a lot of change since its acquisition, which had led to uncertainty across the milk pool.
He said: “I am pleased to see Muller attempting to address this via a new incentivised Advantage Programme and a more stable price offering.
“However, while the majority of suppliers will hopefully see higher, more stable returns as a result of these changes, we know that not all production systems will benefit from these adjustments.
“It is important that Muller continues to work closely with all its suppliers and customers to ease the pressure of any transition, and helps ensure producers receive a fair, transparent and sustainable price which aligns with the spirit of the new fair dealing obligations regulations.”
NFU Scotland milk committee chairman Bruce Mackie added: “While Muller’s planned investment at Skelmersdale and the introduction of revised contracts from November represent steps in the right direction, the timeline offers little immediate relief to those already under immense strain.
“We welcome progress, but stress that urgent interim price increases should be considered.”
Muller confirms £45m site investment
Muller has confirmed a £45m investment in its Skelmersdale site in West Lancashire, to increase liquid milk capacity and provide additional milk drying capacity.
The investment should allow the site to produce 30% more powdered milk with work due to be completed by the end of 2026.
The processor also aims to recruit 40 new employees on site.
Rob Hutchison, Muller chief executive, said: “We are enhancing our liquid milk production capacity, capability and quality, and creating a flagship facility for milk drying, at one of the biggest and most flexible milk balancing sites in the UK.
“With significant investment in the Skelmersdale site, its people and supplying farms, we are creating exciting new opportunities for the whole supply chain, which in turns helps us on our journey to build a better future for British dairy.”
Defra farming minister Daniel Zeichner said: “Britain is a great place for dairy farming and has an excellent reputation for quality, welfare standards and sustainability.
“We are proud that global brands such as Muller see the UK as a great place to produce quality food and drinks.”