Muller Milk and Ingredients (MM&I) has decreased its standard non-aligned milk price for next month by 0.5p/litre.
Non-aligned producers will receive 26.19p/litre from 9 June, before the supplement paid by retailers Aldi, Lidl and Morrisons is applied.
The retailer supplement, which will be confirmed later this month, was 0.3p/litre in April, but had fallen 60% since February.
The 0.5p cut follows Muller’s decision to hold its prices for May as the processor pushed to sign up its 1,900 dairy farmers to its new contract – a process that has now been virtually completed.
The UK’s largest privately owned dairy processor said it had held prices in recent months despite rising milk production and reduced dairy commodity values.
“While the nature of our business and focus on adding value protects our farmers through a more stable milk price than one driven by the commodity sector, we must ensure that we reflect key changes in the market environment,” said Muller agriculture director Rob Hutchison.
“We have been monitoring supply over the lead-up to the peak period and our direct supply volume continues to be very strong and significantly ahead of the same period last year.”
Supply and demand
Mr Hutchison added, “We have worked to minimise the scale of this price reduction while responding to the balance of supply and demand driving the current market value for milk.”
“We have reviewed our position with the MMG board, who are understandably disappointed by a price reduction but understand the market environment we are working in and our commitment to pay a competitive milk price.”