Muller freezes March milk price

Muller Milk & Ingredients (MMI) has frozen its March standard non-aligned milk price, the first major processor to do so since the downturn in mid-2016.

The UK’s second-largest milk processor blamed an “easing back” of commodity markets and the increase to its supply milk volume as reasons for the price hold.

See also: Global dairy production at three-year low

“We are seeing increasing direct supply volumes across all our milk field areas,” said a Muller spokesman.

“As we approach the period leading into the spring ‘peak’, it is important that we closely monitor the balance of supply and demand.”

Dairy farmers on Muller’s non-aligned contracts will continue to receive 27.51p/litre – 45% higher than last October.

‘Global supply should dictate price’

It’s premature to hold prices based on short-term market trends, said NFU Scotland milk committee chairman Graham Kilpatrick.

“At the first sign of a wobble, markets don’t go up as quickly as we saw them fall last year.

“The Muller price has been frozen in anticipation of volumes increasing in the spring, but we don’t know what production will be then.

“Ultimately it’s the global – and not UK – milk supply that should dictate farmgate prices.

“Yes, we do need to watch volumes, but the figures are suggesting that recent rises in production are seasonal and vary between individual processors.”

He added, “Milk prices do need to sit between 27-30p/litre to prevent production spiralling, but without the retailer supplement Muller would fall below this.

“It also put the freeze down to an increase in its supply volume, but was recruiting new producers at the tail end of last year.” 

Contract delay

Muller has also delayed the introduction of its new contract for a second time, with its implementation now pushed back four months later than originally planned.

Former MMI agriculture director Lyndsay Chapman said the original delay of a month was down to the reviewing of “strong, considered and sometimes conflicting views” about the new contract proposals.

Her replacement, interim agriculture director Rob Hutchinson, said the new timetable would allow for Muller’s 1,900 producers, including 650 former Direct Milk members, to familiarise themselves with the new contract.

The milk processor will now send out the finalised contract packs in the week commencing 27 February, which producers can sign up to from 1 May 2017.