UK dairy processor, Meadow Foods has introduced a two-year fixed price milk contract element for its 650 dairy farmer suppliers.
The contract will pay 28p/litre for a 24-month period stretching between 1 July 2018 and 30 June 2020.
Every Meadow producer will automatically be given 3% of their annual volume as forward fixed price litres, with the onus on farmers to opt out if they do not want to take up the offer.
Despite the modest initial figure, the milk buyer says it intends to increase the amount over time in order to provide producers with increased security and is in talks with other customers interested in forward fixed pricing.
The move follows the likes of Muller, Lactalis and Paynes Dairies who all have fixed milk price options.
“We’re pleased to be able to introduce this new pricing option as a direct result of feedback from our producers. We’re committed to offering our producers a simple, secure and straight milk price,” said Meadow Foods chief executive, Mark Chantler.
We’re committed to offering our producers a simple, secure and straight milk price Mark Chantler, Meadow Foods chief executive
“Although we feel milk prices are likely to rise over the summer, it’s harder to forecast what the milk price will be for the 24-month period.
Mr Chantler added: “Having a 28p/litre fixed price for the full 24 months will give some producers the security they desire for a part of their allocated volume.”
Meadow Foods announced earlier in the month that it was looking to recruit new producers to match ever increasing customer demand.