Meadow Foods producers will see their milk price drop by 1.25p/litre from 1 January 2018 in reaction to increased national milk volumes.
The standard A milk price will fall to 29.75p/litre and the change will apply to the flat-rate element of the price schedule.
The company, which processes more than 650m litres of milk a year from more than 650 farmer suppliers, said national milk volumes are now running at increased levels for the time of year, which is adding negative pressure to the market.
The value of cream, for example, has reduced in value by one-third in just three weeks.
The price drop follows Muller’s announcement last week of a 1.5p/litre milk price cut from January, to 29p/litre.
Word from Meadow Foods
Mark Chantler, chief executive at Meadow Foods, said: “We regret that the sudden and marked downturn in milk prices have required us to move our price to reflect these market conditions.
“We have, however, been working to ensure we are now far better placed to manage a downturn, focusing on developing our sales to achieve more products sold into premium contracts.
“This should help reduce some of the effects of market volatility, but we will continue to monitor the situation very closely going into the new year.”
Meadow Foods is the UK’s largest independently owned dairy group. The company operates from sites in Chester, Peterborough and Holme-on-Spalding Moor.
Global milk production is set to rise by 1.5% in 2018, but continuing strong demand for fats should protect prices from major falls, according to the AHDB.
Figures published by the AHDB forecast global supplies to hit 289bn litres in 2018. Strong production levels in the EU-28 have been driven by yield gains and rising milk prices and are expected to result in an increase of 1.4% in 2018.