First Milk has joined forces with international dairy company Eilers & Wheeler to launch a new milk supply contract.
It will pay producers a minimum standard litre price of 28.5p/litre for milk supplied until the end of June 2011. After this, the price will be linked to changes in Dutch skimmed milk powder and butter prices.
On top of the standard litre price, there is a volume bonus for suppliers of larger volumes. This starts at an extra 0.1p/litre for each 1000 litres for those supplying 8000 litres a day and rises to a maximum of 0.8p/litre for over 15,000 litres a day.
Eilers & Wheeler will purchase the milk and sell the product, while First Milk manages the producer contracts and processing of milk at Westbury in Wiltshire.
The companies aim to recruit non-First Milk producers, with the margin that First Milk makes going back to its farmer members.
“When you boil it down, our job is to make money for members,” First Milk chairman Bill Mustoe explained. “Right now with world market prices strong, there is a clear commercial opportunity to put some more cash in the till through getting additional milk through Westbury. Every penny of the margin we make on the international contract will go back directly to members.
“In March we set up a partnership with Eilers & Wheeler to export our cheese around the globe. We have now extended that partnership to cover the purchase of raw milk, the processing of butter and powder and sales of these products on the world market.”