Muller Wiseman formula price to hit 34.55p/litre

Muller Wiseman’s formula contract price is set to rise by 2.28p/litre to 34.55p/litre for the rest of the year from 1 October.

The price increase was an indication of the strength in dairy commodity markets and should make other milk buyers “sit up and take notice”, said NFU Scotland.

“A milk price of around 34p/litre should be the norm and not the exception,” said NFUS milk policy manager George Jamieson.

There was growing frustration among dairy producers due to the reluctance of processors to raise farmgate prices in line with commodity price highs at a time when milk supply was traditionally at its lowest, he said.

“Farmgate prices, although having risen over the year, are now behind where they should be given the strength of product values and this Muller Wiseman price is reflective of the true marketplace value of milk,” added Mr Jamieson.

Muller Wiseman’s formula contract explained

The Muller Wiseman formula price option was launched on 1 July at a start price of 32.27p/litre for the three-month period between July and September.

Milk price is set quarterly based on a formula tracking actual milk price equivalent (AMPE), milk for cheese value equivalent (MCVE) and a basket of competitor milk prices. The weighting of these in the formula is 50%, 25% and 25% respectively.

AMPE was devised by DairyCo to measure market prices for butter and skimmed milk powder, and allowing for processing costs and a margin, while MCVE provides an indication of the value returned by processing milk into milk cheddar and its associated by-products.

“A milk price of around 34p/litre should be the norm and not the exception.”
NFUS milk policy manager George Jamieson

The formula option was offered to the processor’s 381 non-aligned dairy farmer suppliers, who had the option to sell all or a portion of their milk using the formula price, to a combined maximum of 110m litres of milk this year.

Producers on the formula contract are likely ultimately to receive 35.55p/litre from 1 October, taking into account Muller Wiseman’s expansion and recruitment incentive payments, worth up to 1p/litre on all litres produced. The incentives are paid in a lump sum 13th payment.

From 2014 the formula will operate as follows:

  • In February each year the company will specify the total volume of milk available to be priced under the formula option
  • Following applications by farmer suppliers, individual offers will be made with contracts starting for 12-months from 1 April
  • Prices will be adjusted quarterly based on movements in AMPE, MCVE and the specified competitor basket at a weighting of 50%, 25% and 25% respectively
  • Producers will be given at least one month’s notice in advance of any price change

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