Price rise for Dairy Crest producers on liquid contracts

Milk producers supplying Dairy Crest on standard liquid contracts will see a 0.65p/litre rise in their milk price for November to 22.34p/litre.

This is due to the effect of retail supplements announced in August by Lidl and Morrisons, although the base price remains unchanged from the October rate of 21.69p/litre.

However Dairy Crest’s milk-for-cheese suppliers face a price cut of 1.5p/litre in November, giving them 23.84p/litre for a 4% butterfat and 3.3% protein industry-standard litre.

This is only the second milk-for-cheese price cut on this contract this year, pointed out producer group Dairy Crest Direct (DCD). Given that a more pronounced price differential of -2p to -6p/litre had opened up between Dairy Crest prices and those of competitors, the 1.5p reduction was the smallest that could be applied, it said.

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“DCD is under no illusion about the difficulties this reduction will cause on farm,” said the group in its letter to members.

“That the price paid from November remains competitive on a league table basis is of course good news, but that it now remains well below all recognised cost-of-production models places the very sustainability of our supply chain in doubt, especially if this level of ‘deficit pricing to costs’ continues for any length of time.”

DCD members’ October liquid milk cheques, due to arrive in November, will also feature a retail supplement of 0.39p/litre, to give a total October price of 22.08p/litre. The retail supplements will appear as separate items on producers’ statements.

While thankful for the financial support from retail guarantees, DCD said there was still a substantial deficit between costs and returns as farms went into the winter.