Big milk reductions from three farmer-businesses

1 February 2002

Big milk reductions from three farmer-businesses

By Robert Harris

THREE more farmer-controlled businesses have cut ex-farm milk prices, rounding off a dismal month for dairy producers.

First Milk announced a big reduction for January supplies this week, a few days after rival Milk Link lowered its price for the second time in a month. United Milk has cut prices for February milk.

First Milk, which has over 4000 farmer members and sells about 18% of British milk, is reducing its northern region price by 1.9p/litre. Farmers in the southern region face a 1.4p/litre cut. Both changes are backdated to the beginning of January.

Farmers in the north will receive 17.91p/litre for every-day collection, according to farmers weeklys standard litre (4.1% butterfat, 3.3% protein, top TBC and cell count bands and 1101 litres a day).

On the same basis, southern producers will be paid 17.75p a standard litre. Those on every-other-day collection will receive 18.3p a standard litre.

This has eroded the EDC premium of 0.66p/litre enjoyed by the northern section (the old Scottish Milk region) compared with the south (the old Axis region). It now stands at just 0.16p/litre. This comes just two months before prices in the two areas have to be aligned, as agreed when Scottish Milk and Axis merged to form First Milk.

But a spokesman stressed that the company operated separate pools.

Higher-than-expected production meant more milk had been sold into soft secondary markets undermined by poor commodity prices, he said. And higher milk protein levels had pushed up farm-gate prices, but were not recoverable in the market.

A recent dispute with Express, which ended a contract to supply about 0.5m litres of milk a day to the liquid milk market, had not helped either, he said.

United Milk, the Wilts-based farmer-owned plc, has announced a price cut of 1.6p a standard litre for February ex-farm deliveries.

This takes the farmers weekly standard litre price to 18.5p/litre for both daily and every-other-day collection, though this is still higher than most co-ops and some processors are paying.

Don Morris, UKs chief executive, blames high milk volume. "We are running at 10-12% above forecast, and there is not the appetite for milk out there."

Milk Links recent price cut knocks a further 1.27p/litre off farmers weeklys standard litre value, and follows the companys December price reduction of 0.5p/litre.

Its 3000 farmer members will receive 18.12p a standard litre after transport and marketing charges (17.52p/litre for EDC), backdated to Jan 1. &#42

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