Looking for the real milk price
By Stephen Bates
SIGNIFICANT differences in the make-up of milk prices exist between contracts.
For example, of those companies in our table (below) paying by milk constituents, Southern Co-operative Dairies pays by far the highest butterfat rate, at 2.63p a percent (10.78p a percent divided by our standard litre of 4.1% butterfat).
This can be contrasted with Express Dairies, for example, which pays 1.773p a percent, a difference of over 0.85p.
Similar differences occur in the valuation of protein. Nestle (Dalston), for example, pays the highest rate in our table at 3.537p a percent (11.5p divided by our standard litre of 3.25% protein). This can be contrasted with the lowest rate, 3.078p a percent, paid by Golden Vale, a difference of 0.5p.
Clearly, such differences are significant. In addition, some companies “cap” payments for protein, such that MD Foods and Express Dairies, for example, pay for protein only up to a maximum of 3.3%.
There are also flat rate milk payment contracts. Midlands Co-op pays a single flat price of 20.225p (before hygiene adjustments) for all litres of milk supplied, regardless of constituent values, but within minimum standards.
However, there is more to milk pricing than constituent price differences. Transport and hygiene adjustments can also vary considerably. Our table shows prices for daily milk delivery (unless otherwise stated) and for top band hygiene levels (wherever they occur).
v
Things are further complicated by the range of additional payments made such as bonus groups. For example, the Unigate price in our table includes 1.2p/litre relating mainly to its “6 keys”, “general compliance” and “farm inspection” schemes. Such adjustments are likely to become more common as milk purchasers try to tailor milk supplies to product requirements.
To compare milk prices, we use an imaginary standard litre (see footnote to our table), which is an approximation of an “average” farmer.
Prices shown are therefore estimates of what companies would pay for this standard litre of milk, rather than what they actually paid. Real prices depend on the make up of individual companies direct milk supply – information which is rarely forthcoming.
September 1998 for August deliveries (updated monthly)
| COMPANY | This month | Last month | Butterfat (ppl) | Protein (ppl) | Seasonal adj (ppl) | Price/std litre (ppl) | Av price Apr98-Jul98 |
|---|---|---|---|---|---|---|---|
| Southern Co-op | 1 | 1 | 10.78 | 10.27 | 3.50 | 24.66 | 21.66 |
| Unigate – EODC | 2 | 2 | 4.10 | 5.04 | 3.50 | 24.01 | 21.31 |
| Golden Vale | 3 | 3 | 8.88 | 10.00P | 3.00 | 23.19 | 20.39 |
| Nestlé England (Dalston) | 4 | 10 | 8.78 | 11.50 | 3.50 | 23.07 | 19.38 |
| Express Dairies | 5 | 4 | 7.27 | 11.13P | 3.00 | 23.00 | 20.04 |
| The Milk Group | 6 | 5 | 8.82 | 10.62 | 3.00 | 22.74 | 19.74 |
| Bodfari | 7 | 6 | 8.42 | 10.93 | 2.50 | 22.65 | 19.83 |
| AW Foods (Avonmore) | 8 | 9 | 0.03 | 0.03 | 3.00 | 22.54 | 20.15 |
| Wiseman England | 9 | 8 | 0.90 | 0.10 | 2.00 | 22.10 | 19.90 |
| ACC (Stockton) | 10 | 7 | 7.39 | 9.91 | 2.40 | 21.99 | 19.81 |
| Wiseman Scotland | 11 | 14 | 1.36 | 0.28 | 2.00 | 21.74 | 18.94 |
| South Caernarvon | 12 | 13 | 8.12 | 11.17 | 2.50 | 21.66 | 18.90 |
| Nestlé Scotland | 13 | 19 | 8.78 | 11.50 | 2.00 | 21.57 | 18.91 |
| Midlands Co-op | 14 | 12 | 0.00 | 0.00 | 0.00 | 21.18 | 21.32 |
| Wyke Farms | 15 | 11 | 7.46 | 10.11 | 2.20 | 20.81 | 18.53 |
| AW Foods Scotland (Lockerbie) | 16 | 22 | 7.42 | 11.25 | 2.00 | 20.75 | 18.31 |
| Lancashire Dairies | 17 | 15 | 0.00 | 0.00 | 0.00 | 20.69 | 20.65 |
| Scottish Milk | 18 | 17 | 7.83 | 10.73 | 2.00 | 20.50 | 17.70 |
| Milk Marque – EODC | 19 | 16 | 7.71 | 10.34 | 2.20 | 20.12 | 18.02 |
| MD Foods (Premier) | 20 | 21 | 8.20 | 3.25P | 0.00 | 20.00 | 20.00 |
| Aberdeen Milk | 21 | 23 | 0.60 | 0.25 | 0.00 | 20.00 | 18.10 |
| AW Foods Waterford (“PSL” contract) | 22 | 18 | 0.00 | 0.09 | 0.00 | 19.78 | 20.26 |
| Milk Marque | 23 | 20 | 7.71 | 10.34 | 2.20 | 19.62 | 17.52 |
| Source: WYE COLLEGE University of London http://www.wye.ac.uk |
P=payment for protein capped (at 3.3% for MD and Express, 3.35% for Golden Vale)