Milk Marque cuts could hit ex-farm prices
By Farmers Weekly staff
EX-FARM milk prices are under pressure again, following Milk Marques decision to reduce indicative prices in an attempt to break the recent deadlock with the trade.
In the first selling round four weeks ago, dairy companies bid for just 25% of the April-September milk on offer. So, after discussions with buyers, the co-op has cut second-round prices by 0.7ppl.
The most popular Varying Supply contract is now valued at 20.5ppl, the same price achieved in last Augusts selling round. And two higher priced premium contracts, at 20.8p and 21.8ppl, are now 1p and 1.5ppl below that level.
If these contracts attract the same proportion of bids as last August, prices at the farm gate are likely to drop by about 0.2ppl, says Roger Metcalf of Agrifood Consultants.
But he believes prices are still too high to clear the market, given the recent strengthening of sterling and world oversupply of all dairy commodities.
However, MM hopes that bidding patterns will change.
“While there is no getting away from the strength of sterling, our service levels are much improved for supply-led (cheaper) contracts and our market-led contracts are now highly competitive,” says managing director Paul Beswick.
Dairy Crest is blaming the latest MM prices and the strong pound for a cut in farm milk prices from April 1.
Values will fall by 0.8ppl if supply groups insist that DC sticks to its existing six-month price contract. This takes the price of a standard litre (4.1% butterfat and 3.25% protein) down to19.6ppl.
But groups opting for a new monthly price review face less of a cut, thought to be about 0.2-0.3ppl.
Meanwhile Express Dairies has acquired wholesale dairy and fresh food supplier Star Dairies Food Services and certain assets of Star Dairies International for a cash consideration of £2.7m. The move strengthens Expresss position in London.