By FWi staff
ANOTHER massive drop in milk values was signalled today after MD Foods gave its farmers notice that it was slashing its standard price by more than 11%.
The Leeds-based dairy company announced a 2.25p price cut with effect from 1 December, reducing the value of a standard litre from 19.30p to 17.05p.
Other dairies are expected to match the drop in prices over the coming weeks, although it is unlikely that the reductions will be as large as the MD Foods cut.
Farmers regarded MD Foods as one of the better payers, and other companies wont have to reduce their prices by as much to remain competitive.
Nevertheless, farmers must face up to the fact that prices are going to fall, said Peter Weston-Davies of the Charles Holt milk quota agency.
The news will be a bitter blow to dairy farmers who have already seen milk prices plummet by 17% in two years, according to the National Farmers Union.
The average farmgate price for milk was 22ppl between January and June 1997 compared with 18ppl for the same period this year.
Milk Marque, the countrys biggest supplier of raw milk to the dairy processors is generally seen as putting the floor in the market for dairy farmers.
It supplies almost 40% of all the raw milk to dairy processors and is expected to reach its latest price agreement with its customers by the end of the month.
Mr Weston-Davies said he was waiting with “baited breath” to see what milk price would eventually be announced by Milk Marque.
Meanwhile, reports remain unconfirmed that Express Dairies is considering cutting its price by 1.5ppl with effect from 1 October.
The company is waiting for the outcome of the Milk Marque selling talks with dairy companies before making a decision, said an Express spokeswoman
“Were still in preliminary talks with our suppliers but will know at the end of the month,” she said.
But Express could implement a price-cut more quickly than MD which has an agreement to give its customers three months notice of any price change.
- Milk price warning as selling starts, FWi, 27 August, 1999
- Milk Marque starts milk price talks, FWi, 25 August, 1999