By Robert Harris
TOUGH negotiations are under way to try and improve ex-farm milk prices.
Several supply companies are holding talks with major buyers for milk contracts through to March, though the outcome may not be known for a week or two.
Milk Links Neil MacFarlane says prices on most of the companys 1.4bn litres of milk are under discussion.
“We are looking to improve our price on the basis that the milk market has moved forward since the autumn. Long-term deals are worth 21-22ppl.”
That is 1-2ppl more than Milk Link is making, he points out.
“Dairy companies say no one else is going for a price increase. But we are hanging in there.”
The Milk Group is also chasing higher prices, says the companys Richard Sheard.
“Customers prices can and do move at different periods. We are always in negotiations, but we are talking about an increase.”
Zeniths Chris Bird says prices on more than 50% of his members 1.3bn litres of milk are being negotiated.
“I would imagine talks will go on for a couple of weeks. Members are telling me they need significant numbers of pence a litre to survive.”
He believes there is a good case for at least a 1ppl rise.
Zenith is also restructuring its payment package to members.
From April 2001, the seasonality profile will be extended to encourage more production through the trough months of October and November.
And the somatic cell count band for bonus payments will be lowered from 150,000 to 200,000, so achieving the 0.3ppl hygiene bonus will be cheaper.
Both Zenith and Milk Link need to negotiate hard, according to this months milk table, if they are to catch up with the pack.
Although most seasonal bonuses were trimmed in November, they are still high enough to keep the leaders well out in front.