Müller UK & Ireland Group has given dairy farmers a month’s notice that its standard farm-gate milk price from November 1st, 2014 will be 27.1 pence per litre.
The reduction of 1.9ppl from its 29ppl October price results from significantly lower returns from Müller’s sales of cream, butter and surplus milk which is not required to meet customer obligations.
UK dairy farmers have boosted their production of milk compared to last year by the equivalent capacity of more than 750 milk tankers every week.
Milk supplied to Müller by farmers remains ahead of even the most optimistic forecasts, giving the company no option but to trade substantial volumes to spot markets which far from adding value, are commanding returns which are significantly lower than the company’s own farmer price.
Record milk volumes coupled with weak demand for dairy commodity products have also contributed to a 30% year on year drop in the value of cream with the value of butter produced by the company also down by 27% (Source DairyCo Datum).
“Very high levels of milk production coupled with weaker demand for dairy commodities are having a sharp impact on farm gate milk prices" said Martin Armstrong, Head of Group Milk Supply for Müller UK & Ireland Group.
“Our price for September and October has been one of the best available across the UK for farmers who are not part of supermarket aligned groups and despite this reduction we believe that this will remain the case in November.
“We would also stress that the price we offer is not then further eroded by deductions for haulage, member retentions and butterfat penalties.
“We share the concern of dairy farmers, who are anxious to see some signs of improvement in what is a very volatile market.”
Against the backdrop of a severe and unforecasted imbalance between volumes of milk supplied by dairy farmers and Müller’s requirements, the company and the Müller Wiseman Milk Group farmer board have agreed a project which will identify mutually beneficial ways of mitigating the problem.
The initiative aims to find ways of achieving closer alignment between farm milk production and Müller’s demand profile, reducing the need to sell surplus milk into commodity spot markets. The project is expected to be completed by the end of the year.
Note to Editors
DairyCo Datum information is here:
Müller UK & Ireland Group
Müller UK & Ireland Group is wholly owned by the Unternehmensgruppe Theo Müller. It has 19 sites nationwide and employs almost 6,000 people across four business units: Müller Dairy, Müller Wiseman Dairies, Müller Minsterley and TM Telford.
Based in Market Drayton, Müller Dairy is the UK's leading yogurt manufacturer, with major brands such as Müller Corner, Müllerlight and Müller Rice.
Müller Wiseman Dairies processes and delivers around 30% of the fresh milk consumed in Britain every day and is famous for its black & white cow-print branding. In December 2013, the business formally opened a major new state of the art butter-making plant in Shropshire, with the capacity to produce up to 45,000 tonnes of salted, unsalted and lactic butter each year.
Müller Minsterley is our facility near Shrewsbury at which chilled desserts including Cadbury Bubbles of Joy, Pots of Joy, Chocolate Trifle and Twin-pot products are produced under a license from Cadbury.
TM Telford is a state of the art yogurt production facility in Telford, Shropshire which is focused on the development of the company's presence in the UK private label yogurt market.
To make its range of dairy products, the company buys milk from more than 1,200 British dairy farmers, all of whom are Red Tractor Farm Assured.
Müller Wiseman Milk Group Dairy members elect a representative farmer board which works with the company to discuss milk supply issues, including the Group's commitment to maintain a competitive milk price and contractual position.