Dairy Crest and First Milk hike prices, Müller responds to NFU criticism

01-Aug-2016 - Last updated on 02-Aug-2016 at 11:46 GMT

First Milk and Dairy Crest are increasing their milk prices in the UK to reflect a more positive market and falling milk production.

First Milk has confirmed it will increase its A prices in the UK for August and September by up to 1.25ppl (1.65 cents/liter), as well as lifting its B price by 5ppl (6.6 cents/liter).

Dairy Crest is hiking its milk price in the UK by 1ppl (1.3 cents/liter) to 22.72ppl (30 cents/liter) from September 1.

However, Müller is maintaining its price, which has drawn criticism from the National Farmers’ Union (NFU).

Müller told DairyReporter its price was competitive in spite of not raising it.

According to the NFU, Müller’s base price for September is 18.66ppl (24.6 cents/liter) for its Müller Milk Group, and 18ppl (23.8 cents/liter) for the Direct Milk group.

First Milk’s A prices rise to between 16.34ppl for the Midlands group to 18.74ppl for Haverfordwest, while B prices rise to 20ppl.

In late July, Arla Foods amba said it was holding its milk price for August, at 19.05ppl (25.5 cents/liter). The company is yet to announce its September prices.

Falling UK milk production

Ruth Askew, head of procurement at Dairy Crest, said the company was increasing its milk price against a backdrop of falling UK milk production.

“Dairy Crest wanted to reflect this in our milk price as soon as possible. We hope this positive news will provide our farmers with some confidence as we head into the autumn,” Askew said.

First Milk prices could rise again

First Milk chairman, Clive Sharpe, said the September increase could rise further.

Chief executive, Mike Gallacher, added, “The steep progress on the B price indicates the positive direction of travel we see in the market. Clearly our members need to see further improvement in prices and we will be passing improvements on as rapidly as possible.

"In addition to market moves, we have committed to pass back money from progress made internally in First Milk; from cutting costs, improving our cheese quality and exiting our loss-making subsidiaries. As a direct result, we have returned 0.75ppl as a business performance supplement over the last two months and this figure will continue to grow over the year ahead."

NFU asks for explanation

NFU says an explanation was needed on Müller’s milk price hold for September.

NFU dairy board chairman Michael Oakes said, “We have heard Müller state at various conferences this year that it wants to be the biggest and best milk buyer in the UK but this latest milk price news beggars belief.

“Yes, its farmgate milk price remains competitive but this is only due to the continuing support of retailers with their minimum farmgate pricing mechanism, currently paying around 3ppl.”

Oakes added, “I’m sincerely hoping that Müller isn’t hiding behind the retail supplements paid by Lidl, Aldi and Morrisons, rather than reacting to the market realities we are seeing in cream incomes, wholesale prices and volume reductions.”

Müller responds to criticism

In a statement to DairyReporter, Müller said that, “Although our standard milk price for September is unchanged we are confident that it will continue to be competitive.

“Where we differ from many of our competitors is that throughout the crisis we delivered a stable, competitive milk price on all liters bought from our farmer suppliers.”

The company added that it honored its contract terms and did not expose its farmers to very low returns for excess milk from spot markets during the period.

The statement continued, “Whilst we agree with our Farmer Board that the markets are showing positive signals, we have a different view on when this can be translated into milk price.

“We are optimistic for the future and hopeful that we might see stronger returns for our business and the farmers who supply us soon.”