Muller, the UK’s second-largest milk processor by producer numbers, has dropped its standard milk price by 1.5p/litre from 1 April.
The widely anticipated price fall moves the producer’s price to 26.5p/litre for milk with constituents of 4% butterfat and 3.3% protein for its 700 Muller Direct farmers.
The processor cited falling values for wholesale butter and cream in the past six months, as well as an increase in milk production, as reasons for the falling price.
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The latest UK milk production figures for January showed deliveries increased by 1.2% on the month to 1,231m litre, which between April 2017 and January 2018 was 3.9% ahead of the same period 12 months earlier at 12,314m litres.
Bulk cream and butter average wholesale prices for February were up by 20% and 25% on the year, but were 35% and 30% down on the highs of six months ago at £1,850/t and £4,300/t, respectively.
“Market forces have been moving against farmgate milk prices throughout the UK and we therefore have to adjust our position,” said Rob Hutchison, Muller Milk supply director.
“However, Muller has invested heavily in the UK to create a balanced portfolio of added-value branded and private-label dairy products, and this is helping us to mitigate the full extent of the decline in dairy commodity values.”
Mr Hutchison added that Muller would continue its work with Muller Direct farmers through a range of initiatives designed to support business improvement – managing periods of volatility and supporting the next generation – as well as increasing marketing spend by 25% in the next three years.
“We are confident that our agriculture strategy, UK investment and category development plans will continue to underpin a highly competitive milk price, regardless of market conditions, over the longer term,” he said.
By: Jack Yates