UK: Dairy Crest cuts liquid milk prices

Dairy Crest announces plans for liquid milk pricing

Dairy Crest announced today that the continuing impact of tough market conditions would regrettably result in a milk price reduction for some of its milk supply contracts. Farmers on a standard liquid agreement will see their milk price fall by 1.65 ppl from 1 August 2012. However, a commitment has been given to these farmers that there will be no further reductions this year, and that the business would be looking to increase the price again as soon as market conditions
allowed.

Dairy Crest wrote to its farmers at the end of April explaining that they were doing everything they could to reduce the impact of the marketplace on the milk price. This included the closure of two of its Liquid dairies in Cambridgeshire and Liverpool together with a thorough review of all aspects of their operation.

Group Milk Procurement Director, Mike Sheldon stated. "We have a clear and robust plan for the long term future of our Dairies business and we are making progress in what remains a very difficult environment. We have maintained our liquid milk price for 3 months while we have worked hard to achieve greater operational efficiencies and selling price increases. We are acutely aware of the impact this price reduction could have on our farmers but we have to look at affordability and take responsible action when required. We have agreed that we will not reduce milk prices again this
year.

"We have listened to our farmers' concerns about the notice we gave of our April price move. DCD has been a powerful advocate for longer notice of any price changes and so we have agreed that from now on we will give a minimum of 4 weeks' notice. Meanwhile, we have also agreed to work with DCD to review the way we agree milk price changes in the future - with the aim of delivering improved transparency, simplicity and longevity. We know farmers want clarity and a process in which they have confidence. This is our agreed objective with DCD and we don't intend to let any discussion at a national level on a voluntary code slow us down in delivering this.

"At Dairy Crest we are fully committed to building a strong and secure business on which our farmers can depend, even when conditions are difficult. I know this latest price cut will be a great disappointment but I can assure our farmers that as and when market conditions improve sufficiently we will be looking to increase the price again."

Dairy Crest has confirmed that the milk price for their Davidstow contract will be maintained at the current level, which tops the league table for all major cheese processors.

Original source: Dairy Crest