UK dairy processor Dairy Crest has agreed a formula for calculating the price of milk it pays  farmers on standard liquid contracts.

From 1 April, a cost-of-production formula will be offered to farmers on a voluntary basis and will be made subject to an overall maximum volume limit, the company said today (17 December).

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“Initially we plan to agree an overall maximum milk volume to be priced through the formula with offers being confirmed on a first come, first served basis,” said Dairy Crest group milk procurement director Mike Sheldon. “We want a long-term relationship with our farmers and are determined to deliver greater flexibility and choice in the consideration of contract options, as well as trust in the pricing process.”

Details of the formula are still being finalised, Dairy Crest said, but will take into account “movements in both key on-farm costs and dairy market indices”.

“I believe this is a real step forward,” Sheldon added.

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