Muller announces cut to January farm-gate milk price

Muller has confirmed it will cut its January milk price by 1p/L. It means that the processor’s milk price will be 27.5p for a standard litre from January 1, 2019.

It means that farmers who satisfy the conditions for the Muller Direct Premium 2019 will receive 28p/L on their qualifying litres.

For the first time, the 28p/L headline price (which includes the 0.5p/L premium) is in line with the price offered to farmers through the Muller Direct Fixed Price contract option, which provides a ‘safety net’ to protect against market volatility.

The 1p/L reduction reflects continuing declines in the market value of dairy commodities, including cream and butter.

The announcement sees Muller become the latest in a series of processors to drop its monthly milk price.

Arla and Dale Farm were among the first. Last month Arla announced its December standard litre price would drop by 0.89p, taking it to 31.57p/L while Dale Farm dropped from 28.2p/L plus the 0.3p/L loyalty bonus to 27.7p/L plus loyalty bonus for October.

Fixed price contract

More than a third of the 700 Muller Direct farmers opted to commit up to half of their milk supply to the Muller Direct Fixed Price contract option.

The fixed price contract was one of a number of measures introduced by Muller to provide stability in a sector which has experienced damaging levels of market volatility and unpredictability.

Rob Hutchison, milk supply director said: “We are continuing to see declines in returns from markets for cream and butter and like most processors exposed to the liquid milk sector, we are not in a position to ignore market realities.

“We are pleased that so many Muller Direct farmers have opted to use the measures we introduced to
manage the effects of extreme market volatility.

Those who opted in, know that for that portion of their milk supply, they are fully protected from further negative market movements.

“We know that contract innovation of this kind is increasingly recognised and valued amongst dairy
farmers who operate in markets which are consistently volatile.”