Dairy Crest Establishes Milk Floor Price
2 Feb 2015 --- UK dairy Dairy Crest has announced that following a drop in its March milk price, there will be no further reductions to their farmgate milk price before July. The company is the first processor in the British dairy sector to introduce a ‘price floor’. This will guarantee a lengthy period of stability for their farmers.
Dairy Crest, in agreement with Dairy Crest Direct (DCD), hopes that after many months of extreme volatility for the British dairy sector, this move will allow farmers to budget and plan more effectively for the spring flush and until July.
From March, there will be a reduction of 1.5ppl, which means that farmers on a Davidstow contract will receive 25.1ppl, and the Liquid milk price for farmers with all or a proportion of their milk price on the standard Liquid contract will receive 23.1ppl.
Dairy Crest will review the milk price with DCD on an on-going basis. In line with Dairy Crest’s long-standing commitment to paying fair, market-related prices this will enable any improvements to its milk supply and demand balance to be appropriately reflected.
Mike Sheldon, Managing Director of Dairies, said: “During this challenging time for British dairying, Dairy Crest is leading the industry by introducing a price floor until July. We want to provide as much stability and certainty for our supplying farmers as we can. We hope that by the summer markets will have recovered and we can reflect this in our milk price to farmers.
“Whilst the continuing high levels of milk production in the UK have resulted in a further price cut in March, the agreement by Dairy Crest and Dairy Crest Direct to guarantee a floor for future prices will allow our farmers to plan ahead. This is crucial as we move through the peak period of milk production.
“Whilst we hope that dairy markets will start to recover this year, it remains clear that volatility is here to stay. It is critical that the British dairy sector has the efficiency and economies of scale to deal with this global volatility going forward. That is why we continue to believe that the sale of our Dairies business to Muller Wiseman will bring some much-needed stability to the sector.”
