UK - Müller has confirmed a reduction in its standard milk price of 1.35ppl from 1 April 2016, against a backdrop of unprecedented levels of farm milk production forecast for spring, coupled with weak market demand.
Lyndsay Chapman, Agriculture Director of Müller Milk & Ingredients said: “In the current environment where the supply of milk from farms is substantially out of line with demand there are no winners in the dairy supply chain. Market returns are depressed and milk production forecasts for April suggest the months ahead are going to be very challenging for us all.
“We remain focused about the future and are investing heavily in the processing sector to innovate and add value to milk and to make our supply chain competitive. However, supply and demand is a major determinant of milk price and at the moment there is a significant imbalance which is having a severe effect on the value of farm gate milk.
“Our commitment is to maintain a fair and market related milk price and honour our contract terms but we need the market to be more balanced, to generate better returns for dairy farmers.”
As well as Muller, First Milk and Arla have also announced cuts, with Arla giving its direct suppliers 12 months’ notice on their contract as they are struggling to find a market for this milk.
Following the announcement, National Farmers Union (NFU) dairy board chairman Rob Harrison says the next few months will be extremely tough and that everyone must pull together for the sake of the future of the industry.
Mr Harrison commented: “I won’t lie – it’s really difficult out there for many dairy farmers and I honestly don’t see the situation changing in the short-term. The market remains extremely tough and buyers are concerned with the impact of the forthcoming Spring Flush. But AHDB Dairy figures show daily deliveries are coming back in line with February 2015 levels.
“To help manage supply and demand at processor level we’ve seen Dairy Crest, working alongside their farmer group Dairy Crest Direct, bring in a new production balancing scheme. We need more milk buyers to show responsibility in trying to match supply and demand – and this needs to be done alongside farmer suppliers.
“We desperately need help from the government and the EU who must both do more to ensure a sustainable future for the dairy sector and help make tools available for farmers to manage volatility.”
In response to the cuts, the NFU is calling for the following actions:
- The European Investment Bank (EIB) to speed up its work to refinance farm borrowings
- The European Institutions to take steps to alleviate the problems farmers are facing in the wake of the Russian ban
- The dairy intervention price thresholds to be reviewed.
- Fertiliser import tariffs to be removed to boost competition in the European fertiliser sector
- The RPA to speed up BPS payments and ensure that this is not a problem in future years.
- Improvements to the labelling of dairy products to ensure consumers are buying British
- Government agencies doing more to support the public procurement of British food
TheCattleSite News Desk