UK dairy processors announce further increases to milk prices

UK dairy processor First Milk and Muller announced further plans to increase milk prices, with First Milk deciding to increase their September milk prices, despite raising it just last week by 0.75p/L (0.89c/L).

Taking the recent adjustments into account, First Milk will be offering an average September A milk price of 18.5p/L (22.03c/L).

Announcements in recent days have boosted the dairy processors returns and rather than waiting until October to reflect these, the company has decided to pass them on immediately, said First Milk Chairman Clive Sharpe.

“The adjusted price increases for September are now between 1p/L (1.19c/L) and 1.67p/L (1.98c/L), which covers market moves and an additional 0.25p/L (0.3c/L) Business Supplement Payment due to stronger than budgeted business performance,” Sharpe said.

There will be further price increases for October. We will update members mid-month with our forecast, and confirm the level of the increase later in September.

“I hope these additional moves reflects our commitment that as the market continues to rise; so will our milk price. In addition, we will continue to deliver on the Business Performance Supplement commitment,” the First Milk Chairman said.

Meanwhile, Muller UK has also written to dairy farmers to confirm that its milk price will increase by an average of 1p/L (1.19c/L) from October 1, 2016, bringing the price up to 19.189p/L (22.85c/L) excluding supplementary payments.

Muller’s Agriculture Director, Lyndsy Chapman, said they are hopeful that dairy commodities markets have turned a corner and that a sustained recovery is now on the cards.

“Cream and butter values have shown improvements that are now starting to be realised in our business, although the latter is taking longer to recover due to the volumes of butter in storage,” Chapman said.

Better returns will lead to higher farm gate milk prices, and we are optimistic in this respect.

There remains a long way to go before farmers’ milk prices recover to a sustainable level, but this increase acknowledges that the markets are looking more positive, according to Roddy Catto, Chairman of the Müller Milk Group farmer Board.

“Müller’s focus on adding value to milk meant that when the markets hit their lowest point we were not fully exposed to the very low returns being received by others in our industry.

“Nevertheless, this has been an extremely painful and challenging period for Müller suppliers and we now hope to see a sustained recovery. We will continue to work very closely with Müller to build on this positive first step,” Catto said.

The Muller Milk Group Farmer Board are has requested that Muller equalise the prices on its standard liquid contracts, a process has started this month, with the intention to complete this as soon as possible, according to Catto.

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