Dairy Crest has announced that the liquid milk price for farmers supplying all or a proportion of their milk on a standard liquid contract will reduce by £0.014 per litre to £0.2169 per litre from the beginning of September.
The price reduction represents a 6% decrease and follows a six-month period of price stability in spite of what the dairy producer termed “challenging market conditions”. The changes will not affect farmers on a Davidstow contract, where the price per litre of £0.2642 is described as “one of the most competitively priced for farmers in the South West.”
Dairy Crest’s Mike Sheldon said: “We have worked extremely hard to deliver six months of stability to our farmers during very challenging market conditions. In the past month, dairy markets have declined further, with the result of the last GDT auction being widely reported as extremely disappointing for the whole dairy supply chain. At the same time, milk supply has remained strong and ahead of forecast. This has meant we have had to process a significant volume of milk into commodities such as skimmed milk powder and cream. Therefore we are now in the position that we have to reflect these adverse market circumstances within our liquid milk price.
“We are very aware of the challenges our farmers are facing and we will do everything we can to continue to support them through our farm business teams and additional support services at this difficult time.”
The price adjustment has been agreed with Dairy Crest Direct following in-depth discussions in line with its new DPO status, achieved last month.
Dairy Crest Direct chairman David Herdman added: “Earlier this year we agreed to apply milk price floors stabilising liquid and Davidstow prices to the end of June. Further agreements were concluded with Dairy Crest to extend this stability to the end of August – a significant result which we hoped would take us to a position of more balanced supply and demand.
“Through this period of stability, markets have weakened, production has remained strong and competitor pricing has continued to fall. It has therefore proved impossible to mitigate the relentless downward market pressures further into September.”
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