The move follows in Dairy Crest's footsteps © Müller UK & Ireland
Müller UK and Ireland has confirmed that it will lower the price its pays to farmer suppliers for their milk – a consequence of the continued softening of the market value of farm-gate milk and falling global demand.
The reduction of £0.008 per litre is a less severe cut than that announced by Dairy Crest two weeks ago – when it lowered the price it paid to farmers on a standard liquid contract from £0.2273 to £0.2169 – but will still mean that Müller’s farmer suppliers are paid only £0.2235 per litre of milk.
Analysis suggests that British dairy farmers have produce 1.6bn litres more milk in the last 12 months than in the same period two years ago, representing an additional 40 pints of milk for every consumer. This over-supply, coupled with dwindling demand, has led dairy companies to lower the price that it pays to farmers for their milk.
While long-term demand forecasts for the dairy sector remain positive, the value of dairy commodities has declined sharply in recent months with cream suffering a loss of 10% in value in July along, and a fall of 35% in the last year.
Müller UK and Ireland head of milk supply Martin Armstrong said: “We are seeing a significant imbalance between supply and demand in the UK and globally and this is weighing heavily on the value of the milk produced by farmers.
“We are not in a position to avoid the impact of these powerful and cyclical market fundamentals but we are continuing to invest heavily to create a diverse dairy business in the UK and to work collaboratively with our farmer board to align supply with demand.
“We remain focused on adding value and innovation so that we can pay a premium over the commodity market value of farm-gate milk.”
Müller Wiseman Milk Group chairman Philip Rowney added: “It is our role as a board to minimise the impact of a market downturn on our members and to ensure that the company is under no illusions as to the position which farmers currently find themselves in.
“To this end our discussions were constructive and robust and whilst there is no doubt that farmers who supply the company will not welcome this news, Müller UK & Ireland remains committed to a leading non-aligned price and contract proposition.”
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