Dairy Crest announced this weekend, following its March milk price cut, that it would freeze the price it paid farmers for their milk until at least July this year.
The company claimed it was the first processor to introduce a ‘price floor’, which it hoped would stabilise the market for producers.
From March, the company said it would reduce the price it paid for milk by 1.5p per litre (ppl). That would mean Farmers on its Davidstow contract would receive 25.1ppl and farmers on a standard liquid milk contract would receive 23.1ppl.
“During this challenging time for British dairying, Dairy Crest is leading the industry by introducing a price floor until July,” said Mike Sheldon, Dairy Crest md of dairies.
“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.”
On January 29, First Milk announced it planned to hold its members’ milk prices for March.
Nigel Evans, vice chairman of First Milk and Pembrokeshire dairy farmer, said: “As a British farmer-owned business we are acutely aware of the impact that market volatility and our recent announcements are having on our members.
Determined and confident
“We are both determined and confident that the steps we have taken have created a stronger business as we head into this year’s spring peak.
“We remain very cautious about the impact of cheese stocks which are yet to come onto the market and the consequences of higher milk volumes being produced around Europe this spring. But right now markets are relatively quiet and therefore we are able to hold our March milk prices.”
The move follows intense negotiations between First Milk, its banking partners, its suppliers and UK politicians after the cooperative revealed plans in January to push up costs for its farmer members. First Milk also deferred payments by two weeks, from January 12 to January 26.
The processor said the drastic and unexpected decisions were intended to offset cash flow problems and, although the market was nightmarish for dairy farmers, could not be avoided.