Dairy Crest and Robert Wiseman Dairies are cutting the price they pay suppliers for milk, with both citing the current ‘challenging’ market environment.
Dairy Crest announced a 2p per litre cut paid to farmers from last week while Robert Wiseman dairies will cut the price by 2p per litre from 1 June.
The Dairy Crest announcement is expected to affect around 575 farmers, who will now receive 26.61 pence per little (ppl) for their milk.
‘Dairy sector suffering’
The company said: “On top of downward pressure on its selling prices in a tough consumer environment and an extremely competitive middle ground, the whole dairy sector is suffering from steeply falling commodity markets.”
The firm recently started a consultation on the closure of two-UK based dairies, in Aintree and Fenstanton, with nearly 500 employees.
It added they were looking for selling price increases from customers "wherever possible".
Group milk procurement director, Mike Sheldon, said: “Dairy Crest remains totally committed to its 1,300 dairy farmers and is very disappointed to have been forced to cut its milk price to farmers.
“We know that milk production costs remain high and that this will be a blow to those farmers who are affected. However, the market pressures on our dairies business mean that we have no alternative.
“We certainly haven’t taken this decision lightly and have looked at all other options. The tough decision to consult on closing two of our dairies and reductions in depot and head office jobs demonstrate this.”
Robert Wiseman Dairies followed Dairy Crest by announcing its first farm-gate milk price reduction for three years.
The firm said it reflects the collapse in the value of bulk cream and the “continuing and sustained impact of a challenging market environment”.
Pete Nicholson, Wiseman Milk procurement director, said: “After a three year period which has seen our farm-gate price increase five times by a cumulative 4.55 ppl, we must now reflect the competitive environment we are operating in and substantially lower returns from the bulk cream market.
“The slide in the value of cream has accelerated since the turn of the year and the lack of relief from other market related pressures mean that we can no longer sustain the Wiseman milk price at the level it was at.
“It is essential that we continue to strike a balance between paying a competitive milk price to farmers who are not aligned with major retailers, and the ability to compete within our sector of the dairy industry.”