New Dairy Crest contract, First Milk drops prices

By Jim Cornall contact

- Last updated on GMT

Dairy Crest has announced a new contract for its milk supplying farmers, while First Milk is dropping milk prices for some of its pools, Photo: iStock - CGRouse
Dairy Crest has announced a new contract for its milk supplying farmers, while First Milk is dropping milk prices for some of its pools, Photo: iStock - CGRouse

Related tags: Price, First milk

Dairy Crest (DC) and Dairy Crest Direct (DCD) have announced their new Davidstow Balancing Contract, while First Milk has simply cut prices for some of its UK farmers.

Farmers can sign up for the new DC/DCD contract in March. If they do so, they will have prices held at the current level of 22.72ppl until May 31. If they don’t sign the new contract, the price will drop by 0.8ppl to 21.92ppl on April 1.

For farmers who do accept the new contract, after May 31 the price will be adjusted on a monthly basis based on core volumes needed by Dairy Crest.

Should total milk supplies exceed the core volume requirements, the excess or “reserve” liters will be priced using a ‘market-related indicator.’

Current model ‘not sustainable’

Ruth Askew, head of procurement at Dairy Crest, said the current milk supply model, “is not sustainable.”

Stephen Bone, chairman, Dairy Crest Direct, said, “Our aim has been to reduce the exposure of our members’ core litres, whilst providing a transparent mechanism to value the reserve litres above factory demand.

“We believe this contract is an innovative approach to managing supply.”

First Milk price drop

Paul Flanagan, First Milk's external relations & membership director said that from April, improvement in business performance has enabled an increase in the proportion of milk paid at its higher A prices, from 80% to 90%.

“However, for March the continued weak market conditions and plentiful supply of milk has impacted on the pricing mechanism we have in place for our cheese business,”​ Flanagan said.

“Therefore we need to cut prices for those milk pools which are linked to cheese manufacture.”

The March price drop of 0.60ppl applies to First Milk’s four creamery pools, and the Northern England balancing pool. There is a 0.42ppl drop for the Scottish balancing pool, and no change for the Midlands balancing pool.

Related topics: Markets, Pricing Pressures, Fresh Milk

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