Milk price row: Muller agrees 1p per litre increase
Dairy giant Muller has claimed milk prices have "turned a corner" after agreeing a 1p per litre increase in the price paid to farmers.
The Market Drayton-based yoghurt and butter maker is to raise the price it pays farmers for milk will increase by a penny from October 1, on the back of rising global demand for dairy products and a reduction in supply.
The move has been welcomed by the NFU, although an official today warned farmers would not see the benefit until November.
Last month Muller faced fresh protests from farmer groups after deciding to keep its price unchanged in September, in the face of improving prices around the world.
It has now joined other suppliers in increasing its prices – although it was among the companies to keep a relatively high price as the global milk price slumped in the first half of the year.
"We are hopeful that dairy commodities markets have turned a corner and we will now see a sustained recovery," said Lyndsay Chapman, Müller's agriculture director.
"Cream and butter values have shown improvements that are now starting to be realised in our business, although the latter is taking longer to recover due to the volumes of butter in storage. Better returns will lead to higher farm gate milk prices, and we are optimistic in this respect."
The company will also begin the process of harmonising prices between the price it pays to suppliers.
Eight months ago the group completed the takeover of Dairy Crest's dairies operation, and the new announcement means the company is to begin moving suppliers to that contract onto the same level as its own Muller Milk Group suppliers.
That means that the increase will be higher for ex-Dairy Crest suppliers than for existing Muller farmers. The average price paid will be 19.4p per litre but Muller suppliers are still receiving around 0.37p per litre more than their Dairy Crest counterparts.
Roddy Catto, chairman of the Müller Milk Group farmer board, said: "Whilst there remains a long way to go before farmers' milk prices recover to a level which is sustainable, this is an important first step and acknowledgement that the markets are looking more positive.
"Müller's focus on adding value to milk meant that when the markets hit their lowest point we were not fully exposed to the very low returns being received by others in our industry.
"Nevertheless, this has been an extremely painful and challenging period for Müller suppliers and we now hope to see a sustained recovery."
Michael Oakes, NFU Dairy Board chairman, said: "Following our strong statement last month we are pleased to see Muller increasing their milk price for October and passing back some market returns to farmers. We believe this is a positive trend that should continue."
"Although we welcome the announcement, the increase is for milk produced in October so won't actually be seen by farmers until November, which is still a long way off. Farmers remain in an unsustainable situation and even with a 1ppl increase and retail supplement, it will not be a sustainable milk price."
