One of the UK’s largest milk buyers has announced it will increase the price it pays farmers by 1.5 pence per litre (ppl) over the next two months.
“We have seen inflation across dairy markets and milk volumes continue to fall. We wanted to take positive action and reflect these market conditions as soon as possible,” said Ruth Askew, head of procurement at Dairy Crest.
Dairy farmers in the UK have been facing falling milk prices for the last two years, and have attributed some of the squeeze to buyers.
Last August, a collection of farming unions called on the government to “admit something [had] gone fundamentally wrong in the supply chain”, and said many contracts put all the risk on farmers with little reward.
Askew said: “Our farmers have been facing difficult conditions on farm as the whole industry has dealt with unprecedented deflation over the past 18 months. During this time we have worked hard to support our farmers by paying a fair, stable and competitive milk price.
“This latest two-phased milk price increase demonstrates that we are determined to continue paying a leading price to support and grow our milk field in the South West. We are committed to reviewing market conditions on an on going basis.”
Although farm gate milk prices saw a 3.3% increase between June and July, the latest statistics from the Department for Environment, Food and Rural Affairs (DEFRA) showed prices were still 13% lower than the same time last year.
Dairy Crest, owner of brands including Clover, Country Life and Cathedral City, said they would pay 23.72ppl from the start of October, and 24.22ppl from November.
“Dairy Crest has ambitious growth plans for our leading British cheese brands… as well as our new infant formula products, demineralised whey powder and galacto-oligosaccharide. Our farmers are critical to these growth plans," said Askew.
In a trading update on Monday, the company said it expected its half year profits to be up on last year, but said the “sudden cost inflation” was likely to impact on margins in the second half.
Mark Allen, Dairy Crest chief executive said: “To date we have announced increases amounting to 12% in the milk price we pay our farmers. Cream prices have been particularly affected, doubling over a very short period.”
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