Muller Wiseman raises milk producer price

Dairy farmers who supply Müller Dairy and Robert Wiseman Dairies are to see their milk price rise to 30.5 ppl.

But Farmers for Action campaign group said 33p a litre was needed to cover production costs alone after staging a blockade in October.

Group chairman David Handley said: "We are producing milk at the moment for an unsustainable price."

The increased milk price will be offered to all dairy producers supplying the Group except those in Tesco and Sainsbury supply groups which each have their own milk pricing arrangements.

The farm-gate price will increase from its October level in two stages - by 0.5 ppl to 29.5ppl from 1 December 2012 and then a further 1 ppl to 30.5 ppl from 1 February 2013 - with the company aiming to help dairy farmers meet rising costs whilst it works commercially to recover the increase from markets it serves.

“We want to return a higher milk price to farmers so that we can ensure security of supply for our customers in an environment where off farm milk production is dropping” said Ronald Kers, Chief Executive Officer of Müller UK & Ireland Group.

“The elected Müller Wiseman Milk Partnership farmer board deserves great credit for the manner in which they have approached this issue. They have worked tirelessly with us to arrive at a decision and we share the view that our collaborative work on this and the Müller Wisemilk Initiative augurs well for the future.

“We are determined to be the leading dairy company in the UK and Ireland and the preferred home for milk produced by Britain’s dairy farmers and we will work closely with the farmer board to this end. For this reason we cannot be distracted by localised and unlawful militancy promoted by people many of whom have no connection with the Group whatsoever.”

Roddy Catto, Chairman of the Muller Wiseman Milk Partnership Board said: “We would ask those behind recent militant activity to respect the fact that we are the elected representatives of all dairy farmers who supply the Group."

300 farmers staged a blockade of a Muller factory in October after price talks collapsed.

“Blockades of the kind recently seen in Shropshire risked undermining the progress of these discussions and it is time now to build a relationship that is based not on disruption and ultimatums but on constructive dialogue.”

The NFU told a House of Commons Committee last week that the dairy 'turmoil' of 2012 must not be repeated as part of its inquiry into the future of the industry.

The delegation included Deputy President Stephen James and Milk Board Chairman Aled Jones.

"The events of this summer have to be a turning point" said James.

"The decision of processors to slash milk prices attracted a huge amount of interest and led to headline news – in fact it was only pushed off the front pages by the Olympic Games."

"Whilst these price cuts have been withdrawn, the long-term sustainability of the industry remains uncertain."

Dairy farmers are likely to face worrying tax bills this winter, despite many producing milk at a loss following well-publicised price reductions by processors.

Although cash flow and profits are already tight – and likely to be even tighter over the winter months - farmers stand to incur hefty tax charges in January, following comparatively good milk prices in the 2011/12 financial year.

"While profits may not have been at levels farmers would have liked, accounts being produced for that year indicate that the income for 2012 rose compared with the previous year" said Mike Butler, senior partner at accountancy firm Old Mill.

"Where profits rise, tax liabilities rise also."

NFU Deputy President Stephen James said the dairy sector 'has been a source of tension' in the last decade.

"The key problem over many years is that dairy farmers have routinely failed to see prices rise as fast and as high as the dairy commodity markets."

"Yet, when these same markets fall, the milk price paid to farmers drops like a stone. This is a clear result of the exploitative nature of milk contracts and lack of negotiating power that currently exists."

The dairy coalition said milk buyers must be more transparent and clear about milk pricing policies.