Yew Tree Dairy in Lancashire is breaking new ground in the British dairy industry with its new forward milk pricing offer.
The new contract will give farmers the option to lock in a long-term price for a portion of their milk, which allows them to fix a margin on at least some of their milk production.
It is understood that the fixed pricing offers will be made available to farmers supplying milk into Yew Tree’s ingredients business. Prices paid on milk going into these markets will be inherently volatile as they are directly linked into commodity market prices for cream, skimmed milk powder and brokered milk. The ability to fix the price for a portion of milk sales will, therefore, allow farmers to take some of this volatility out of their prices.
The dairy industry has called this an 'innovative approach', saying it will benefit farmers who are supplying into volatile markets, but it is restricted by exclusivity clauses in milk supply contracts.
AHDB Dairy said: "There are, undoubtedly, many farmers with milk production in excess of their buyer’s requirements who would welcome the ability to place this milk where it can achieve the best return – whether with their current buyer or another."
