Muller Wiseman Milk Group members are being circulated with new contracts which include, for those who receive the standard milk price, an option to link their milk price to movements in the value of global dairy commodities.
The 'Muller Wiseman Formula Price' option for dairy farmers is contained within the revised contract which has been sent to all Müller Wiseman Milk Group members as part of the company’s commitment to the Voluntary Code of Practice.
Developed collaboratively by dairy farmers and the company as part of the Müller Wisemilk Initiative, the Müller Wiseman Formula Price will initially be available for nine months from 1st July 2013, for a maximum of 110 million litres.
The formula will calculate a farm gate milk price using publicly available benchmarks: Actual Milk Price Equivalent (AMPE), Milk for Cheese Value Equivalent (MCVE) and a basket of competitor milk prices, all of which will be reviewed quarterly.
Dairy farmers who are currently being paid the company’s standard milk price will be able to apply to sell a minimum of 10% of their milk volume (based on previous year’s figures) under this new Formula option. Müller Wiseman Dairies is looking to declare the opening Formula Price within the next few days with a view to canvassing interest amongst farmers in June for commencement on July 1.
Pete Nicholson, Agricultural Affairs Manager for Müller Wiseman Dairies said: "The current Müller Wiseman Standard Price will remain the default for non retailer aligned suppliers to the company. But the new contract offers an additional option which addresses the desire amongst some dairy farmers for their milk price to have a direct and clear link with published dairy commodity values.
"Members will get support from the company’s Farm Services team to understand the principles of the option, and we are developing an online calculator on the member’s website to help them predict trends and track movements to determine whether it is of interest.
"I have no doubt that the Müller Wiseman Formula Price will generate interest amongst existing and prospective suppliers to the company as the Müller Wiseman Milk Group continues to grow.”
Roddy Catto, Chairman of the Müller Wiseman Milk Partnership Board which represents the Muller Wiseman Milk Group members, said: "The Müller Wisemilk group has delivered a new way to value farm-gate milk which is transparent and linked to recognised market indicators so that the price paid tracks their upward or downward movement.
“We have achieved excellent collaboration between farmer representatives and the company and also with industry analysts, farming unions and other interested parties.
“What sets the Müller Wiseman Standard Price apart is its simplicity and flexibility. The Müller Wiseman Formula Price follows the same approach and unlike prices offered by competitors, it is not then eroded by deductions like member contributions, capital levies, balancing charges or haulage charges.
Pembrokeshire NFU Cymru dairy farmer members highlighted the need for fairness in the dairy supply chain during a well-attended meeting of local dairy farmers recently held at Duckspool Farm, Wiston courtesy of the James family.
Speaking at the meeting, NFU Chief Dairy Adviser, Robert Newbery said, "The NFU is striving to create an environment where farm businesses are confident to invest in a profitable future. It is clear that in the dairy sector one of the biggest barriers that’s preventing farmers from getting a fair deal in the marketplace is milk supply contracts.
"Much progress has been made in the UK over the last twelve months in developing a Voluntary Code of Practice on contractual relationships in the milk supply chain to ensure fairer and more balanced milk supply contracts for dairy farmers.
"However, there remains resistance from some milk buyers to sign up to the code and to put in place the basic measures of a sustainable relationship between dairy farmers and the supply chain."
Commenting on the ending of existing EU milk quotas in 2015 and the on-going CAP Reform negotiations, Mansel Raymond, NFU Dairy Board Chairman said, "There are some European countries, with the support of some MEPs within the European Parliament, who support the maintenance of supply management measures in the dairy sector post 2015.
"It’s proposed that in the event of a severe crisis in the dairy market that farmers who voluntarily cut their production by at least five per cent compared to the same period the previous year would be granted aid whilst levies would be imposed on those dairy farmers who increase their production. This is unacceptable to the NFU and we’re calling on CAP Reform negotiators to reject these proposals from the European Parliament."
Mansel Raymond added, “There should be no place in a modern and market-orientated CAP for supply management measures that penalise farmers for increasing their production, particularly as we already have effective market safety net tools such as intervention, public storage and the direct payments that are made to dairy farmers. Dairy farmers should be in a position to seize the opportunities presented by the growing global demand for dairy products rather than be shackled and held back by these supply management proposals.”
William Lawrence, Pembrokeshire NFU Cymru County Milk Chairman said, “Whilst I’m heartened by the progress that’s been made in developing a voluntary code for contractual best practice there are still a number of milk buyers who have yet to step up to the mark. I feel that the major retailers and the food service industry could do more by insisting that their suppliers offer contracts to dairy farmers that comply fully with the voluntary code.
“As dairy farmers, all we’re asking for are fair and equitable contracts, where the risks and rewards are shared more equally between milk producers and milk buyers. If milk buyers are unwilling to move forward with a voluntary code that’s balanced and transparent, then they should be in no doubt that we will not shy away from calling for firm Government intervention to ensure that dairy farmers get a fair deal.”
William Lawrence concluded, “We’re coming out of one of the most challenging years that many milk producers can remember with industry estimates indicating that feed costs alone have risen by over 2 pence per litre over the past winter. The adverse weather conditions of the last 12 months have had a big impact on our businesses and this has resulted in a sharp decline in milk production, but in spite of this we’re committed to the long-term future of the dairy industry. The demand for dairy products in both global and domestic markets is high; however we need to see the right signals from the marketplace to have the confidence to invest in our businesses and to ensure a sustainable future for dairy farming.”
