Farming News - Meadow Foods reduce Cumbrian milk price by 2ppl from Apr'20

Meadow Foods reduce Cumbrian milk price by 2ppl from Apr'20

20 Mar 2020
Frontdesk / Livestock has reported that Meadow Foods suppliers in Cumbria are to receive a 2ppl reduction in their milk price from next month, which will see the company’s milk price move into regional pricing for the first time. Meadow suppliers in the South Wales region have also received the same level of price cut, while suppliers in the Chester milk pool will see their price hold for April. The reduction is a result of what the company describes as ‘significant changes within key sales contracts’.

The company wrote out to all suppliers finally fully confirming April prices yesterday but, the news was broken to those attending a series of meetings held the week before last. May producers attending had been expecting a further price increase from April 1 adding to increases of 0.5ppl already received for February supplies and again for March.

The company explained it had not been possible to place the volume into similar premium contracts, a task made all the more difficult as milk supply in the UK has remained stable.

The consequence of not being able to place this volume into stable longer-term arrangements meant the milk would be firstly, subject to the added cost of hauling the milk back down from Cumbria (up from South Wales) to the company’s main processing site in Chester. In addition, this milk would be more exposed to the immediate returns from the commodity market—and the current seasonal challenges being faced at this time of year with spring just around the corner—and while these commodity markets have been looking slightly more positive, more recently have started to come under pressure. Also, the growing uncertainty in the months ahead due to the Coronavirus pandemic—which subsequently since those meetings have been held, have taken a much tighter grip over the country.

The cut of 2ppl for Cumbria suppliers is dramatic and is one of the largest single price reductions since Nov’14—outlining the severity of the situation as shorter-term markets increase in volatility by the day—and takes our liquid standard litre—4%b/f & 3.3% prot. Bactoscans of 30,000/ml & SCC’s of 200,000/ml, with Thermodurics of 500/ml, 1mltrs/yr on EODC (max vehicle accessibility) based on level supply and therefore, before seasonality, before seasonality, monthly profile adjustments, balancing charges, capital deductions or annual / part annual growth incentive schemes or supplements not directly linked to dairy market price movement—down from 26.0ppl 24.0ppl. This price includes the 0.5ppl bonus for signing up to the company’s Sustainability Scheme Agreement and a further 0.5ppl for participating in their Sustainability Survey carried out in Feb’20.

Our manufacturing standard litre—4.2%b/f & 3.4% prot. with the remaining conditions the same as our liquid standard — reduces from 26.38ppl to 24.38ppl.

With Meadow suppliers in the company’s Chester milk pool and those supplying closer to the main dairy, already told their milk price will remain unchanged at 26ppl for April.

Producers in Cumbria have been hoping the company might reverse its decision and spread the reduction to be shared by all suppliers to Meadow.

However, in their letter yesterday the company wrote that following the strong views of producers from the meetings, it had given its decision a great deal of thought but had concluded that regionalised pricing was the right course of action given the company’s current milk supply.

The company re-iterates it will try to support the new price for as long as it can and will return any positive trends back to the producers as soon as possible