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Bombshell 2ppl immediate milk price cut for Omsco members

Posted on: 01/10/21

200 organic members of Omsco were given only 24 hours’ notice of a whopping 2ppl milk price cut from today 1st October. 

Without doubt this put chairman Neil Kennedy and the Omsco board firmly in with a very small handful of UK milk buyers who need to be pulled into line by others by the governments contract legislation.

For Omsco members to suddenly see their total revenue drop by 5% overnight and to already be wrestling with increased on farm costs must make them weep and wonder what’s next.

The general trend in both conventional and organic farmgate milk prices in the UK and EU is upwards and let’s be honest a 2ppl drop on October 1st during winter supplies does not bode well.

 

Omsco say the business model has been hit by a late Brexit deal which hindered its product exports.  In addition, it now has increased costs for haulage, shipping containers etc and it cannot absorb these costs and the farmers have to take a hit.

 

Neil Kennedy as chairman of Omsco and the signature to the devastating letter producers received yesterday will be one of the most clued-up people as to what other organic milk processors are doing given his executive involvement in several of them.

There are normally only two options in this situation:

  1. Drive the market with innovation and points of difference

Or

  1. Drop the cost of your raw material AKA farmgate milk (the last domino)

Several are already driving up standards having realised that conventional standards have been driven up close to basic organic standards leaving some customers struggling to understand what they are buying, that’s different with a UK organic dairy product.

For sure the November Omsco member meetings will be lively and the big question will be what’s coming next? 

In his closing sentence Chairman Neil Kennedy commented “However, we firmly believe that by taking this action now we will ensure the long-term future of the business” But will it ensure the long-term future of its farmer suppliers’ business?

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