1.25ppl shock price drop for Muller Direct producers from 1st March

Muller have shocked the majority of the Dairy Industry with a 1st March price drop amounting to 1.25ppl.

Muller say one of the key reasons for the drop is a surge of unplanned milk smashing all forecasts and expectations.

Muller have indicated they were irresponsibly scare mongered by various organisations that on farm winter production would be hit hard following last summers drought. The reality is the opposite has occurred with a significant production surge.

Muller, and others, are having to handle the biggest GB milk output for more than 25 years and say they simply cannot absorb the extra milk and associated cost especially in the ridiculously cut throat and marginless liquid packing business.

This 1.25ppl drop reduces the February standard litre price for 700 Muller Direct Farmers from 28ppl to 26.75ppl a price which includes the 0.5ppl Muller premium which an estimated 80% of Muller Direct producers achieve and is paid annually in arrears to those who quality who are not under notice to leave. Some refer to it as a loyalty bonus!

Without that 0.5ppl premium the standard litre price is 26.25ppl.

Mullers spin Doctor has certainly been taking steroids and is keen to remind everyone that around one third of the 700 Muller Direct producers will continue to receive 28ppl for the portion of their milk output they committed under the fixed price contact option.

There can be no doubt Muller have broad shoulders and “big balls” especially given they are one of the few remaining voluntary code complaint milk buyers and offer a short 3 month farmer notice period.

All eyes will now be on Arla when they declare their 1st March milk price. If Arla do manage to announce a no price change it will leave a whopping 2.81ppl standard liquid litre price gap between them and Muller (or 2.31ppl if the Muller Premium is included). If that happens the big question will be how and why this gap can happen.

In addition its looking very much like Muller could be one of the lowest March prices however it’s a fact a bunch of middle ground liquid processors will be breathing a huge sigh of relief as they really battle to breakeven. Watch out for the introduction of A + B pricing by some as a solution.