Dairy Crest boss Drummond Hall has blasted claims made by rival processor Robert Wiseman Dairies last week that it pays a “significant premium” for milk compared with other dairies.
Hall told The Grocer that the matter of milk prices was complex because companies had different business mixes in terms of the types of products they made.
He added: “I could talk to you for hours about milk prices, but if you look at the league tables, then by far the highest price paid is by Dairy Crest to farmers
supplying our Waitrose and Marks and Spencer contracts, which are a significant part of our business.
“The fact is that, relatively speaking, theirs [Wiseman’s] is a very slim premium.”
But sources close to Wiseman dismissed Hall’s argument as a “myth”. They claimed that an independent analysis proved that turnovers at the three leading processors, Wiseman, Dairy Crest and Arla Foods UK, were all dependent to a similar degree on the cost of raw milk. They insisted that the analysis also showed that Wiseman paid out a premium of around 0.6p/litre to farmers compared with other leading dairies.
This represented a hit of about £5m a year to its bottom line, leaving it at a serious disadvantage to its competitors.
Hall’s claim to be top of the table in terms of milk prices was unconvincing, they said, because the Waitrose and M&S deals were premium contracts under which the retailers paid more for milk than rivals did.
Wiseman’s claim to be paying a premium was based on a like-for-like comparison of standard milk contracts, they said.
Wiseman warned last week that it would be forced to cut its milk price in January to fall into line with Dairy Crest and Arla.
Richard Clarke