Muller lorry

Source: Müller Milk & Ingredients 

The processor has also increased the price it pays farmers supplying it milk for its Lidl supply contract by 4ppl

Müller Milk & Ingredients has become the latest dairy processor to respond to soaring on-farm inflationary pressures by increasing the price it pays farmers for their milk.

MMI has added an extra 1p per litre to the 2ppl increase to its January farmgate price it announced last month, taking the standard price it pays farmers in its non-supermarket-aligned Müller Advantage scheme to 33ppl from the start of 2022.

In a further measure, Müller Direct farmers supplying milk for its Lidl supply contract – who opted to benefit from a three-year fixed price contract for up to 50% of their milk supply – will see this fixed price temporarily increase by 4ppl to 33ppl from the same date.

The fixed price contract was designed to help farmers to manage milk price volatility and gain long term financial certainty and was relaunched by Lidl GB and MMI in May at 29ppl.

The moves follow a raft of price increases by major milk processors in recent weeks, with The Grocer reporting in November that farmgate prices were now at their highest since 2018.

Retail prices are also climbing, with analysis of Assosia data showing there were 443 price increases across the liquid milk category in the big four, Waitrose, Aldi and Lidl this year – 58.8% more than the corresponding previous 12 months.

“As the dairy supply chain meets the challenge of unprecedented increases in costs, we will continue to do everything we can to support farmers who supply us,” said MMI COO Rob Hutchison.

Lidl’s commitment to the UK dairy sector by increasing the value of its contract was “an important and valuable hedge against milk price market volatility” that also recognises the current pressures facing farmers, he added.

“There is no doubt that the whole supply chain is working in an environment which no-one could have predicted. We will of course continue to monitor and manage the issues facing our supply chain in the coming months, to ensure that we continue to provide excellent levels of service to our customers.”

Martin Kottbauer, chief commercial officer at Lidl GB said: “We are proud of the strong, long-standing relationships we have with our dairy suppliers and have always looked to support them against the challenges posed by milk price volatility.

“It was why in May we agreed a landmark new three-year fixed milk price for with our farmers to help them better plan for the future and why, against the backdrop of exceptional inflationary pressures facing the industry, we are continuing the support them by increasing our fixed rate from the start of next year.”

Milk prices increase by up to 18% as farmgate hikes and other costs hit home