The leading butter & spreads brands have all slashed prices and succeeded in stealing share from own label, but with bad weather leading to continuing milk shortages, manufacturers are set to feel the pinch in 2013.

“The last year has been extremely challenging for British dairy farmers,” says Adam Mehegan, senior shopper marketing manager at Dairy Crest, whose brands include Country Life, Clover and Utterly Butterly.

“Costs of production, food and fuel increased considerably and difficult weather conditions put them under further pressure.”

The company says it has increased what it pays its farmers four times since September 2012, and is now paying a record price for milk. Last month, it announced farmers supplying milk on the company’s standard liquid contract will receive a price increase of 1.5 pence per litre, taking the price to 31.5ppl.

In April, it was the first milk processor to offer its farmers a standard liquid contract - the opportunity to move to a formula milk price mechanism - which it says it plans to roll out more widely.

“Dairy Crest wants to continue to pay a fair, market-related price so farmers feel confident they can make a decent living from their hard work and skill, and ultimately ensure we have a sustainable supply of milk in the future,” says Dairy Crest’s Mehegan.

Meanwhile, Somerset-based Wyke Farms increased its price by 1ppl last month, taking the price to 31.7pppl - again the highest price that it has ever paid for milk.

And Müller Wiseman Dairies revealed its new Müller Wiseman Formula Price will pay 32.27ppl during its first quarter of launch from July to September 2013.

“While milk production rose by 0.6% over 2012, firm demand for dairy products led to tight supplies,” says Robert Miles, senior commodity analyst at Mintec.

“At the beginning of 2013 France, the UK, Italy and the Netherlands all began the year with negative growth in production but early estimates suggest EU milk output will rise by 0.4% in 2013.”

As a result, butter prices have been increasing since the start of 2013 and in the last six months butter prices in the EU have risen 14% [Mintec].

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