dairy cow

The processor’s price hike to 46ppl means Müller has increased its milk price by 31.4%, or 11ppl since 1 March

Müller Milk & Ingredients has announced a 4.5p per litre increase to its farmgate milk price for July, in response to the ongoing cost of production crisis plaguing the dairy sector.

The price hike to 46ppl – applicable to farmers supplying the processor via its Müller Advantage scheme – means Müller has increased its milk price by 31.4%, or 11ppl, since 1 March.

Dairy farmers were continuing to see “extraordinary increases in input costs” throughout their entire supply chain “including but not limited to fertiliser, feed, energy, packaging, and logistics”, said MMI joint CEO Rob Hutchison.

“We are doing everything we can to support our farmers and protect security of supply for the millions of consumers who enjoy the dairy products we make,” he added. “We will closely monitor all of the factors which influence farmgate milk price, including farm supplies, in the coming months.”

Müller’s announcement follows a €0.05/kg increase last week by Arla for June, taking its UK price for a standard litre up by 4.49p to 47.79ppl, and to 54.34ppl for organic milk.

The price hike means the dairy co-op is paying its farmers 66%, or 19.01 ppl more for a standard litre of milk than it did two years ago in June 2020. It was described as “necessary” by Arla UK agriculture director Paul Savage “to help our farmer owners cover costs so the UK’s milk supply can continue to flow, while also prioritising sustainability and animal welfare on farm”.

The moves are part of a glut of ongoing increases from large and small suppliers that have escalated over the past six months. 

And many of these have come alongside adaptations in payment models from producers, with one – Cornish clotted cream supplier Rodda’s – having just announced a near 4ppl increase in its milk price for June to 43.55ppl, while also moving from a quarterly to a monthly pricing schedule to “deliver price increases faster to its farm suppliers”.

It comes as Defra’s UK average milk price for April rose by 1.7% to 37.41ppl, according to data published last week by AHDB.

The GB five-year average price was up 6.1% to 29.86ppl year-on-year in March, AHDB added, and was expected to rise even further once April’s data was released in June (after taking into account Northern Ireland’s average milk price).

The feeling within the dairy sector was that “there is still more to come” on price increases, suggested industry analyst Ian Potter in his regular newsletter this week, partly to cover continuing on-farm inflation but also due to major concerns the record prices “are still not converting to additional milk”.

With that, hung the “harsh reality there could be a shortage of milk in the coming winter until farmers have the confidence to push on”, he warned, echoing AHDB’s prediction in April that year-on-year milk volumes could fall by up to 5.3% – the equivalent of 605 million litres – over the coming year.