New milk price does not add up

Milk is a source of iodine.
Milk is a source of iodine.
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A NEW formula for setting milk prices is a dud, say farmers, who want to see positive international market signals translated into a better price paid for milk.

Milk buyer First Milk’s new ‘A&B’ pricing structure for April sees the A price set at 20.87 pence per litre (ppl) for the manufacturing pool and 20.5ppl for the balancing pool.

The range for the B price is 16-18ppl which will be fixed after the month-end. This B price will be paid on at least 20 per cent of a member’s total volume.

Rob Harrison, the National Farmers’ Union’s dairy board chairman, said: “Late last month, First Milk announced they were bringing in their new pricing model from April and today we’ve seen what this delivers.

“Put simply, this is a price cut masquerading as a new pricing model. We have seen positive signals recently and this needs to feedback onto farm urgently.”

First Milk chairman, Sir Jim Paice MP, said: “There continues to be marked volatility in global dairy prices. Nevertheless, the recent movement of market indicators means that we are cautiously optimistic that the trend for future dairy prices is, at long last, a more positive one.

“However, there remain a number of uncertainties. For example, although the latest few GDT (Global Dairy Trade) figures have been encouraging, as yet, they have not fed through to milk prices and many buyers are awaiting the outcome of the forthcoming spring flush.”

A&B pricing sees First Milk members allocated a monthly A volume based on the average of the same month’s production during the previous two years, multiplied by 80 per cent.

B volumes include any milk produced in addition to the allocated A volume.

The A volume prices are based on market returns for that milk pool, as determined by the First Milk board.

The price for B volumes reflect returns from short-term markets.