First Milk members 'will be rightly shocked' at the forecast milk price set for April under their new A and B pricing model, according to the National Farmers' Union.
The co-operative announced that the April A price will be set at 20.87ppl for the manufacturing pool and 20.5ppl for the balancing pool. The range for the B price is 16ppl to 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.
NFU dairy board chairman Rob Harrison said: “Late last month, First Milk announced they were bringing in their new A and B pricing model from April and today we’ve seen what this delivers. Their members will be feeling continued frustration with First Milk with this announcement of shockingly low prices for both the ‘A’ and ‘B’ volumes. 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.
“The B price forecast of 16-18ppl is extremely cautious – sitting at around the EU powder intervention price this is not manageable for farmers to deal with. If I was a First Milk member I’d be asking them how exactly the ‘B’ price will be substantiated at the end of the month. This model desperately needs more transparency in the calculations, as a cooperative, First Milk members need to understand why they are facing yet another price cut.
“With other milk buyers also looking to implement these pricing models from April we would urge them to be honest and transparent with their suppliers as to how the A and B milk price is calculated. Today’s positive GDT auction result comes at the back of five consecutive positive outcomes, and we’ve seen two upward price changes from Dutch co-operative Friesland Campina. The signals are there that the market is starting to stabilise and we want to see this confirmed in UK farmgate milk prices.”
Chairman Sir Jim Paice MP commented: “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 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.
“As a Board we will continue to monitor market indicators closely and build these into our decision-making on milk price.”
First Milk are organising local drop-in days across the country, which are being held by their Farm Enterprise Team, to ensure that all members have the opportunity to discuss and understand the new pricing arrangements.
But Managing Director of Muller Wiseman Dairies Carl Ravenhall said: “We are encouraged by recent signs of improvement in global commodity markets and very much hope that this establishes a trend. On the supply side, production of farm-gate milk will peak over the next period and we hope that this will be at a level which supports, rather than undermines stability and progress.”
