Minimum milk base price announced

Dairy Farmers of Britain are announcing an estimated headline price of 20p, but after estimated costs of collection delivery and overheads this nets down to a 10p minimum base price for farmers on their monthly rolling contract. This price will remain for the next month (17 June 2009 – 16 July 2009). Next month’s minimum base price will be set no later than 10 July 2009, but its level will depend on both prevailing market conditions and collection costs and volumes.

Half of the DFB co-operative’s 1,800 farmer members had tendered their resignation prior to the receivers’ appointment and were serving the 12-month notice period. PwC decided following the receivership to release the requirement to notice; those that wanted to go were free to. From 3 June 2009, a two-week purchase order was given by the receivers, which has succeeded in allowing time for the vast majority of the farmer members to find another milk buyer. As such, the base price applies only to the 400 or so farmers who have not moved their supply to alternative buyers.

Stephen Oldfield, agribusiness leader and joint receiver and manager of Dairy Farmers of Britain Limited, said:

"We have been working to provide collections for farmer members of the co-operative who need continuing support. The emphasis has been on keeping the wheels turning and the milk flowing from farm gate. The remaining DFB milk field are almost certainly those small farms whose milk falls below the minimum volumes many milk buyers have. Some are farmers in the most remote and yet most scenic and beautiful areas of the country. The price is likely to be met with real concern by these farmers who have no viable alternative milk buyer and have to accept our monthly contract to ensure their milk is collected. My understanding is they may not be able to continue as dairy farmers if I am unable to get improved prices from the marketplace for their milk.

"We are strictly margin managing and will be fully transparent with the famers on the eventual net price we achieve, any margin we achieve above the base price will be returned to farmers but this will not be known until the end of the month’s contract. We continue to ask milk buyers to support the remaining member farmers with a fair price for their milk."

The receivers are making arrangements to pay twice a month to help farmers’ cash flow and have also arranged an urgent ’all parties’ meeting for Wednesday 17 June 2009, to explore what can be done to help the remaining DFB farmers. The receivers have asked representatives from Dairy UK, NFU, FUW, UKASTA, CLA, TFA and Welsh Assembly to attend and Defra are co-ordinating the meeting.

Stephen Oldfield continues:

"I will update the member farmers following the meeting on the 17th June. In the meantime, updates will be posted as available on the website and members can call the members helpline on 08700 108181 for help and information. RABI have also been active in supporting farmers in distress and continue to be available on 01865 727 888."

The Members’ Council, which has been retained by PwC, has been proactively working with the milk supply employees to provide as much information as possible to farmers about their position to help them make their individual decisions on their farming businesses.