UNITED KINGDOM-THE DAIRY CRISIS.
Dairy Crest has cut its milk-for-cheese price to suppliers at the Davidstow Creamery by 1.25ppl from April 1. There will be no change to its liquid milk price for April, though the company has said it will review the position for May.
According to Dairy Crest the change to the cheese milk price reflects a number of substantial reductions in returns from the cheese market, where the increasing volume of imported cheese is a major concern.
The resulting competitive pressures are set against an economic environment where value is the main priority for most consumers, which increases the need for on-going promotional activity to maintain brand loyalty.
Commenting on the announcement, Dairy Crest’s new milk procurement director, Mark Taylor, said: "In February, we confirmed that we would maintain our new milk prices for liquid and cheese through to March 31.
"We have honoured this commitment, even though both cheese and ingredients markets have become more difficult.
"I am pleased that we can maintain our liquid price for April, but the scale of the downturn in the cheese market has meant that we have had to take further action beyond the 1ppl reduction which was applied to our milk-for-cheese price in February.
"We are fully aware of the pressures our farmers are facing, which have been highlighted through our negotiations with Dairy Crest Direct. However, we have to react to market movements of this level and duration.
"We take a responsible approach to milk pricing and have mitigated the full impact of the market on our milk price in order to provide support to our direct suppliers.
"The current market conditions are very challenging to all parties and it is essential that we all concentrate on improving efficiency. We are working closely with Dairy Crest Direct to explore how we can work together to extract maximum value from our supply chain."
Dairy Crest Direct chairman David Herdman said: "We are pleased that the liquid price has been maintained for a further month, which will be welcome news on farm. We are concerned about the impact on our members who supply milk on a cheese contract, but acknowledge that Dairy Crest has sought to minimise this reduction in the light of the current market conditions.
"Dairy Crest Direct is committed to working together to explore all opportunities where there is the potential to generate additional benefits or reduce cost."