MULLER’S refusal to increase its September milk price is totally justified, according to its chief executive Ronald Kers.

Following adverse publicity over Muller's standstill on the farmgate price, Mr Kers has written to each of the company’s 1900 producers detailing the reasons behind the decision.

And, responding to demonstrations by Farmers For Action at its main Market Drayton premises south of the Border, Mr Kers warns that if the blockades continue, the collection of milk from farms cannot be guaranteed.

He said: “It is important that I make you aware of the implications of our sites being blockaded. We are confident that our supplying farmers are not the ones who are turning up at our dairies intent of illegally seeking to halt operation.

“We will do everything we can to maintain our milk collection service, but I want to alert you to the possibility of delayed or missed collections in advance and apologise if there is any inconvenience.”

Mr Kers continued: "The strategy which we are pursuing is well established. We are investing more than any other dairy business in the UK to build a diverse and successful dairy company. Our commitment to offering you a competitive milk price at every point in the market cycle is underpinned by a simple, straightforward contract.

“As the past few months have shown, our milk price doesn’t track the extremes of the spot market. During this difficult period, many of our competitors introduced contract variances at short notice which exposed their farmer suppliers to spot market returns which were as low as seven pence per litre.

“Given that this is the route they chose, it is only right that they immediately reflect the changes in spot market values as the market begins to recover," he said. "But I would stress that whilst these increases are headline grabbing, they are only moving these competitor milk prices closer, on an average basis, to the price we pay you, our farmers.

“The fact that dairy markets are improving is very welcome news for us all. This will translate into higher milk prices. However the timing is dependent on when we actually realise these higher returns within our business.

“We offer a competitive standard milk price and in addition a retailer supplement. We show this supplement separately to be transparent, so that you can see how it benefits your total monthly price paid.

“This is a very different approach from competitors who also receive this supplement from retailers but choose simply to incorporate it, and other retailer group premiums into their standard milk price, which is similar to ours. As a result your actual returns are significantly higher and we as a business are paying more for the milk that we buy.”

Commenting on Muller's position, dairy industry analyst Chris Walkland told The Scottish Farmer: “The reason Muller didn’t move on the September price is simple. They didn’t have to.

“The lobbying for milk prices started far too late in my opinion. If lobbying had started earlier, bearing in mind markets started moving in May, there would have been a better chance of a September increase. With all commodities in the market up significantly, Muller will have to go in October.”

Fellow market analyst Ian Potter was less forgiving: “Mr Kers’ letter states the case for the defence and once again he claims he is building Britain’s biggest and best dairy business.

“The letter is clear that Muller prices will not go up until ‘we actually realise these higher returns within our business’. Clearly Muller haven’t achieved that for August or September which is a worry, and some believe this is because Muller have forward sold quantities of milk which now look very cheap and could be holding prices back.

“The letter should ideally have gone out at the end of July with the announcement that milk prices for Muller non-aligned were frozen. At the same time it could have addressed where the extra cream returns money Muller has received has gone,” he added.