MULLER UK is to explain the precise details of its new 'direct' milk supply contracts at a series of meetings around the country next month.

Producers not on aligned contracts are to be given the opportunity to fix their price for 25% of their supply for 12 months, in a move that the company hopes will take some of the uncertainty out of the job. Muller’s agriculture director Rob Hutchison commented: “Let’s face it, there is a lot of uncertainty out there. The markets in which we operate are unpredictable and frequently unforgiving, and the impact of the UK’s departure from the EU is still to be determined.

“We want to help our farmers realise their ambitions by taking a more strategic approach to delivering the kind of supply chain we all want – where each part has the opportunity to run businesses which are sustainable and profitable."

Dairy industry analyst Ian Potter explained: “At first sight the new contract sounds complicated but in reality it’s fairly straightforward – on the third Wednesday of each month, Muller Direct suppliers will be able to log in and view a paid price to them for each of the 12 months based on a www.milkprices.com standard litre.

“A farmer will trade over 12 months, so if say he wants to trade 10,000 litres a month he will trade the minimum lot size of 120,000 litres and trade at 12 individually monthly prices x 10,000 litres, which he presumably will average out over the 12 month period."

NFU Scotland’s milk policy manager George Jamieson said: “Muller’s latest initiative to offer their non-retail aligned farmer suppliers an alternative, voluntary option utilising futures platforms is a welcome development. It gives those producers an opportunity to ‘fix’ prices for a proportion of their milk for an agreed period of time.

“This merits consideration and I encourage Muller producers to engage with their elected farmer representatives to help them fully understand the offer and the option to use hedging as part of a risk management process to reduce the impact of volatile milk prices.”