MÜLLER DIRECT has been accused of freezing milk prices at ‘unviable levels’ over the past year, leaving some farmers struggling to cover monthly costs.

The Müller Milk Group (MMG) board – which represents 1550 dairy farmers across Scotland, England and Wales – is behind the criticism and is also calling for a review of discretionary pricing which they state causes an imbalance in the relationship between farmers and processors.

Müller Direct hit back by reinforcing its decision to maintain a fixed milk price of 25.25ppl (not aligned to a retailer) during the pandemic, in order to offer stability during a time of volatility which saw many dairy farmers face economic hardship.

The board stated that non-aligned suppliers for Müller Direct are currently receiving a base price 5.92ppl lower than 31.17ppl which they say is the average of the two main retailer cost tracker milk prices for September, 2020. In addition, a Müller Direct premium of 1ppl will be paid to suppliers on eligible volume in January, 2021.

Vice-chairman of the MMG board, Ray Gibbins, commented: “At this milk price, many Müller Direct farmers are having difficulty covering their monthly costs with many relying on the recent government bounce back loans to support their cash flow needs. There are fears that dairy farms will increasingly exit production unless the liquid market returns a more sustainable milk price.”

The MMG Board has accused the current method which sets the milk price paid to Müller Direct (non-aligned) suppliers of being ‘fundamentally flawed’, stating that the monthly milk price is determined by the processor in the form of discretionary pricing. This approach, they said, created an imbalance in the relationship between farmers and processors.

Currently, this issue is being consulted on by the Government who are seeking views from the UK dairy industry on regularising milk contracts.

In response to the consultation, the MMG board is advocating a review of discretionary pricing and consideration of alternative pricing options, a mechanism to support volume management and the possible adoption of non-exclusivity arrangements.

A spokesman for Müller responded: “We are surprised by the MMG Board’s criticism of our decision to maintain a stable milk price during the Covid-19 crisis. By comparison, many dairy farmers in Britain have suffered severe hardship including significant reductions in their income and the distressing practice of pouring unwanted milk down drains.

“Müller farmers have benefited from stability through this period of volatility which has protected those who choose to supply our business from the problems seen elsewhere.

“In addition, many of our farmers are opting to manage volatility by fixing the price they receive for a portion of their milk supply, and accessing additional premiums for committing to initiatives such as those which improve animal health.”

“We have a waiting list of dairy farmers who wish to join us, and we will continue to act as a responsible, progressive and reliable milk buyer for those who choose to supply us, including compliance with the Voluntary Code.”