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Milk Price Update

24/09/2012

29 pence Milk Price from Dairy Crest

Dairy Crest announced today that the prices it pays its farmers on both a non-aligned liquid milk contract and a Davidstow cheese contract will increase to 29 pence per litre from 1 November 2012. Non-aligned liquid farmers will also benefit from an earlier increase on 1 October to 28.25 pence per litre. These increases are in addition to Dairy Crest's decision to set aside the August price cut and mean that the company's milk prices are now higher than they were before prices started to come down from May.

Dairy Crest hopes that this news will help restore confidence at the end of a difficult summer for farmers and processors alike and, going forward, has committed to strive for further milk price increases.

The increases reflect the expectations of improving returns from commodity markets and higher selling prices that Dairy Crest is seeking from its customers. They are much needed to reflect the higher on-farm costs that all dairy farmers are currently experiencing following the difficult weather conditions this summer.

Communication of these price increases is being sent to around 1,000 farmers supplying Dairy Crest.

Help beyond milk price increases Dairy Crest has led the way this summer by being the first milk purchaser to implement the new voluntary code of practice for milk contracts. It was also the first of the three major processors to embark on the difficult process of finding a more predictable, formulaic way to determine milk prices. These are clear indicators of the company's commitment to working with its farmers to resolve the difficulties faced across the sector this summer.

Farmers supplying Dairy Crest continue to benefit from their milk price not being subject to capital deductions, which some milk buyers enforce on their milk suppliers to pay for investment in their processing factories, and they don't have to pay for haulage or the cost of milk balancing. They will also continue to benefit from free farm consultancy funded by the company.

Mike Sheldon, Group Milk Procurement Director, explained the process Dairy Crest has been through in the past few months:

"Poor markets and weather have combined over the summer to make it very difficult for our farmers.

We have responded by adopting the terms of the voluntary code, working on a formula based pricing model, setting aside planned price cuts and now we are increasing prices at the first affordable opportunity, as we committed to do. Our milk price is competitive, as we do not expect our farmers to pay for investment in our dairies or apply other hidden charges. We are also continuing to support our farmers with a free on-farm consultancy service.

As the only major processor in British ownership Dairy Crest's future is strongly linked to that of our farmers. We want and need our farmers to be successful. This is a partnership and today's announcement reflects our determination to make Dairy Crest the milk buyer of choice."