#Formula price for Muller Wiseman milk producers

NEW optional milk contracts with producer price linked to movements in global commodity values is being offered to the 381 Mí¼ller Wiseman Milk Group members currently on the standard price.
The new, transparent formula price will initially be available for nine months from July 1, 2013, for a maximum of 110 million litres and a minimum of 10 per cent of a producer’s volume.
Unlike the recently introduced Dairy Crest formula price, there is no reference to movement in producers’ input costs.
Muller Wiseman said the formula option was contained within the revised contract sent to all Mí¼ller Wiseman Milk Group members as part of the company’s commitment to the Voluntary Code of Practice.
The formula uses the benchmarks of Actual Milk Price Equivalent (AMPE), Milk for Cheese Value Equivalent (MCVE) and a basket of competitor milk prices. A launch price for the new contract was expected this week.
Agricultural affairs manager for Mí¼ller Wiseman Dairies, Pete Nicholson, said:
“The current Mí¼ller Wiseman Standard Price will remain the default for non-retailer aligned suppliers to the company.” But he said some dairy farmers preferred their milk price to have a direct and clear link with published dairy commodity values.
An online calculator on the member’s website is being developed.
Roddy Catto, chairman of the Mí¼ller Wiseman Milk Partnership Board said: “We have achieved excellent collaboration between farmer representatives and the company and also with industry analysts, farming unions and other interested parties.”
He claimed the formula price, like the company’s standard price, was set apart from the rest by its simplicity and flexibility and once set, was not then eroded by various deductions like member contributions, capital levies, balancing charges or haulage charges.
NFU dairy board chairman Mansel Raymond said: “While ultimately the scheme will be judged on its ability to pay farmers a sustainable milk price, the NFU welcomes the steps taken byMí¼ller Wiseman to become compliant with the Dairy Industry Code of Best Practice for Contractual Relations.
“We have pressed for determinable milk pricing mechanisms in milk contracts for some time.It is important that determinable milk pricing mechanisms get the support of supply chain customers, to ensure their future success.
“We now call on all milk buyers to offer farmers contracts that are compliant with the code;this is essential to building trust between them and farmers in the future.”
NFU Scotland’s Milk Committee Chairman Gary Mitchell said: “NFU Scotland’s long running campaign to see a formulaic approach to pricing adopted by milk buyers is beginning to bring results and we welcome Muller Wiseman introducing this option into its pricing schedule.
“We would encourage those supplying Muller Wiseman to have a look at the formula option. We are also hopeful that further good news in this area may emerge in the coming months as others examine milk pricing formulas that can react to the real market and also allow dairy farmers to better manage volatility in the sector.
“This announcement has to be seen as the beginning of a process that sees other buyers follow suit.  Post-2015, when the quota regime ends, farmers must be in a position to consider all market options for their milk and base their choices on what best suits their business.”
 
Source: Farmers Guardian