Dairy Crest has blamed plummeting milk prices and the Russian trade ban as it cuts its price by 1.75ppl from October 1.
Farmers on a Davidstow contract will now be paid 30.34ppl and those with all or a proportion of their milk price on the company’s standard liquid contract will be 28.34ppl.
The global dairy trade auction continued a series of price falls on August 19, and further drops are expected at the next event, which takes place tomorrow.
The GDT index fell by 17 per cent in July and August, continuing a fall of 44 per cent since a peak of 1,573 in April last year.
Announcing the cut on Saturday, group procurement director Mike Sheldon said: “As has been widely reported, global dairy markets have fallen dramatically over the past few weeks at an unprecedented speed and level. Unfortunately we have had to reflect this within our milk prices for October.
“I understand that this reduction will be really disappointing news for our farmers. However, having discussed our position at length with DCD, they recognise the severity of the situation.
“I recognise that price volatility is difficult for farmers and processors alike, which is why Dairy Crest and DCD pioneered the development of a Liquid Formula that helps to smooth out the peaks and troughs. We will be offering further volume to farmers from October 1.”
In a statement, the firm said: “These price reductions reflect the dramatic falls in global dairy markets over the past few weeks, further exacerbated by the recent Russian trade ban on dairy products.
“The 17 per cent reduction in the Global Dairy Trade auction price between July and August means that prices are now around 50 per cent down from their peak at the start of 2014.
“At the same time, UK cream prices have fallen back 15 per cent this month alone and cheese stocks are at record high levels.
“With half of the butterfat supplied by our farmers being processed into butter and half being sold on the commodity cream market, these external market conditions have a very direct impact on the farmgate price of milk.”
Source: Western Daily Press
