Müller has confirmed that its direct premium milk price will be 25.75ppl from 1 October, which is a fall of 1ppl.

But farmers who opted to use a fixed price contract option, launched by Müller more than a year ago, will continue to get 28.00ppl.

Müller stated that the reduction in the market value of farmgate milk reflects record levels of milk production by farms at a time when the industry is facing a marginal decline in demand for fresh milk and other dairy products.

ADVERTISEMENT

The misalignment has seen the value of commodity cream plummet by 37% in a year, with butter values also badly affected.

'Difficult period'

Milk supply director Rob Hutchison said: “This is an extremely difficult period for the whole dairy supply chain in the UK and while this

supply and demand imbalance persists, it appears likely that market values will remain depressed.

“Müller Direct dairy farmers who chose to hedge against volatile market conditions by using our fixed price option will be cushioned to a certain extent, but for the whole industry to move forward it must work more coherently and effectively together to align with the needs of customers and consumers.

We are confident that this will place our business and supplying farmers in a strong position

“Müller is playing its part by ensuring that it has the dairy network capabilities, the fully recyclable and light-weighted packaging proposition and the herd health standards which consumers demand.

“We are confident that this will place our business and supplying farmers in a strong position as the sector emerges from this period of significant and fundamental change.”