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Müller has angered farm suppliers and lobby groups by applying a 1.25p/l cut to its milk price, effective from 1 March, which brings liquid milk price to 26.25p/l.
The price excludes a 0.5p/l premium which is paid in arrears to suppliers who are not under notice to leave, with 80% of its 700 suppliers in Britain typically receiving the additional payment.
The processing giant blames an oversupply of milk coming onto the market as the key reason for the price cut.
It is understood that Müller, along with other processors in Britain, is faced with the highest volume of winter milk in 25 years.
Processing higher volumes of milk has added unexpected costs to deal with the supply glut, and in the extremely volatile liquid milk sector, these costs are being reflected in milk price.
NFU Scotland milk chair John Smith described the price cut “a clear step backwards in the market”, and suggested that it creates serious concerns around Müller’s profitability.
He added: “This figure is even worse for the northeast which has a 1.75p/l reduction for transport. This is in contrast with Tesco farmers in the northeast who are receiving 7.11p/l more than their non-aligned neighbours.”
Dairy farmers will be watching carefully to see if other processors, especially Arla, follow suit with a price cut for March. If Arla holds its price, this opens a price gap of 2.8p/l between Britain’s two largest milk processors.
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