First Milk farmers have been hit with a further cut in prices, while Dairy Crest suppliers will be forced to sign up to a new contract or stomach a 0.8ppl cut in milk cheques.
Both firms pointed to the continuing difficult market conditions as they announced the contract changes.
Those supplying First Milk’s four creamery pools plus its North of England balancing pool will face a 0.6ppl cut in price for March. Those on Scottish balancing pool will have returns cut by 0.42ppl, while there was no change in the Midlands balancing pool price.
First Milk’s external relations and membership director Paul Flanagan said improved business performance meant the firm was able to increase the proportion of milk paid on its higher A price from 80 to 90 per cent from April.
"However, for March the continued weak market conditions and plentiful supply of milk has impacted on the pricing mechanism we have in place for our cheese business. Therefore, we need to cut prices for those milk pools which are linked to cheese manufacture," he added.
Dairy Crest’s announcement saw the firm offer producers a choice to sign up to a new Davidstow Balancing Contract or accept a 0.8ppl cut in prices from April.
The contract will use a price for ’core volume’ which will be negotiated between Dairy Crest and DCD on a monthly basis. Milk supplies exceeding this will be priced using a market related indicator.
The firm said the mechanism aims to better match supply to the needs of the Davidstow creamery.
Ruth Askew, head of procurement at Dairy Crest, said: "Dairy Crest’s aim, with DCD’s support, is to work in partnership with farmers to grow and expand our brands and products and so, in time, increase our demand for milk. However, the current milk supply model is not sustainable."
Those farmers who sign up to the new contract will see prices held at the current 22.72ppl until May 31. Dairy Crest claimed this would give core price stability during the spring flush of milk.
Farmers who do not sign up to the new mechanism will have prices cut 0.8ppl to 21. 92ppl which will take effect from April 1.
Dairy Crest bosses claimed this reflected the current market conditions as well as the cost of balancing excess milk.
Lake District creamery 17.51ppl
Haverfordwest creamery 17.51 ppl plus Tesco winter supplement
Scotland balancing 17.51ppl
North England balancing 17.52ppl
Midlands and East Wales balancing 17.28ppl