Müller Direct farmers to be offered fixed price option

Published 20 April 18

Supported by a long term partnership with Lidl, Müller Direct farmers are to be offered the option of fixing a long term price for a portion of their milk. From June 2018, they will be able to secure a price of 28ppl for up to 50% of their milk supply for two or three years. The minimum amount of milk committed to the scheme will be 240,000 litres, or 10,000 litres per month for two years.

The ability to lock in a price for a portion of their milk supply will help to reduce the milk price volatility faced by farmers, and provide more certainty around cash flows. While fixed prices can mean prices may not achieve the highs of the market, the real benefits are seen in the protection they offer at times of low prices.

The net gain or loss to the farmgate price[1] resulting from allocating various proportions of milk to the fixed price option are summarised in the table, while the graph shows the impact under the different market conditions seen over the past five years.

 Muller Fixed Price Averages

Muller Fixed Milk Price Analysis

[1] Prices are based on what was paid on the Müller non-aligned liquid contract for the AHDB standard litre profile, and weighted by the proportion of volumes paid the fixed price of 28ppl.