First Milk to adopt regional milk pricing system and look to cut costs

Published 1 May 15

A new approach to milk pricing is to be introduced by First Milk as part of its turnaround plans announced today. From June, the manufacturing and balancing milk pools will be sub-divided into seven milk fields.

There will be four milk fields in the manufacturing pool based on farms located around the Arran, Campbeltown, Lake District and Haverfordwest creameries. The balancing milk pool will be split into three fields on a regional basis – Scottish mainland, Northern England and Midlands/East Wales.

The A&B pricing model will remain although prices paid on ‘A’ volumes will be linked to the commercial value of milk coming from each field, giving 7 different ‘A’ prices. This means that those milk fields supplying into higher value markets will realise a higher ‘A’ price. Prices paid on ‘B’ volumes will continue to be based on returns from short term trading and be the same for all milk pools.

First Milk has also announced an average price reduction of 0.33ppl from 1 June, applied to each of the milk fields according to relative returns. The ‘B’ price range for June has been announced as 14-17ppl, a drop of 1ppl from the May range.

In addition to these changes they are undertaking a variety of cost cutting activities.