Dairy farmers supplying Muller warn they could be forced out of business due to the “unviable” price they are being paid for their milk.
The Muller Milk Group (MMG), which represents more than 1,500 dairy farmers who supply Muller across Scotland, England and Wales, has criticised the dairy giant’s Muller Direct contract.
However, Muller has defended its pricing and said it has provided stability to farmers during the coronavirus pandemic.
MMG says the price paid to Muller Direct farmers – those not on a retailer-aligned contract – is almost 6p per litre lower than the price paid to those producing milk for Tesco and Sainbury’s.
It said the average retailer-aligned milk price for September was 31.17p per litre, compared to the Muller Direct base price of 25.2p per litre. This is the price before a haulage fee of up to 1.75p per litre is deducted for suppliers in Scotland.
“At this milk price many Muller Direct farmers are having difficulty covering their monthly costs, with many relying on the recent government bounce-back loans to support their cash-flow needs,” said MMG board vice-chairman Ray Gibbins.
“There are fears dairy farms will increasingly exit production unless the liquid market returns a more sustainable milk price.”
He said the group had raised its concerns over Muller’s discretionary pricing mechanism in its response to a UK Government consultation on contractual relations in the dairy sector.
A spokesman from Muller said: “We are surprised by the MMG board’s criticism of our decision to maintain a stable milk price during the Covid-19 crisis.
“By comparison, many dairy farmers in Britain have suffered severe hardship including significant reductions in their income and the distressing practice of pouring unwanted milk down drains.”