Dairy Crest and its milk supply group – Dairy Crest Direct – have agreed a new cost of production milk pricing formula for farmers who are not on more lucrative retailer aligned contracts.
Farmers will be able to take advantage of the new pricing formula from 1 April next year.
Precise details of the milk pricing model were still being finalised, but it would take account of key on-farm, costs and dairy market indices to calculate the pay the farmer receives, said DCD chairman David Herdman.
“I believe this is a real step forward in our commitment to find a better way to agree farmgate milk prices for DCD members,” he said.
The new formula is being developed by consultant Stephen Bradley, who runs the milk price comparison website milkprices.com. He was jointly appointed by Dairy Crest and DCD.
The formula is being offered to farmers on a voluntary, first-come-first-served basis and it will be made subject to an overall maximum volume limit, said Dairy Crest milk procurement director, Mike Sheldon.
“We want a long-term relationship with our farmers and are determined to deliver greater flexibility and choice in the consideration of contract options, as well as trust in the pricing process,” he added.
Further detail on the price will be given to farmers in the coming weeks through a number of workshops.
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