Müller is to launch a futures contract for its farmer suppliers as part of a series of measures designed to bring “stability and predictability” to its supply chain.
The dairy giant said the contract option, which will go live from the end of August, would be among the “first mainstream executions” of a futures contract by any major UK dairy processor.
The contract will be available to members of its newly created Müller Direct group, which represents 700 of the company’s 1,800-strong farmer supply base who aren’t currently part of groups aligned to major supermarkets.
Farmers will be able to agree a monthly price for up to 25% of their milk volume, for 12 months ahead as part of the futures contract, Müller said. The move would increase “confidence and resilience” among its dairy farmer suppliers, it added.
The arrangement established a link between the production of Müller Direct farmers with “real customers” from the ingredients side of its business, as opposed to it being traded on dairy commodity markets, a spokesman added.
“It’s a win-win situation,” he said. “The farmer gets more certainty on the price they get, we get more certainty on the supply we need, and our ingredients customer gets a predictable supply of milk.”
Müller is also launching Müller Farm Insight - a new service that will offer data, welfare tools and benchmarking for farmers - in addition to increasing its farmgate milk price from 1 September by 1.31ppl to 29ppl.
The move was welcomed by NFU dairy board chairman Michael Oakes, who said introducing a futures contract would give farmers more choice.
“We’ve been talking as a sector for a long time about introducing futures contracts. Whilst it won’t be for everyone, It’s a positive move.”
Müller agriculture director Rob Hutchison said: “There is a lot of uncertainty out there but we are optimistic. Britain remains one of the best places in the world to produce milk and Müller is investing heavily to ensure that consumers will be able to buy more and more dairy products made in Britain with milk from British farmers.
“We want to work with farmers to realise our shared ambitions as the basis of a progressive industry with the security and confidence to invest. The steps we are outlining today are early measures which signal our intent.”
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