Co-op increase milk price under new payment model

Farmers supplying the Co-op dairy group will be guaranteed to receive at least the Muller direct price or higher as part of a new payment model introduced by the retailer.

This will mean that its producers will be paid a minimum of 42.25p/litre for a standard liquid litre in April, up from 40.95p/litre in March.

Dairy farmers supplying the Co-op have traditionally been paid based on a “basket price” for milk, which factors in cost of production.

See also: Global milk production set to grow as prices stay high

The retailer says this price has typically paid above the standard Muller milk price during the past decade, but due to fluctuations in recent months it has had to evolve its model.

A letter sent out to its milk pool said it recognised the recent challenges and understood that the prolonged difference between the Co-op basket price and Muller direct price has put pressure on the model.

Moving forward, it has guaranteed to pay its producers at least the Muller direct price, or the basket price, if higher.

The Co-op will continue to operate its quarterly payment method and has signed a new five-year deal to work with Muller.

Positive step 

Tom Bramall, chair of Co-op’s Dairy Group, said: “Dairy farmers value the relationship with Co-op and the announced movement on price is a positive step forward.

“The committee and I welcome the opportunity to have an open discussion on how the pricing model can be improved to ensure the continued success of the Co-op Dairy Group [CDG].

“It’s also welcome news that a long-term contract with Muller has been agreed which includes a stronger role for the CDG in decision-making.”

Co-op Food managing director Matt Hood said: “Supporting UK agriculture is more important than ever, and while our milk pricing model has worked well over the past decade, we recognise the need for its evolvement as part of our continued commitment to farmers.”