Müller – new contract, hedging options and farmer reps

Published 24 February 17

Müller has made changes to its proposed supplier contract and aims to set up a new farmer representative group, following discussions with suppliers and farming unions.

In its new standard contract, Müller has relaxed penalties on milk forecast accuracy and butterfat levels, from those originally proposed. There will now be no penalty for milk supplies within 7.5% of forecast volumes and relaxed bandings up to 20%. The penalty per 0.01% of butterfat below 4.0% has now been reduced, from 0.035ppl to 0.025ppl.

The new contract will be sent to farmers during the week of 27 February, with sign-up expected by 21 April. The contract terms will begin from 1 May 2017.

A new Müller Ingredients Contract will also be introduced later this year, which will allow farmers to hedge and fix a portion of their production, based on futures markets.

To increase farmer representation, Müller is setting up a “Müller Milk Group Farmer Forum”, made up of 21 elected farmer members. Once formed, this group will have the right to determine its own structure and whether it seeks to gain official DPO (dairy producer organisation) status. The deadline for nominations for representatives will be mid-March.

Müller also announced it will invest over £100m to increase efficiency at its dairy plants and to develop new added-value products. Müller believes this investment in novel products could deliver additional sales of up to £700m by 2020.