In recent years the industry has seen massive fluctuations in milk price, leading to instability in the market place.
One local dairy, Crediton Dairy are leading the way with a new initiative to provide stability to their producer’s businesses. The dairy have been working on some sort of forward buying contract for some time and announced this proposal to their farmers a couple of weeks ago. The offering for suppliers is 10% or 20% of their base litres for 2 years at 28ppl on a standard litre. This scheme is completely voluntary and will depend on various business factors whether farmers decide it is the right thing to do.
What will this mean for suppliers? The forward contract will enable suppliers to plan ahead. FeedCo as a business believe this is an excellent example of a dairy company supporting suppliers ensuring long term relationships.
Why should producers sign up?
• Crediton Dairy producers have over the last 2 years been paid an average of 26ppl, the price offered is 2ppl over this.
• The worldwide market is currently above production of previous years.
• More stability to business, reducing the risk to the business in the milk price troughs. Bank managers like this!!!
The deadline for producers to sign up is Monday 25th September, so if anyone is in any doubt they should seriously be considering this today.