Dairy Crest, the leading British dairy company, is announcing a reduction of 1.25 ppl for farmers on Davidstow and standard Liquid contracts from 3rd January 2015. This has been agreed with DCD.

• For farmers on a Davidstow contract this takes the price to 27.79* ppl for a standard litre from 3rd January 2015.
• The Liquid milk price for farmers with all or a proportion of their milk price on the standard Liquid contract will be 25.79* ppl.

Commenting on the price moves Mike Sheldon, Dairy Crest Group Procurement Director, said:

“I understand this will be disappointing news for our farmers who were hoping, like us, that the situation might have started to improve. I was pleased to agree the price hold for December, providing some respite for our farmers, but cannot continue to maintain the price against the backdrop of such extreme market volatility and increasing levels of milk production."

“Our process for reaching this pricing decision with DCD has been very detailed, which is why we have run beyond the month end. We have been continually reviewing all the factors that impact the price and exploring different approaches. Whilst we are all operating in a very challenging market, I am confident that our offer to farmers is competitive. We also remain committed to providing 30 days’ notice of any price change, which is why this move is effective from 3rd January.”

– Ends –

^{* Prices expressed on a standard litre basis, according to milkprices.com}

For further information please contact:

Mike Sheldon, Group Procurement Director 01372 472351
Dairy Crest Press Office 01372 472249

NOTES:

About Dairy Crest

Dairy Crest is the leading British dairy company, employing 4,500 people. Our four main consumer brands are Country Life, Clover, Cathedral City and FRijj.

As well as our branded business, we process fresh milk for the retail and residential sectors. We are one of the UK's largest milk purchasers, buying around 1.8 billion litres every year. We source milk directly from around 1,100 British dairy farmers.

Dairy Crest, in consultation with DCD, was the first company to launch a voluntary formula contract for non-aligned liquid farmers, in 2013. Published indices are used within the transparent formula, which is independently verified by Steve Bradley of milkprices.com. Since April 2014 two options have been available: the Core Formula and the Simplified Formula.

Davidstow - Cheese growth and whey project

400 farmers in the South West supply our Davidstow cheese contract. Last year Cathedral City sales increased by 9%, significantly ahead of the market.

In July, Dairy Crest announced that it has entered into a strategic partnership with Fonterra, the world’s leading dairy exporter to market and sell two products for the fast growing global infant formula market. Dairy Crest had previously announced a £45 million investment at Davidstow to manufacture demineralised whey powder. This is the base ingredient in infant formula. Dairy Crest also announced a new £20 million capital investment at its Davidstow site to manufacture galacto-oligosaccharide (GOS). GOS is a lactose-based prebiotic, widely used in infant formula.

Dairy For Life strategy

Earlier this year Dairy Crest invested in a significant piece work called ‘Dairy for Life’. The objective was to develop a new 3 year dairy growth strategy - providing solutions across the entire dairy category. The report looks at opportunities to increase the consumption of milk and dairy products by understanding and responding to consumer behaviour and future trends. We have already shared this work with DCD and will look to share it with farmers at future meetings and through our bespoke website: Farm Connect.

Proposed sale of Dairies business to Muller Wiseman Dairies

On 6 November Dairy Crest announced the proposed sale of its Dairies business. We believe that this will be good for news for the British dairy sector.

The sale is subject to approval by Dairy Crest shareholders and the relevant competition authorities. It’s anticipated that this will take several months and so it’s very much business as usual in the meantime.