4ppl surprise additional payment from Lidl to Muller Directs
Posted on: 03/12/21
Just when a few Muller suppliers were gnashing their teeth and feeling fairly sick over the 3-year fixed price 29ppl deal they signed with Lidl, comes the surprise news that Lidl have agreed to pay an additional 4ppl from January 1st to take the deal to 33ppl.
The Lidl fixed price offering started in May of this year and saw around 200 Muller direct farmers commit to an average 45% of their output for the 3 year period. Note the maximum an individual farmer could sign up was 50% of output.
Today’s additional 4ppl is a temporary increase to be reviewed in spring 2022 according to the market conditions and on farm costs at that time.
Back in spring of this year the Muller/Lidl fixed price offer was a very useful hedging tool to protect farmers from any potential downside in farmgate milk prices which indeed it still achieves. The uptake of the offering was very successful.
Since then, we all know the unprecedented situation in cost increases faced by processors and farmers and to be fair to Lidl they have listened and should be congratulated for doing the right and sensible thing with this top up payment. At the end of the day it was a fixed price deal and Lidl had no obligation to step forward and do what many now feel is right. It certainly demonstrates that Lidl fully understand and appreciate the unprecedented surge of cost inflation pressures and want to work with both its farmers and Muller.