2ppl Bombshell price drop from Meadow Foods

Cumbrian suppliers to Meadow Foods were delivered a huge blow late last week with the announcement that Meadow were to cut their milk price by 2ppl from April 1st resulting in a relegation/bottom of the table standard litre price of 24ppl.

Umpteen furious Meadow farmers emailed Ian having been informed that Meadow have had to make the cut due to reduced demand by Arla of 150 Million litres which means Meadow were brokering 30% of their milk (Circa 500 Million Litres) to Arla. Meadow will continue to supply a reduced, unconfirmed, volume of milk to Arla under their new supply contract agreed last year.

Ian spoke to both Meadow, Arla and others and it’s a certainty that Arla gave notice reference the volume reduction to Meadow many months ago and possibly as some claim as long ago as last April so the volume reduction has been known about for a long time. In addition, given Arla’s extraordinary member milk price more milk from members was always a certainty.

Arla’s recent financial results demonstrated continued brand success and for sure it’s number one priority must be to process all the additional milk from expanding members consequently requiring less 3rd party milk from Meadow and others.

So, the big unknown is where will this surplus Meadow milk be placed and at what price/cost?

Most farmers grievance appears to be with Meadows Communication in terms of having known about it for months and on the face of it they conclude Meadow failed to take positive mitigating action.

Others highlighted the fact Meadow announced a healthy 25.6 million (4.65ppl profit on each litre processed) profit in January then announced extra 0.5ppl milk price increase to producers from 1st of February and March in full knowledge this cut was on the cards.

Some believe Meadow had two options to either serve contract termination notice or dramatically cut the price in the hope a heap will quit on the basis they have a few if any alternative buyers possibly with the exception of Yew Tree Dairies.

Serving more termination notices would likely have resulted in Meadow receiving a bigger kicking than it is.

Farmers claim they have to take the 24p on the chin with Meadow insisting any wanting to leave must serve their full 12 months’ notice leading some to say the Meadow master plan is to cut the price and have the cheaper milk for the longest possible period.

Its brutal at 24ppl especially given that price is only paid on the A litres and the April B price could easily be 20p or less. It’s a grim situation and little wonder some argue contract regulation is required. Meadow have handed a bag of hand grenades to those campaigning for contract regulation overnight! It was described by one person to Ian as “extremely reckless and irresponsible behaviour”.