2ppl bombshell price cut for Freshways suppliers

In my 13th March edition I wrote:

Coronavirus is causing a melt down and if the government introduces restrictions the dairy trade is buckling for a very rough ride with some expecting spot milk to be plentiful and quickly down to circa 20p as orders are reduced or cancelled on mass.

The problem is primarily in London where the food service industry is gradually grinding to almost a shut down and if schools and universities close it will be close to meltdown especially in coffee shops (people working from home won’t visit coffee shops) and restaurants.

 

Talk of challenges within the enlarged Freshways Medina combined business have been doing the rounds in recent weeks and the supplying farmers have now had to swallow a very bitter pill in the form of an eye watering 2ppl 29th March short notice price. If that wasn’t enough, Freshways are also deferring paying their farmers for milk supplied by one extra month. So, March deliveries will be paid for on May 15th rather than April 15th.

In a letter to producers, Freshways suggested there were four options available and two of those options have been quickly executed and put extreme pressure on farmers viz, a 2ppl price drop coupled with extended payment terms.

Freshways are very focussed on London, which has seen almost all food service customers (coffee shops, hotels, restaurants etc.) put the shutters up. It’s a section of the Freshways business which accounts for more than 40% of their product outlets.

This is in complete contrast to many other liquid processors who are under extreme pressure to meet the additional demand spike for milk from stay at home consumers, many of whom have been panic buying.

Several Freshways farmers do not accept this is force majeure and have been advised it is a breach of contract and their push is how quickly, without notice, they can get off the Freshways bus. 

Freshways 29th March liquid standard litre price will reduce to 24ppl.