Müller will be introducing revised milk contracts which will mark a major change in how it will pay for its milk, with the mission of helping to stabilise milk prices in the supply chain.
The dairy giant said the new structure for its 1,300 Müller Direct dairy farmers would “boost stability, competitiveness and transparency.”
The contracts are due to be launched in the spring, following a consultation process with the farmers.
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The dairy supplier estimates about 94% of the milk it sources in 2023 will be used to meet its customers’ requirements for manufactured dairy products like fresh milk, yoghurt and butter.
Under the new proposed structure of the contracts, the remaining 6% of its milk would be influenced by volatile global market returns.
“This move reflects the value in the fresh milk and dairy products destined for our retail customers, and this will be the bedrock of the milk price we offer,” head of agriculture at Müller, Richard Collins said.
He added that independently produced modelling using available forecasts suggests the revised Müller contract will “provide higher annualised returns for our Müller Direct farmers and less volatility than our current contract offering, while ensuring we can continue to meet our customers’ desire to maintain supply groups to meet their specific needs,” Collins said.
“We also know issues such as sustainability and herd welfare are of utmost importance to our customers and consumers, and the high standards we expect from our supplying farmers will be maintained as part of this new revised contract.”
The news comes as Müller is set to replace the current coloured milk caps on its own label and branded milk ranges with clear, fully recyclable alternatives.
