Changes in the producer payments scheme

Extract

For many years, the Milk Marketing Board (MMB) of England and Wales has operated a pricing system related to the compositional quality of milk supplied by the producer and to the month of supply. As milk production has increased and the seasonal pattern altered, a need has arisen to alter the pricing system.

The volume of milk for manufacture has more than doubled since 1970 and now exceeds that taken by the liquid market. The fat and protein elements of milk are of considerably greater value to the manufacturing market than lactose. To match producer payments more closely to market realities, the MMB will, from April 1984, replace the fat and solids-not-fat compositional quality payment scheme with one based on fat, protein and lactose. The proposed prices at 1983/84 levels are: fat, 2.02; protein, 1.77; and lactose, 0.28 pence/1/10 g/kg.

In the last 10 years, the seasonal trough of production has moved from December to August/September. It is still deepening and adds considerably to marketing costs. In an attempt to slow this trend and also provide a disincentive to additional supplies at peak, the MMB is altering its seasonal price adjustments. Milk prices will be increased in August and September and decreased in May and June.

These changes will not affect the total sum of money available to producers, hence most of them will see little difference to their annual income. The exception will be those producers supplying milk of either especially low or high protein and, to a lesser extent, fat content. The change in seasonal adjustments will, however, cause a noticeable disruption in the cash flow to all producers.