What is the Value of Your Milk Contract?

Milk price is a key driver for a profitable dairy enterprise. The range in milk prices is as wide now as it has ever been. With most processors not recruiting suppliers at the moment, restricting the transfer of suppliers, many producers on poorly paying contracts have little option but to put up and shut up.

Recently Arla UK has been started to allow producers to transfer their contract to another producer subject to some restrictions. These conditions include continuation of supply and similarity of volumes. Obviously, the purchasing farmer has to be able to exit their existing contract and this may be something that is not easy.

The value of the contract will obviously depend on the uplift in milk price that the volume of supply being transferred. If you are about to retire then your milk contract may have a substantial value, but you need to arrange the transfer in plenty of time to ensure that you maximise your return. We have seen producers paying between 3 and 6 ppl for an Arla contract.

If you want to know more please contact William at w.waterfield@fcgagric.com in Andover, or your local FCG Office.

Posted in Andover, Business Management, Dairy & Forage.