This page was last updated at 09:40 26th October 2016 (Press your refresh/reload button for the latest information)
Note all standard litre prices quoted are before seasonality, balancing charges, capital retentions or production incentive payments/bonus.
Our Weekly News Bulletin is available by email. To receive it please email email@example.com
1.5ppl milk price increase for suppliers to Paynes Dairies – from November 1st (26th October 2016)
This takes producers’ liquid standard litre price to 22.8ppl (www.milkprices.com)
1ppl milk price increase for suppliers to Dairy Partners Limited (Wales) – from December 1st (26th October 2016)
This takes producers’ standard manufacturing litre to 25.7ppl (www.milkprices.com)
1ppl minimum price increase for all First Milk members – from November 1st (26th October 2016)
First Milk have announced they will pay a minimum 1ppl increase on it’s A litres to all its non-aligned producers from November 1st.
Its B milk price will increase by 5ppl to 25ppl for all pools. First Milk’s A price for November will be finalised and announced within the next 7 days.
Graham’s producers claim the goalposts have been moved (26th October 2016)
Graham’s Dairies Scotland were last featured in this newsletter when they dramatically dropped their B milk price to only 7.5ppl and in doing so sending a very clear message to its suppliers that it simply did not want any B litres. Farmers instantly responded by culling cows, cutting feed and cutting milk production. In the past week, some have claimed that they also signed up to the EU milk reduction scheme, which started on 1st October. And now another shock has come because Graham’s producers have received a bombshell letter - AFTER the 1st October! - informing them that FROM October 1st any producer who failed to fill their A litres would be financially penalised!
For some it appears to be the final straw, who are still getting A litres at 22p, which is below their cost of production. Some were furious and arranged a get together to meet fellow suppliers and to send a clear message to the Graham family as to how they feel about the treatment they are receiving.
Freshways are struggling with angry loyal producers (26th October 2016)
According to numerous emails Ian has received, Freshways also have significant numbers of dissatisfied suppliers, many of whom claim to have already handed in their notice. In summary, most, if not all, claim they are not being treated fairly and are being held to ransom by a combination of their milk buyer and their contract.
Most claim they are selling A litres at below COP, however, Freshways will not allow them to cut their losses and exit the industry with dignity, instead insisting they must give a minimum of nine months notice.
So irrespective of whether it’s ill health, poor profitability, old age, or simply that the farmers have had enough of what they call exploitation, its producers cannot stop milking. No longer, apparently, can the Freshways farmer decide when he can sell his cows and even a TB breakdown is not a valid reason to exit dairy farming. And yet Freshways can serve notice when they like, as happened a few months ago!
In addition, along with Graham’s Dairies (see above), Freshways are one of only two dairies we know who penalise farmers for failing to fulfil their A litres.
One claimed that when his A price penalty was added to his A milk price he is still receiving 18ppl for October deliveries.
It’s clear that Freshways are approaching a crisis and that they will not retain their current 180+ suppliers and could find it very challenging to attract new replacement producers.
Non-aligned aggrieved producers – What can they do? (26th October 2016)
The discontent among non-aligned farmers is growing significantly. But what can they do about their position? In simple terms they can bite the bullet and resign and that’s possibly the only language some processors will understand. They shouldn’t pay lip service to their neighbour threatening to resign if things don’t improve, they should resign themselves, and resign now!
If you feel you are being exploited and/or treated unfairly by your milk buyer, take charge of your own destiny and do something about it. Please don’t let your milk purchaser demoralise you and your family any more. Don’t let them cripple your business further and under no circumstances let them promise you jam tomorrow.
If the trust has gone and the relationship broken down, change buyers or get out - even if it means you have to sell your milk for a slightly lower price for the time being to a milk purchaser who you trust and thinks is fair.
It’s jaw dropping that individual, hard working, honest dairy farmers who are considered the backbone of the countryside cannot chose whether they exit the industry. Even some of those who opted for the EU milk reduction programme now find that the money is simply going to their milk purchaser in the form of A litre penalties, which is surely not as the EU Commission planned and from a moral and ethical point of view has to be questioned.
We are in yet another crisis and as I have said before, don’t fall for promises of jam tomorrow or little tweaks to your contract, because it’s gone beyond that with some buyers.
It’s demoralising and it’s exploitation. If some milk purchasers are now concerned over their future milk supply then I have no sympathy. They have made their bed and need to be made to lie in it.
One farmer has even informed me that his milk purchaser suggested that his single farm payment would soon be in the bank suggesting that that would be his saviour. Little did he realise that all of that money is already spoken for.
It’s time the Government got stuck into the tactics of some GB milk buyers and looked in to their contracts in detail. Whether it’s a job for the Groceries Code Adjudicator or for someone else is one for the future but some producers need urgent help to ensure fair play. And that requires a referee in one form or another.
Australia’s milk production continues to plummet (26th October 2016)
Australia’s milk production is plummeting and was down 10.2% in both July and September with August down 9.2%. Meanwhile, UK milk production is now running at around 8.2% below the same time last year.
Meg wins in a man’s world (26th October 2016)
Congratulations to Meg Elliott for winning the British Farming Award’s award of Auctioneer of the Year 2016, and many thanks to all those who voted for her. Auctioneering was largely a man’s world, once, but Meg has broken the mold and all credit to her.
30ppl October milk price Yew Tree Dairies (AKA Woodcocks) (17th October 2016)
Yew Tree has confirmed suppliers on its ingredients contract will receive at least 28ppl for September deliveries and 30ppl plus for October milk.
4ppl total milk price increase for suppliers to The Fresh Milk Company (AKA Lactalis) from 1st November & 1st December (17th October 2016)
The precise reasons behind The FMC’s seismic price increases could be debated but the fact is its producers should be pleased with the latest announcement.
The total November 1st increase has been increased to 2ppl with an additional 2ppl from December 1st. This is the 6th consecutive monthly increase amounting to 8.5ppl since July.
The business is optimistic for further 2017 farm gate milk price increases assuming returns for its cheese continue to improve.
The increases result in the following manufacturing standard litre prices (www.milkprices.com)
23.8ppl November & 25.88ppl December
24.37ppl November & 26.46ppl December under FMC’s profile option
2ppl milk price increase for South Caernarfon Creameries Limited suppliers – from November 1st (17th October 2016)
They still require new suppliers to join their co-op. This takes producers’ standard manufacturing litre price to 24.53ppl (www.milkprices.com)
2ppl milk price increase for Barbers suppliers – from November 1st (17th October 2016)
This takes producers’ manufacturing standard litre price to 25.04 (www.milkprices.com)
1.366ppl milk price increase for Muller Direct formula contracted milk – from November 1st (17th October 2016)
This results in a liquid standard litre price of 28.616ppl (simplified formula contract) and 28.808ppl (core formula contract). The formula has delivered 4.237ppl in the past 4 months and with only two months left until Muller axe both contracts it looks like the contracted price could finish up at 30ppl or more which will be them going out on a high!
1.25ppl + 0.25ppl milk price increase for suppliers to Joseph Heler Cheese – from 1st November (17th October 2016)
The increase is 1.25ppl which will be boosted by an additional 0.25ppl for producers who submit a monthly milk price production forecast by the 15th of each month.
1ppl milk price increase for Meadow Foods suppliers – from November 1st (17th October 2016)
This takes producers’ standard liquid litre to 22.15ppl (www.milkprices.com). In addition, Meadow’s September B litre milk price will be 26ppl and for October will be 30ppl.
1ppl milk price increase for 105 Dairy Partners suppliers (Newcastle Emlyn) – from November 1st (17th October 2016)
This comes on the back of a 3ppl October increase
1ppl milk price increase for Pensworth Dairies suppliers – from November 1st (17th October 2016)
This takes producers’ standard liquid litre price to 21.5ppl (www.milkprices.com)
1ppl milk price increase for suppliers to Grahams Dairies – from November 1st (PRODUCER NOTIFIED) (17th October 2016)
This takes producers’ liquid standard litre price to 21.5ppl (www.milkprices.com)
Sooty & Sweep are under attack from their non-aligned poor relations (17th October 2016)
A group of enterprising and active Muller non-aligned farmers have kick started a campaign based on the fact Sooty and his three friends on the MMG Board, all on aligned contracts, are failing to represent their interests and appear to only be accountable to Muller.
Clearly they do not intend to sit back and take what’s gratefully thrown their way. Those wanting to join the group are asked to email firstname.lastname@example.org
As one industry leader commented to Ian “This is a smart move by Muller non-aligned who are taking their own initiative due to the complete absence of consultation and/or leadership from Sooty & Friends.”
Minimal co-operation from Holstein UK (17th October 2016)
Negotiations to merge the RABDF’s Livestock Event and UK Dairy Day into one National Dairy Event (identical to the one RABDF ditched) have sadly ended in no resolution after 15 months of discussions.
The fact two of our dairy organisations have failed to agree on a way forward to hold one national event is damming. As one industry leader emailed to Ian, “what hope is there for the UK dairy sector when even out own internal organisations are unable to co-operate!”
From the evidence presented to Ian, Holstein UK’s board slammed the door shut in RABDF’s face last Tuesday. Statements made by Holstein UK as to the reasons they have terminated discussions are rather limp and at best good excuses.
For example, it’s a bit rich for Holstein UK’s CEO Richard Jones to detail one of the main reasons for Holstein UK pulling out being concerns about RABDF’s financial position given Holstein UK’s former CEO was found guilty of pocketing £240,000 of its funds and sentenced to 2 years in prison.
The RABDF’s planned September Event is likely to need life support but it will be exhibitors who have the final say as to which event, if either, succeeds. Will they support the RABDF at the NEC or will they support the aggressive upstarts in Holstein UK? It seems inevitable we will only have one September Dairy Show and to that end Holstein UK may be successful but it’s a very sad state of affairs the two organisations couldn’t agree.
Nick Everington exits as RABDF CEO with no retirement party (17th October 2016)
There was no surprise at the announcement that Nick Everington had left his position as CEO of RABDF after 15 years, however, the notice to members was jaw dropping and contained more spin than a child’s spinning top.
According to RABDF, Mr Everington has retired but the announcement allegedly came some time after he had left his desk for the last time. Few, if any, will believe this is retirement and most will be convinced that his determination to move the very successful Dairy Event to a July Livestock Event date, which spectacularly bombed, is the main reason for his sudden “retirement”.
Had RABDF stuck with a National Dairy Event in September there is little doubt former events co-ordinator, Richard Evans, would not have gone to Holstein UK to set up a rival Dairy Day.
One area Nick Everington can claim to eclipse Holstein UK on is the matter of show fixing. Everington was shoulder to shoulder with the Great Yorkshire Show on the matter whereas Holstein UK appear to bow to pressures from breeders with serious financial interests in showing and insisting on the ability to fix and cheat at shows both home and abroad.
The image of the UK dairy industry will be seriously damaged one day if Holstein UK continue to turn a blind eye to fixing and fail to police their own show rules.
Ridiculously Cheap Milk (17th October 2016)
Spa shop on Cowpen Road, Blyth has 2 litres of Paynes Dairies milk for 50p, yes 25ppl and get this they expect the promotion to run for 6 months!
1.5ppl milk price increase to Muller non-aligned suppliers – from 1st November (30th September 2016)
This takes producers’ standard litre liquid price to 20.94ppl. The November retailer supplement is estimated to be 2ppl taking the total non-aligned price to an estimated 23ppl.
1.25ppl milk price increase for suppliers to Belton Cheese – from 1st November (30th September 2016)
This takes producers’ standard manufacturing litre price to 23ppl.
1.25ppl milk price increase for suppliers to Glanbia Cheese – from 1st November (30th September 2016)
This takes producers’ standard manufacturing litre price to 24.29ppl.
1ppl milk price increase for Arla Directs – from October 1st (30th September 2016)
This takes producers’ liquid standard litre price to 20ppl
1ppl milk price increase for suppliers to The Fresh Milk Company (Lactalis) – from 1st November PRODUCER NOTIFIED (30th September 2016)
This takes producers’ standard manufacturing litre price to 22.77ppl.
Clock this AMPE = 28.5p & MCVE = 32.4p (30th September 2016)
According to the latest figures from AHDB MCVE stands at 32.4ppl and AMPE at 28.5ppl.
This means the MCVE value is up 60% (12.1ppl) in 12 months and AMPE is up 67% (11.5ppl).
40% less dairy farmers in Western Europe by 2026 (30th September 2016)
One of the outcomes presented at the recent IFCN Conference in Holland predicts the next 10 years will result in 40% of Western European dairy farmers exiting the industry.
In addition, ICFN predict an increase of 25% in the global demand for dairy products in the same 10 year period, which means an annual demand increase of 2.3%.
European milk reduction scheme almost 100% taken (30th September 2016)
The Commissions surprise move to introduce a milk reduction scheme paying farmers 12ppl for reducing milk production between October 1st and 31st December has seen a 98.9% uptake for the first periods allocation.
In total 52,000 farmers applied, including almost 13,000 from France, 10,000 from Germany, with the UK coming in 3rd place with applications for 112 million litres from 1,800 farmers, which represents 10% of the total EU uptake.
Of the total 1,800 UK farmer applications, 154 came from Scotland.
It is now clear that some milk purchasers have left it too late to reverse the fall in winter milk production, currently running at 7.7% down on the same period a year ago, and with spot prices almost at 40ppl few will have any sympathy with processors who have completely mis-read the market signals.
Meeting Notice (30th September 2016)
Speaker David Handley on the GB Dairy Industry
Date Tuesday next (4th October)
Venue Hadlow College Boardroom, Nr Tonbridge, Kent
Time 12 noon
2ppl milk price rise for First Milk non-aligned members – from October 1st (23rd September 2016)
This is First Milk’s largest single monthly milk price increase in 9 years (November 2007). The 2ppl increase comprises of 1ppl from customers/the market mechanism and a further 1ppl as part of the internal performance supplement.
2ppl milk price rise for suppliers to Paynes Dairies (AKA Charlie Payne) – from October 1st (23rd September 2016)
In addition, Paynes have re-opened their recruitment doors.
This takes producers standard litre price to 21.2ppl (www.milkprices.com)
1.6ppl milk price increase for all Arla members – from October 1st (23rd September 2016)
The increase comprises of 1.5ppl (2 Euro Cents) milk price increase plus a further 0.1ppl from the currency adjustment. The increase applies to all members, including those supplying the organic pool.
This takes producer non-aligned standard litre price to 21.65ppl.
This takes producer organic standard litre price to 37.2ppl.
1.5ppl milk price increase to Dairy Crest Davidstow suppliers split over two months (23rd September 2016)
The split is:
1ppl from October 1st to give a manufacturing standard litre price of 23.72ppl
0.5ppl from November 1st to give a manufacturing standard litre price of 24.22ppl (www.milkprices.com)
28.61ppl for Tesco aligned producers – from November 1st (23rd September 2016)
Tesco’s half yearly review sees a small reduction of 0.1ppl with a new standard litre price of 28.61ppl, which should put a smile on all of the producers who are involved.
GDT auction runs out of steam (23rd September 2016)
This week’s auction was tipped top continue its recent price increase rally with some analysts predicting the key product WMP would lift by a further 10 to 11%.
As it was, the WMP price was almost stand on and SMP was up 3% and the overall all products price index up 1.7%, which is the highest level since March 2015.
Notable movers were:
Butter +3.6% to average US$3892 tonne
SMP +3.0% to average US$2293 tonne
Cheddar +2.2% to average US$3518 tonne
WMP -0.2% to average US$2782 tonne
Fonterra increases its forecast farm gate milk price (23rd September 2016)
Fonterra has announced a 50 cents forecast farm gate milk price to $5.25 per kg of milk solids. This is welcome news, especially given the breakeven figure for New Zealand farmers is currently publicised as $5.05 per kg.
Muller pledge an additional £100 million investment in 18 months as part of its 2020 vision (23rd September 2016)
Muller has confirmed it plans to invest an additional £100m in its UK facilities, innovation and marketing.
In a statement Muller comment:
“What underpins all of this is our desire to increase consumption of valued added dairy products, which are made in Britain from milk produced by British farmers.”
It’s part of Mullers’ 2020 vison plan to unlock an additional £700m of potential category growth in the UK dairy sector by 2020.
To put the £100m into perspective it’s more money than Muller paid for Dairy Crest’s liquid business. The area of product innovation is perhaps one of the most exciting areas Muller plan to invest in with the aim of bringing to shelves new ways for consumers to consume our British dairy products.
12.23ppl to cut milk production (16th September 2016)
Details of the European Union’s dairy package have been publicised, in particular, the €150 (£127 million) incentive for producers to cut production at a rate of 12.23ppl.
It’s very tight for producers to apply for the first window, which closes on Wednesday next, 21st September at 11am, and will be for a 3 month reduction period 1st October to 31st December 2016 with other windows to follow until the money is fully subscribed. According to Dairy Market Weekly, any farmer who applies for the first reduction period may also apply for the fourth period assuming there is still money in the pot.
With many producers facing an October milk price of under 20ppl if they do qualify it looks like a case of less = more. Less milk = less work = less invoices = less pain and more money.
The total £12.7 million fund has a maximum subscription literage of 1.04 billion litres across all member states.
Applications are via the RPA website https://www.gov.uk/guidance/milk-production-reduction-scheme-how-to-apply
Spot milk at 37ppl and rising but Arla say no to 5ppl winter premium (16th September 2016)
There are really only two forces in the current extremely hot GB spot milk market. The two buyers who are hoovering up virtually all available spot milk are Muller and Arla.
Both deny they have any short or medium term supply problems yet both are buying up spot milk like it was the last in the world.
To farmers supplying either of them at 19ppl to 20ppl this will be a big disappointment to learn that both processors find it economical to fill any shortfall with spot milk as opposed to paying a higher winter milk price to encourage existing suppliers to churn out more milk.
Spot milk is currently around 37ppl and tipped to hit 40ppl by the end of September.
So far as Arla members are concerned it is now confirmed that its farmer BOR put forward a proposal in July for the co-op to pay a 5ppl winter supplement on the additional litres a farmer delivered over and above the litres delivered in the corresponding month last year.
This was done in the full knowledge Arla were on course for a winter milk supply shortage. Guess what? The idea was thrown out by the Arla board on the basis one country’s producers could not be seen to receive such an incentive and that it was better to deal with supply problems via high prices in the spot market.
As several Arla members are calling for national pricing convinced the one size fits all with a single Arla farm gate milk price is unsustainable.
Yew Tree Dairy (AKA Woodcocks) launch their farmers milk futures trading (16th September 2016)
Ian has been involved in discussions concerning the benefits of dairy futures contracts since 2009 and it’s taken until this week for a farmer futures trading contract to be made available.
Out of a crisis usually comes some good and solutions and there can be no doubt that the Woodcock families dairy farming experience , the fact they have milked cows and their close relationship with many farmers who have turned to Woodcocks to save their dairy farming business has spurred them to look for alternatives. Remember when many farmers were dumped by their existing milk purchaser and had nowhere to go, Woodcocks pledge was to offer a home for their milk.
That’s part of the Woodcock family offer. They have alternative outlets for milk from retail to commodity and ingredient outlets and now its supplying farmers have the option to lock into a margin and trade a percentage of their milk on futures. The bulk of the work to get to this stage has come from a team effort involving Stephen Bradley of www.milkprices.com , FC Stone and Carl Woodcock.
This week farmer suppliers listened to presentations from both Stephen and Carl and the opportunity for farmers to trade and lock into a margin is expected to commence in early October.
The meetings were well attended particularly the one in Ayr which was standing room only and Stephen Bradley commented that it brought back memories of the huge interest generated when the DCD Formula contracts were launched
Some farmers may be large enough to take out single contracts however it is expected that the majority of Yew Tree suppliers will see Woodcocks group farmers together into squadrons in order to fill futures contracts. All contracts will be backed off at farm level in order to protect a farm margin it is recommended a futures feed contract is taken out.
Farmers decide what percentage of their milk they forward sell and it’s clear that doing nothing and making your dairy business suffer the pain of recent months is a huge gamble but trading futures and locking into a margin is a safety belt. For some this way of doing business could potentially be a life line.
Now it’s a case of ensuring the Yew Tree farmers who are keen to trade are futures ready and that’s in hand. We believe it will work and the likelihood is that other processors will be forced to offer similar schemes to help insulate their farmers from some of the price volatility extremes.
It’s a big project but the Woodcock family are never phased by the size of the project and only focus on the outcomes. All eyes will be watching how their famers get on as we move into 2017 with what is a new, exciting and different way to lock into a margin for future months/years.
In the US, dairy farmers have to use these risk management tools to justify expansion and investment and to demonstrate they are globally competitive.
Vote for the female who takes control of farmers for breakfast (16th September 2016)
When I was livestock auctioneer I worked with a young girl called Meg Elliott. When she stood on the pig rostrum with me she told me she wanted to become a livestock auctioneer – I was sceptical and curious as to how she would get on in what was a man’s world.
During the past 25 years she has gained, particularly dairy farmers’ trust and respect. She is an inspiration to other women to step onto the rostrum with a gavel and to take charge of an auction.
So it came as no surprise to me when I heard Meg was one of five auctioneers shortlisted for the Auctioneer of the Year Award.
I hope as many of my readers of this free weekly dairy bulletin will spend 30 seconds and click on this link and simply tick the box to vote. The top vote is Meg Elliott and with your help that’s where she will be when voting closes at the end of this month.
Please vote now because in Ian’s eyes she is not only the number 1 British female livestock auctioneer, she is now on course to top trump four men and rise to the very top of her profession by winning this award.
Click now on http://mth2016voting.questionpro.com
Paine & Partners buy a significant share of Meadow Foods (12th September 2016)
A significant share of Meadow Foods is now owned by US private equity firm Paine & Partners, who have purchased the 35% shareholding owned by the Pickering family plus part of the Chantler family’s 65% shareholding. The deal has taken around 12 months to conclude following an initial approach to Simon Chantler from Paine’s.
For the staff, management and executives at Meadow Foods it’s business as usual with all staff retained under the same managerial control. For the Meadow Foods farmer suppliers it’s also business as usual.
For the business it will be a major game changer because Meadow Foods are now catapulted into the big boys playground when it comes to acquisitions and expansion given the capital backing and fire power Paine & Partners bring to the table.
It will be interesting to see where the new business makes its first big move but for sure Meadow Foods and Paine & Partners are going to figure in the UK and European dairy news frequently from now on as the business grows and possibly at a rate few had previously contemplated.
The challenge for Paine & Partners, Meadow staff and executives will be to try to maintain the personal one to one family relationship Meadow have cultivated with their 550 producers, whilst embarking on its ambitious expansion plans. In addition to continue to pay a leading ex-farm gate milk price to retain existing loyal suppliers and attract new recruits and not give the impression that the new private equity investors want more than a fair return on their capital at the expense of farmer suppliers.
Paine & Partners website www.painepartners.com is agriculturally impressive and claims current assets of $2.7 billion (£2 billion) having been set up only 9 years ago. They are certainly a very professional and ambitious operation and the only question is where will their next UK dairy acquisition be.
Meadow currently handle around 650-700 million litres, (including Selky Vale), of GB milk each year and are the 4th largest UK owned dairy processor.
The only way is up as GDT auction results show (12th September 2016)
All eight product categories on this week’s today’s GDT auction showed gains compared to the result achieved only 2 weeks ago, particularly SMP, which shot up by a staggering 10% and butter top trumped it at 14.9%.
The overall all products average was up 7.7% to average US$2920.
Notable movers (12th September 2016)
Butter + 14.9% to average US $3764 tonne
SMP + 10% to average US $2070 tonne
Cheddar + 9% to average US $3436 tonne
WMP + 3.7% to average US $2793 tonne
The quantity of product sold was 36,748 tonnes similar to that sold at the previous auction. However, the number of successful bidders was up 10% and the number of bidders who bid was up 12.5% to 199.
2ppl milk price increases for suppliers to Barbers Cheese (12th September 2016)
Split into two stages +1ppl 1st September
+1pp 1st October
The total 2ppl increase takes producers’ manufacturing standard litre price up to 22.98ppl by October 1st (21.95ppl September 1st) (www.milkprices.com)
1.15ppl milk price increase for suppliers to Meadow Foods – from October 1st (12th September 2016)
In addition, Meadow have confirmed their September B price will be 26ppl and that the October B price will be at least 27ppl and likely to be more.
1.247ppl for Muller Direct (Dairy Crest) DPO liquid formula contracted suppliers – from October 1st (12th September 2016)
The increase comes predominantly from the continual upward movement in cream prices.
This takes producers’ standard liquid price under this contract to 27.33ppl (www.milkprices.com)
The only way is up as GDT auction results show (6th September 2016)
All eight product categories on today’s GDT auction showed gains compared to the result achieved only 2 weeks ago, particularly SMP, which shot up by a staggering 10% and butter top trumped it at 14.9%.
The overall all products average was up 7.7% to average US$2920.
Butter + 14.9% to average US $3764 tonne
SMP + 10% to average US $2070 tonne
Cheddar + 9% to average US $3436 tonne
WMP + 3.7% to average US $2793 tonne
The quantity of product sold was 36,748 tonnes similar to that sold at the previous auction. However, the number of successful bidders was up 10% and the number of bidders who bid was up 12.5% to 199.
2.5ppl milk price increase for Glanbia Cheese suppliers – from October 1st (5th September 2016)
This takes producers’ manufacturing standard litre price to 23.04ppl (www.milkprices.com)
2ppl milk price increase for suppliers to Wyke Farms – from September 1st (5th September 2016)
This takes producers’ manufacturing standard litre price to 23.07ppl
1ppl milk price increase fro supplies to Pattemores – from September 1st (5th September 2016)
Including re-instatement of the West Country premium the new liquid standard litre price from 1st September is 20.25ppl.
2.25ppl milk price increase for suppliers to South Caernarfon Creameries Limited (SCC) (5th September 2016)
In the last bulletin we referred to a 2.5ppl milk price increase from SCC as 0.5ppl from September 1st plus 2ppl October 1st. The 0.5ppl September 1st increase is on top of the previous 1.75ppl increase announced at the end of July taking producers’ total September increase to 2.25ppl.
This takes producers’ manufacturing standard litre price to 22.53ppl.
0.85ppl milk price increase for suppliers to Pensworth Dairy – from 1st October (5th September 2016)
This takes producers’ liquid standard litre price to 20.5ppl
1ppl milk price increases for Arla Direct suppliers – from 1st September (5th September 2016)
This takes producers’ standard litre price to 19ppl.
1ppl average milk price increase for Muller non-aligned suppliers – from October 1st (5th September 2016)
The 1ppl follows the identical Arla increase announced a few days earlier but paid to non-aligned farmers a month later.
The actuals are 0.9ppl increase for Muller non-aligned and 1.189ppl for the former Dairy Crest non-aligned now badged Direct Milk.
This takes producers’ liquid standard litre prices on the 1st October to:
Muller Milk Group 19.56ppl (www.milkprices.com)
Direct Milk 19.19ppl (www.milkprices.com)
The Muller price increase press release left those who read it and understood it close to speechless. Amongst the all time gems was the line from the Chairman of the Muller Milk Group (MMG) farmer board, Roddy Catto.
“Nevertheless, this has been extremely painful and challenging period for Muller suppliers.”
Now come on Mr Catto you are on a Tesco aligned contract and the other 3 out of 3 fellow MMG board members are also on aligned contracts. I don’t think anyone reading your statement will believe any of you on aligned contracts have found 2015/16 extremely painful. The quote should have stated for Muller non-aligned suppliers.
0.5ppl milk price increase for Wensleydale Creameries (Hawes) suppliers – from 1st September (PRODUCER NOTIFIED) (5th September 2016)
This takes producers’ manufacturing standard litre prices to 21.20ppl (www.milkprices.com)
First Milk’s September milk price increases – Round 2 (5th September 2016)
Within only 3 working days of announcing its September milk price increases co-op First Milk announced further increases.
The revised increases are as follows:
Sept price increase (ppl)
Sept business performance supplement (ppl)
Total Sept price increase (ppl)
Sept A price (ppl)
Sept B price (ppl)
Midlands & East Wales
Haverfordwest (includes Tesco supplement)
Who’s having all the cream? (5th September 2016)
Spot milk prices are now 35ppl and rising with most traders anticipating 40ppl in the near future.
In this week’s Provision Trade Federation, Chris Walkland highlights some astonishing facts on cream, which prompted Ian’s headline.
The cream price is almost twice what it was in May and currently stands at around £1.70 and it’s still heading north. This means to a processor cream is worth 8.5ppl to 9ppl the highest amount since December 2013.
AHDB point to the fact that “for liquid processors, fat as a by-product has increased in value by around 4ppl since April. This improvement is cream returns is not currently flowing through into farm gate prices for those supplying the liquid market.”
However, if that wasn’t enough the killer statistic is that “normally” the ratio between the cream income and farmers milk cheques is 25% of the milk price received at farm gate level. Now it’s 45% for the non-aligned.
Farmers and their so-called negotiators would have to be stupid not to realise who is banking all of this extra cream income.
2.5ppl milk price increase for suppliers to South Caernarfon Creameries Ltd (SCC) (26th August 2016)
The increase is split into two parts:
0.5ppl from 1st September
2.0ppl from 1st October
Note SCC continue to recruit new producers in Mid and North Wales
1.5ppl milk price increase for suppliers to Joseph Heler cheese – from October 1st (26th August 2016)
1ppl First milk price increase for Arla members – from 1st September (26th August 2016)
The actual Arla increase across all members is 1.25 Euro Cents, which converts to 1ppl and takes the standard liquid litre price to 20.05ppl (www.milkprices.com)
Whilst a welcome increase the quantum will be a disappointment to many Arla members who simply cannot come anywhere close to balancing the books at 20ppl. As Ian’s school report stated “Could do better”
1ppl milk price increase for suppliers to Belton Cheese – from 1st October (26th August 2016)
This takes suppliers manufacturing standard litre price to 21.75ppl (www.milkprices.com)
Various milk prices increases for First Milk Members - from September 1st (26th August 2016)
The increases vary from 0.77ppl to 1.25ppl and note the additional 0.25ppl business supplement.
Sept price increase (ppl)
Sept business performance supplement (ppl)
Total Sept price increase (ppl)
Sept A price (ppl)
Sept B price (ppl)
Price rise since June for combined A&B (ppl)
Midlands & East Wales
1 Note the Haverfordwest increase includes the Tesco cheese group payment estimated at 0.94ppl for September
7.5ppl milk price increase for suppliers to Dairy Partners (Cymru Wales) Limited – in four months (26th August 2016)
Dairy Partners increases to its 100 or so suppliers are now confirmed as follows:
July 1st +1.5ppl
August 1st +1.5ppl
September 1st +1.5ppl
October 1st +3.0ppl
Longley Farm Dairies (26th August 2016)
Often under the radar but Longley Farm Dairies from Holmfirth, Yorkshire operate an A & B system with their producers and it appears to be operated in a more producer friendly and fairer way than is the case with one or two other processors.
Both Longley’s A & B prices are currently 26.5ppl and that was the same in July.
Both prices are for a standard litre and not for the Jersey milk they take it, which attracts a significant constituent premium. One of its producers described it simply as fair pricing for all parties where there is total trust.
1ppl milk price increase for suppliers to Meadow Foods – from September 1st (19th August 2016)
The takes producers’ A litres (80% of deliveries) standard liquid litre price to 20ppl
Meadow Foods August B price will be 22ppl. Note, only 3 months ago the Meadow B price was only 11.25ppl (see below).
1ppl milk price rise for suppliers to The Fresh Milk Company (AKA Lactalis) – from 1st October PRODUCER NOTIFIED (19th August 2016)
This take producers’ manufacturing standard litre price to 21.73pl (www.milkprices.com)
Whole milk powder auction price rockets up 19% in 2 weeks (19th August 2016)
This week’s GDT auction produced some eye-wateringly cheery results. The all products average jumped a whopping 12.7% (US$295) to average US$2731/tonne and this increase comes on the back of a 6.6% increase only 2 weeks ago. This is the highest average price since October and is up 45% compared to that recorded 12 months ago.
Analysts in New Zealand are now suggesting markets are heading towards delivering an average break even price for New Zealand farmers at near NZ$5.
All products lifted in price and notable movers were:
WMP +18.9% to average US$2695/tonne
Butter +14.1% to average US$3274/tonne
Cheddar +8.9% to average US$3157/tonne
SMP +3.0% to average US$2028/tonne
The quantity sold was up at 37,766 tonnes and more important was the fact 177 bidders participated of which 119 purchased.
Woodcocks (Yew Tree Dairy) and Freshways targeting a 1.5ppl October milk prices increase (19th August 2016)
Yew Tree Dairies have announced to their suppliers that they expect a 1st October farm gate price increase of 1.5ppl or close to it.
Freshways have declared a minimum 1.5ppl farm gate A milk price increase for October. Note, Freshways July B price was 25.21ppl and for August Freshways anticipate its B price could be knocking on the door at 30p. In comparison Meadow Foods B price for July was 17.5ppl and its August B price has been announced at only 22pl. So comparing the two B prices the difference for July and August is likely to be 7.5ppl.
However, headline grabbing B prices don’t relieve the pain of low A prices and a number of Freshways producers are grumpy.
“The smaller guys are certainly no longer waiting for the big players!” – quote from www.milkprices.com
Some middle ground milk processors claim to be pushing customers for immediate price increases and frequently they are quickly kicked back with words like but Arla and Muller haven’t increased farm gate prices yet. Well come next Wednesday Arla are expected to take the lead on Muller with a member price increase for September following which Muller will have to follow.
Milk supply is dropping worldwide and has tipped the supply and demand balance upside down in a matter of months and processors need to realise it will only continue to fall irrespective of any delayed upward movement in ex-farm gate milk prices. Some have overcooked it and robbed producers blind.
Is this all fair or is there evidence of tactical moves? (19th August 2016)
Some processors are claiming they work on basket prices, which include the likes of Muller and Arla and until they move their farm gate milk prices up they can’t move theirs up. It’s what is called hanging on the shirt tail. Muller know that their refusal to lift prices in September catches out a number of their smaller competitors because their farmers are screaming for more money and customers are resisting until the likes of Muller move on price.
On top of that some liquid processors are guilty of packing milk for customers at ridiculously low prices. They were desperate to retain volume so they dropped their trousers and pants to keep existing customers and to smash and grab new ones at unsustainably low prices.
The problem here is they did it using a milk into powder price of 14p so the odd penny more and they thought they were slightly better off.
But those cheap contracts are still running and they could cripple the processor alternatively the processor cripples their farmer suppliers with low or non-existent milk price increases. Either way the farmer pays for the fact some processors have completely mis-read the market and are now under serious pain just as their farmers are. The worry is whether all processors can weather the storm and still retain their milk field. Notices to leave some buyers milk should now be flooding in because they understand that language. Sadly, it will be a miracle if all survive and some farmers need to remember processors who didn’t and don’t play fair.
July retail supplementary payment is 2.894ppl (19th August 2016)
The Muller payment for July deliveries is slightly down from the previous months 3ppl to 2.894ppl.
Holstein UK’s Chief Executive pocketed £240,000 of Society funds (19th August 2016)
The RABDF is clearly not the only one with some challenging financial issues to get to grips with, now the future of its (once) cash cow the Livestock / Dairy Event is in doubt.
During his tenure Holstein UK’s former Chief Executive Greg Watson managed to illegally trouser a cool £240,000 from the organisation, and he might have got away with it if it wasn’t for the determination of the then board and its chairman John Edge.
They ensured justice was done and in Greg Watson has been sentenced to two years in prison and ordered to repay the money. Let’s hope the organisation and its trustees have learned their lesson and that proper independent accountability of activities prevails going forward.
This has to rank as one of the biggest financial scandals any UK dairy organisation has allowed to happen.
State of the art Cheddar processing and packing facility (19th August 2016)
Dale Farm – the successful farmer owned processing arm of United Dairy Farmers officially opened its £7million expansion of its cheese processing and packing facility in Co. Tyrone, Northern Ireland, creating 60 additional jobs.
1ppl milk price increase for suppliers to Pensworth Dairies – from 1st September (12th August 2016)
1.172ppl milk price increase for Muller Direct liquid Milk DPO formula contracts – from 1st September (12th August 2016)
The increase applies to the ex Dairy Crest formula suppliers and is the largest price increase the formula has delivered and takes both standard litre prices to over 26ppl and is the second consecutive monthly increase.
The main influence has been the significant lift in bulk cream prices which are up by almost 75% since April worth 3.37ppl on the milk price. Sadly for the farmers involved come the 1st February 2017 the formula pricing mechanism will be axed by Muller.
The new liquid core formula standard litre price will be 26.2ppl compared to the comparable 1st September no aligned standard litre price of only 18ppl (www.milkprices.com).
0.5ppl milk price increase for suppliers to Pattesmores – from 1st August (PRODUCER NOTIFIED) (12th August 2016)
Muller defends their corner & attempt to dig themselves out of a PR grave (12th August 2016)
CEO of Muller UK Ronald Ker’s has responded to mounting criticism on his firms refusal to move non aligned farm gate milk prices up with a letter to his producers. It states the case for the defence and in bold letters once again claims he is building Britain’s Biggest and Best Dairy Business.
The letter is clear that Muller prices will not go up until “we actually realise these higher returns within our business”. Clearly Muller haven’t achieved that for August or September which is a worry and some believe this is because Muller have forward sold quantities of milk which now look vey cheap and could be holding prices back.
Where the letter is silent is with reference to the question asked by Michael Oakes, NFU Dairy Board Chairman last week which was for Muller to explain why farmers have received some of the extra cream money (see above).
However analyst and journalist Chris Walkland has commented he does not blame Muller for not moving the price up in September. He points the finger to the incredible lack of lobbying of milk buyers like Muller sooner which if it had happened might have persuaded Muller to move its non aligned price for September 1st. The evidence points to a very limited number of complaints about the Muller no aligned milk price from its own farmers.
To be fair the letter does make some valid points several of which were mentioned in this bulletin last week in addition there are a couple of irritating ones. No matter what the defence is the reality is that heading into winter on a farm gate milk price of 18 to 18.6ppl is painful, unstainable, disappointing and will not promote additional production.
Finally the letter should ideally have gone out at the end of July with the announcement that milk prices for Muller non aligned were frozen. At the same time it could have addressed where the extra cream returns money Muller has received has gone.
Arla Farmer Milk Brand broke the 1 million litre barrier in two weeks (12th August 2016)
Arla’s farmer’s milk sales in Asda stores have broken the 1 million litre barrier in just over two weeks since its launch at the Great Yorkshire Show. An extra 25p from each 4 pints sold will be paid to Arla members, so that’s an extra £250,000 to kick start.
Cheap Milk (12th August 2016)
Booker cash and carry in Cardiff is selling Muller Wiseman milk 8 litres for £2.35 and this incredible offer runs for 2 months until the 4th October. That’s 29.4ppl!
2ppl milk price increase for Glanbia Cheese suppliers – from 1st September (5th August 2016)
This takes producers’ standard manufacturing litre to 20.54ppl (www.milkprices.com)
2ppl milk price increase for Arla Direct Suppliers – from August 1st (5th August 2016)
This takes producers’ standard liquid litre to 18ppl (www.milkprices.com)
1.55ppl plus milk price increase for suppliers to Paynes Dairies Limited – from August 1st (5th August 2016)
This takes producers’ standard liquid litre price to 19.2ppl (www.milkprices.com)
The increase comes in two parts with 1ppl on the basic milk price, in addition producers no longer face the balancing charge deduction, which is equivalent to an additional 0.55ppl so total increase of 1.55ppl. On top of that the promise that if Paynes ongoing discussions with customers deliver results there could be a further backdated increase on top of the 1ppl. However, the reality is that with Muller holding until at least October 1st those discussion will be extra challenging.
1ppl milk price increase for suppliers to Dairy Crest Davidstow – from 1st September (5th August 2016)
This takes producers’ standard manufacturing litre to 22.72ppl (www.milkprices.com)
First Milk milk price increases including 5ppl on B litres (5th August 2016)
First Milk has increased the price it pays for B litres by 5ppl to 20ppl for August.
In addition, the following A price increases have been announced by the co-op, spread across August and September.
August/September Increase 1st September Standard Litre
Haverfordwest 1.25p 18.74p
Lake District 1.25p 17.71p
Scotland 0.70p 17.08p
North of England 0.70p 16.90p
Midlands 0.50p 16.34p
First Milk are not moving mountains but each and every snippet of news is encouraging for a large group of co op farmers who just over a year ago feared the Co op would be the next DFOB, Amelca or United Milk.
The B price above the standard litre A price is exactly how A and B should operate with the two ratcheting up and the B price sending a clear signal to members that more milk is required by First Milk.
It wont be enough for some but it will provide encouragement and optimism for many especially in the full knowledge that First Milk are no longer paying a milk price they cant afford just to keep up with other milk purchasers as happened under the previous management.
WMP auction prices jump 10% (5th August 2016)
Tuesday’s GDT auction saw WMP prices increase by 10% compared to a fortnight ago and the overall average all products price was up 6.6% to average US$2436, which was significantly more than analysts anticipated.
Key movers were:
WMP averaged US$2265 tonne +9.9%
Butter averaged US$2871 tonne +6.6%
SMP averaged US$1965 tonne +2.1%
Cheddar averaged US$2889 tonne -0.8%
AMPE & MCVE rocket up (5th August 2016)
AHDB’s AMPE & MCVE values for July have rocketed up and in one month AMPE has increased by 24% (to 23.4ppl from 18.9ppl) and MCVE is up by 20% (to 23.5ppl from 19.6ppl)
Muller under attack for announcing no price increase before October 1st (5th August 2016)
This week’s dairy news and chatter has been dominated by Muller’s announcement its non aligned suppliers will not see any increase until at least October 1st. There was talk of a possible mid September rise, however, Muller have subsequently ruled this out.
The announcement attracted widespread criticism, particularly from NFU Dairy Board Chairman Michael Oakes who certainly sharpened his teeth and let go with both barrels in a press release.
His language was unusually strong for an NFU press release but his frustration was understandable.
In the NFU’s release Michael Oakes refers to Muller’s 3ppl retailer premium with a hint that Muller could be using this as a reason not to increase producer prices in September. He commented:
“Müller’s non-aligned suppliers will no doubt be dumbfounded by Müller’s decision to hold. The decision is an insult to its suppliers and is completely out of line with recent positive market movements which are bringing some confidence to the industry at last.
I’m sincerely hoping that Müller isn’t hiding behind the retail supplements paid by Lidl, Aldi and Morrisons, rather than reacting to the market realities we are seeing in cream incomes, wholesale prices and volume reductions. Cream incomes to a liquid retailer have increased by a whopping 77% since Müller last increased its base price and current daily deliveries of milk are down 10.2% on this time last year. This stand on milk price also makes a mockery of the support retailers gave, and continue to give, dairy farmers in minimum farm gate pricing.”
Similar comments came from Graeme Kilpatrick Chairman of NFUS with:
“I can think of no justifiable reason why Muller has chosen to ignore the market and leave their non-aligned suppliers languishing with an unsustainable milk price. I sincerely hope that Muller isn’t hiding behind this retailer supplement and using it as an excuse for not lifting prices now.”
Farmers for Action are equally ignited and protests are on the radar (see below)
The Muller Milk Group Chairman and former board have come under attack with the group collectively described as impotent as well as Muller messengers rather than negotiators. In addition the fact it doesn’t affect most of the Muller farmer board because they are on retailer aligned contracts has not gone unnoticed.
Did this group prepare their case for an increase if so why did they agree to the stand on or were they simply told that’s the position? They claim to represent 1200 plus farmers and will know that Muller have pocketed money on the cream price alone.
Muller have certainly received additional income, particularly from cream and questions are being asked whether they have retained it or given part or all of it away to retail customers rather than passing it back to farmers.
To be balanced it has to be remembered that like Arla Muller have paid one price for every litre and not introduced A and B pricing with which comes the opportunity to create chaos in the liquid market by playing smash and grab with competitors customers using B milk bought for as little as 6 or 7ppl. Muller have had to defend those predatory prices and retain customers. In reality they cut prices slower and by smaller amounts than they could have and that’s perhaps one explanation as to why upward price movements aren’t coming as quickly as some producers desperately need it to.
The move leaves Muller non-aligned farmers on only a 18.66ppl standard litre price and the ex-Dairy Crest producers on only 18ppl. Note, when Muller do decide to move up on milk prices they will equalise both the Muller Milk Group (18.66ppl) and Direct Milk (ex-DC 18ppl) milk prices, which is undoubtedly a factor in their equations and decision to hold producer prices.
The NFU’s release concluded with “Müller is throwing its support to the British team at this year’s Olympics and it’s about time it showed similar support to its non-aligned farmers who deserve improved milk prices.”
All eyes now point towards Arla and whether their member milk price increases for September 1st. If it does increase by a useful amount it won’t help Muller in its bid to be both the biggest and best GB milk processor. If Arla don’t move the NFU will have to sharpen their teeth for the second time in a month.
Farmers for Action go back out on the picket lines this Sunday (5th August 2016)
Predominantly in response to the Muller stand on price announcement FFA are planning direct action. For details log onto www.farmersforaction.org latest news.
A demonstration will take place this Sunday 10th at Market Drayton at 8pm according to FFA’s website posting today.
5000 entries from 31 countries means Nantwich the biggest in the world (5th August 2016)
The Nantwich Cheese Show continues to grow and it is without doubt the biggest cheese show in the world where this year 5000 cheeses came from 31 countries with 53% of the entries from UK processors.
Champion UK cheese went to Arla Foods’ Taw Valley Creamery Double Gloucester.
The Tesco Red Leicester Trophy was awarded to First Mill’s Haverfordwest Creamery, which is good news given Haverfordwest’s close relationship with Ornva Foods (AKA Adams) and Tesco. It means Tesco are buying the champion cheese.
Haverfordwest also won the best Extra Mature Cheddar against a class of almost 100 entries.
2008 1.4 Petrol Manual Mini One in Pepper White with Black Stripes (5th August 2016)
Good condition inside & out.
Fabric Seats (note, the passenger seat has a tiny hole smaller than a 5 pence piece), Electric Windows, CD Player, Height Adjustable Driver's Seat & Passenger Seat. Folding Rear Seats. Alloy Wheels, Power Steering, Central Locking, Alarm Immobiliser, Service History & it had an MOT in early June, hasn’t been used since. Mileage 94,860
In May it had an oil change, new oil, air and pollen filter. I am selling the car because I have had a baby boy, Bobby, and unfortunately the car is not quite big enough for both me, Bobby and the two British bulldogs. That means Ian is now a Grandad for the first time!!!
It is a great little reliable car and viewings are more than welcome.
Any questions please email me on email@example.com pictures are available on request.
4.8ppl record breaking milk price increase to suppliers to Bowland Fresh (Lancashire) – from 1st August (PRODUCER NOTIFIED) (28th July 2016)
This takes producers’ standard litre price from 17.2ppl to 22ppl.
The price increase is a headline grabber but needs to be balanced out with the pain Bowland suppliers have endured, particularly in recent months.
Bowland operated an A & B pricing mechanism with historical deliveries ratcheted back to 80% paid on an A price of 16.2ppl in April, May & June and the remaining 20%+ paid on the jaw dropping B price of 6ppl in April & May and 8ppl in June. Is this the lowest B price paid to producers? If any readers know of a lower B price, please email Ian. By our calculations Bowland’s blended A & B milk price paid in April & May would be around 14.2ppl. Note, producers supplying Bowland believe that the A & B mechanism will be abandoned by Bowland from 1st August.
4.5ppl milk price increase for suppliers to Lanchester Dairies – from 1st August (28th July 2016)
After 1st August Lanchester acknowledge the serious financial implications and pain farmers have taken and that unless seismic increases are confirmed now supply bases will be further decimated.
Along with SCC (see below) Lanchester are one of two milk buyers who have re-opened the doors to new recruits. Lanchester are seeking farmers ideally situated in an area roughly between the Yorkshire Dales & Moors, up to the Scottish Borders.
1.75ppl milk price increase for suppliers to South Caernarfon Creameries – from 1st September (28th July 2016)
In addition, SCC is now recruiting new suppliers in North & Mid Wales as they ramp up production in their new factory.
1ppl milk price increase for suppliers to Belton Cheese – from 1st September (28th July 2016)
This takes producers standard manufacturing litre to 20.75ppl (www.milkprices.com)
1ppl milk price increase for suppliers to Joseph Heler Cheese – from 1st September (28th July 2016)
Joseph Heler Cheese hit the nail on the head (28th July 2016)
In a letter to producers notifying them of the 1ppl increase, Mike Heler opens up with a very thought provoking paragraph:
“We are very aware that some milk purchasers are increasing milk prices particularly those who are paying market related or A/B prices. This has to be welcome news however we are concerned that some milk purchasers are introducing penalties for under supply and are encouraging increased milk production direct from farms. The UK is not short of milk and milk buyers should be careful and diligent in encouraging producers to increase supply if we are to see a sustained recovery.”
The final sentence should be studied by all dairy farmers.
No change for Arla members’ milk price for August at 19.05ppl (28th July 2016)
One must surely come for September!
Spot Milk @ 31ppl - if you can find it! (28th July 2016)
The 30ppl spot milk barrier has been broken but it is very scarce. In March some milk buyers told suppliers they wanted less milk and had no home for all the milk they were receiving. Consequently, farmers responded and cut production, in some instances turning cows into meat.
However, whilst spot milk price headlines are sensational the total amount of spot milk traded in GB accounts to a maximum of 1% of total production. It is however, an important barometer of daily supply & demand.
According to www.milkprices.com, if farmers deduct 2.5ppl from the headline spot price it will give them an approximate farm gate equivalent milk price.
Milk prices are moving up but no news from the big guns yet (28th July 2016)
Price increases are coming through but there is still no positive news from either of the two GB liquid big guns, namely Arla and Muller, other than the fact both have declared that their member milk price will not increase before 1st September.
GB milk production is now down almost 11% (3.7m litres a day) compared to the same weeks in 2015, and GB in 2016 has seen the biggest fall in production compared to the other 27 EU member states. In Holland the corresponding 6 months of 2016 has seen production drop by 8.6% compared to 2015.
To be fair to Muller and Arla they were not guilty of crashing their producer price as quickly or by as much as many other processors did. This is an area were the likes of the NFUs should be doing some analysis to see who went down quickest and who is hanging back and slow to increase.
Is the Freshways A & B system working as it should? (28th July 2016)
Freshways have written to its farmer suppliers and confirmed to Ian that farmers who produce below their agreed weekly litres are likely to be penalised. Freshways do regularly trade in the spot market and will now be facing a 30ppl+ price for any top up milk they require. They do however anticipate that their July B milk price is likely to be heading towards 25ppl, which if paid, leaves a huge gap between themselves and the likes of Meadow Foods whose estimated B price for July is only 17.5ppl.
If Freshways do pay a B price in the region of 25ppl they will be able to claim that their operation of A & B pricing is exactly how it was designed.
Note, in reality some milk buyers could say they will pay 40ppl or 50ppl for B milk in the full knowledge that their producers are unable or unwilling to produce any B litres in that particular month.
Unless some processors start to operate the A & B pricing mechanism as it was designed its image is likely to be tarnished for life.
€500m dairy aid package has missed the low point (28th July 2016)
The latest €500m additional EU dairy aid package announced last week indicates that the Commission is definitely out of touch with the direction of travel of milk prices.
Of the €500m a total of €350m will be allocated in the form of a national envelope handled by each member state with the UK down to receive £25m (€30m). The Commission say that member states can match fund this taking the total compensation for the UK to £50m. But if anyone believes our Treasury will put £25m into dairy farming they are likely to still believe in the tooth fairy.
The remaining €150m will be paid as an incentive to producers for cutting milk production based on milk they do not produce in a 3 month period compared to the same 3 months period production in 2015. Exact details are still to be confirmed, however, the rate is expected to be around 12ppl for each litre not produced and rather surprisingly the payment will be available to retired farmers as well as on farm processors. This extra money takes the total paid by the Commission to over €1 billion during the crisis.
Holstein UK statement on Dairy Day (for the decoded version see below) (28th July 2016)
Following the disastrous Livestock Show Holstein UK has issued a statement on its UK Dairy Day. The full statement reads:
UK Dairy Day - Media Statement
Richard Jones, Holstein UK Chief Executive, commented;
“Holstein UK acted on behalf of its members and the dairy industry to ensure that there was a dedicated dairy event held in the UK every September. We are determined that UK Dairy Day will continue to showcase the very best of British dairying and feature all cattle breeds from all over the UK. The one day event is tailored for the dairy sector and has established itself as the leading event for dairy farmers to network, meet industry suppliers, share knowledge, innovations and ideas – and this will continue until at least 2020.
In response to recent speculation surrounding RABDF and Livestock Event, with plans to change the date of this event to early September, Holstein UK can confirm that discussions with RABDF have occurred, but there are many issues to be resolved before any joint activity can be confirmed. Our foremost priority is to protect our members and the financial security of Holstein UK and the current framework for UK Dairy Day already achieves this very successfully.
The positive reaction that UK Dairy Day has received over the last two years demonstrates Holstein UK’s understanding of exactly what the dairy industry needs. In 2015 visitor numbers exceeded 7,000 and this is expected to grow. The variation on offer for dairy farmers and those related to the industry, from topical seminars, new product competitions, college and charity displays – to leading cattle shows and over 300 businesses represented provides a diverse, informative and valuable business event.
UK Dairy Day 2016 takes place on Wednesday 14th September at the International Centre in Telford. In response to the challenges currently facing the industry, UK Dairy Day has made important changes for the 2016 event to support farmers by offering free visitor entry, and free car parking onsite and off-site. We’re also extremely appreciative of a new partnership with Anglia Farmers which is enabling free entry for all show cattle.”
That Holstein UK statement on Dairy Day – decoded (28th July 2016)
“Holstein UK acted on behalf of its members and the dairy industry to ensure that there was a dedicated dairy event held in the UK every September.” = RABDF, in moving its event to July and renaming it Livestock made a huge balls-up.
“We are determined that UK Dairy Day will continue to showcase the very best of British dairying and feature all cattle breeds from all over the UK. The one day event is tailored for the dairy sector and has established itself as the leading event for dairy farmers to network, meet industry suppliers, share knowledge, innovations and ideas” = Our event is better than yours now so the second word is off, RABDF.
“This will continue until at least 2020.” = There ain’t gonna be a merger of events for at least three years.
“Our foremost priority is to protect our members and the financial security of Holstein UK and the current framework for UK Dairy Day already achieves this very successfully.” = We make a profit out of UK Dairy Day and we are going to continue doing so.
0.452ppl milk price increase for Muller formula contracted producers – August (15th July 2016)
This increase is almost entirely down to the extraordinary improvement in cream prices during June, which has resulted in a 0.453ppl uplift in the formula price for August.
In fact, the cream price for June (which drives the August price) has, according to AHDB, increased by £240/tonne, which is the biggest monthly increase for almost seven years.
The increase results in the following standard litre prices:
Liquid core formula 25.02ppl
Simplified contract 24.83ppl
The difference between the formula priced litres and the standard contracted litre is now 6.713ppl.
3ppl extra for Muller non-aligned suppliers (15th July 2016)
Non-aligned farmers supplying both Muller Group and Muller Direct will receive a June retail supplementary payment of 3.047ppl in addition to their published standard litre milk price.
0.5ppl milk price reduction for suppliers to Pattemores, Somerset - from July 1st (PRODUCER NOTIFIED) (15th July 2016)
Thank you to the readers who emailed Ian last week to inform him of this price cut, which was one of only two recorded for the 1st July. Several producers have commented that pressure has been applied to Pattemores to follow the lead of others and to rescind this cut. The fact Pattemores haven’t rescinded has understandably alarmed some of those producers.
UK deliveries crash (15th July 2016)
According to AHDB UK milk deliveries are crashing and are now down 10% on the weekly statistics, equivalent to a 4 million litres a day drop on the amount produced last year.
Arla brand to pay more money to farmers (15th July 2016)
Following the extremely successful launch, 11 months ago, by Morrisons of its Milk for Farmers brand comes the Arla Farmers Milk brand, which has been initially rolled out in 500 ASDA stores this week. In those ASDA stores consumers have the choice between standard ASDA discounted milk at 95p for 4 pints or to pay an extra 25p for the new brand. Note, the Morrison’s success is such that volumes sold are almost 8 times the amount budgeted.
As well as coming on the back of the Morrisons success its launch will have been spurred on following Arla’s recent research, which confirmed that 63% of consumers care about dairy farmers and are willing to pay more for dairy products if they know the extra money actually goes back to dairy framers.
So all eyes are waiting for the tweets and interviews from the small vocal family of grim reapers who quickly came out when the Morrisons brand was launched, all of whom either supplied another retailer or were a tiny processor with an Arla axe to grind. From Arla’s point of view these people were described as being like mosquitos biting an elephant’s backside.
Floating 40 cow dairy farm to open in January (15th July 2016)
Yes the world’s first floating dairy farm is to be built by Dutch developers in Rotterdam with 40 cows at a cost of $4million (£3 million). The milk will be processed on the floating deck into yoghurt and the project is fully integrated with, for example, the cow’s urine treated and utilised to grow red clover, alfalfa and grass under artificial light. Due to open in January next year, the main question is whether cows get sea sick?
RABDF – Houston we have a problem (15th July 2016)
Following on from last week’s reports of a disappointing NEC Livestock Event comes information from RABDF members that its finances are rapidly sliding down hill.
In 2014 RABDF had balance sheet reserves of over £1 million and by the end of 2015 this had slipped to £763,000. The main blow is down to declining income from its events with the provisional 2015 accounts showing an eye watering £238,000 loss. However, that was with ticket sales amounting to £963,000 compared to this year when entry to the event was free.
It appears almost inevitable that the organisation will lose money again in 2016 and that the £763,000 in reserve will be further eroded, which has led to one hack questioning whether the situation could spell the end of the organisation, which now has less than 750 paid up members. It’s certainly looking like a 999 situation, which has been allowed to continue too long and needs arresting. Given the numbers and facts we doubt even the First Milk magician, Mike Gallacher, could pull a rabbit out of the hat if he were to be parachuted in not withstanding the fact he has plenty to keep him occupied at First Milk.
For 2015 RABDF budgeted to make a loss of £170,000 but the actual deficit was £265,000 and this loss came on top of a 2014 loss of £156,000. Houston we have a problem and we are almost stranded.
2ppl milk price increase for suppliers to The Fresh Milk Company (AKA Lactalis) (8th July 2016)
This is another two stage price increase of 1ppl from August 1st and 1ppl from September 1st.
Previously FMC had declared a 3 month price holding guarantee, which, like others, it has decided to bin by announcing a price increase, which comes in addition to the previous 0.5ppl July payment.
The 2ppl results in a standard manufacturing litre of 19.13ppl on September 1st under their company profile contract and 19.70ppl under their seasonality schedule. Both are manufacturing standard litre values calculated by www.milkprices.com
0.5ppl milk price reduction for suppliers to The Wensleydale Creamery - from 1st July (8th July 2016)
This price decrease is certainly against the flow and is one of the few, if not the only, GB cheese processor farm gate milk price decrease to be implemented without any indication of an upturn or freeze on farm gate prices.
Spot price at 28ppl plus! (8th July 2016)
Spot milk prices are only an indication of supply and demand on a daily basis and come with a wealth warning.
However, www.milkprices.com have recorded daily spot prices during June and the average months spot price they calculate as 22.5ppl having started in early June at 17/18ppl and ended at 25/26ppl.
During the first week of July spot prices have traded at 28ppl and possibly more.
Livestock Event 2016 “was like a sick dog on life support needing to be put out of its misery” (8th July 2016)
Ian only attended the first day of the Event, which was poorly attended and the dairy exhibitors he spoke to were extremely disappointed at the number of farmers attending and the enquiries. Apart from the farmers the number of company absentees was staggering. Take the feed sector alone. No For Farmers. No Carrs Billington. No NWF. No Devenish. No Mole Valley. And why? Because having a show in July is just a crap month!
There is no way RABDF can run a successful one-day event in 2017 in direct competition to UK Dairy Day. The exhibitors Ian spoke to all claimed that if there was no agreement on merging the event they would only either attend the UK Dairy Day in 2017 or alternatively would boycott both events. There is talk of the two events amalgamating but the truth is if RABDF had consulted and listened to exhibitors and not moved to July in the first place we wouldn’t have two events. The disastrous date change and loss of direction by moving the name away from Dairy to “Livestock” left the door wide open to UK Dairy Day and Holstein exploited it very well indeed.
But as personalities battle for positions, it’s quickly heading for a knock-out in which Holstein UK are favourites to win. But it shouldn’t come to that. If the UK can negotiate an exit from Europe then two dairy organisations should be able to negotiate over trade shows. They will both be laughing stocks if they can’t.
It’s a miracle heads haven’t already rolled over the rapid demise of the RABDF’s flagship cash cow event, the profits of which are used to fund the whole organisation.
One dairy farmer emailed Ian to simply state “The Livestock Event was rubbish”, another described this year’s two-day event as “resembling a sick dog that needed taking to the vets and putting out of its misery”.
Michael King (RABDF chairman), Peter Alvis (vice), Lord Curry (president) and others within the RABDF’s council are desperately trying to shake things up and turn the ship around but it’s now much tougher than it was earlier this week.
Sean (Marmite) Rickard to chair First Milk’s Member Council (8th July 2016)
Sean Rickard is well known to farmers and is best described, like Ian, as Marmite. Some love him whilst others hate him, however, both groups tend to listen to what he has to say and talk about it.
Sean is to immediately take the Chairmanship of First Milk’s Member Council who will oversee the co-op’s strategy and represent its farmer members/owners.
Sean is sure to ruffle some feathers with his rather blunt straight talking style , which occasionally gets very serious when he wags and points his finger at you saying “let me tell you my friend”. He won’t be every farmer’s cup of tea but he will call it how it is no matter how unpalatable or unpopular.
Note, at last Friday’s SGM First Milk members approved the conversion of all Capital Account Balances, B Shares and Debentures into C Shares.
Russian dairy import ban extended to 2018 (8th July 2016)
Since August 2014 European dairy product has been banned from entering Russia and that ban is now extended until at least 31st December 2017. Further proof that the EU might have permanently lost that customer.
1.25ppl milk price increase for suppliers to South Caernarfon Creameries (SCC) (1st July 2016)
This is split into two increases:
1st July 0.5ppl
1st August 0.75ppl
In addition, SCC’s new cheese production facility will be officially opened next Tuesday (5th) by The Prince of Wales and Duchess of Cornwall.
Dairy Crest rescinds 1ppl July 1st milk price cut (1st July 2016)
Dairy Crest has done right by its Davidstow producers and rescinded the previously announced 1ppl milk price cut, which will mean for July producers manufacturing standard litre will remain at 21.72ppl (www.milkprices.com)
0.65ppl First Milk member milk price increases – from 1st July (1st July 2016)
From 1st July First Milk’s A litre milk price will increase by 0.5ppl whilst the B price will increase by 2ppl. The combination results in a nett 0.65ppl member price increase from 1st July.
350,000 tonnes is the new intervention SMP ceiling (1st July 2016)
From June 30th the SMP intervention ceiling has been raised from 218,000 tonnes to 350,000 tonnes at a fixed price of €1698 tonne (approximately £1,400 tonne). This ceiling is unlikely to be reached this year given the current direction of travel of markets.
Total tonnage in store has reached almost 300,000 tonnes of which 218,000 are at the fixed price and 80,000 tonnes via tender.
In the space of weeks SMP intervention storage has gone from 109,000 tonnes to 350,000 tonnes and the 300,000 tonnes of product in store will have to come out and be sold, which will hamper any recovery. It’s a huge tonnage and a big black cloud.
Now dairy prices really have turned the corner (1st July 2016)
AHDB Dairy this week has a headline titled “Wholesale prices move off the floor.” This surely officially confirms what others have been stating for the past 2 to 3 months, that prices have bottomed and are on the up.
6,500 cows in the world’s biggest robotic milking farm (1st July 2016)
A farm in Chile will install 64 robots and become the biggest robotic milking farm in the world.
RABDF does a U-turn abandoning its Livestock Event in 2017 (1st July 2016)
In 2012 the RABDF broadened the scope of the two day Dairy Event and once again re-named it to be The Livestock Event.
In 2013, they switched the event from September to July, a move which was heavily criticised by a number of exhibitors who felt they should have had prior input and consultation.
At the time of the 2013 move, eyebrows were raised at the press releases from RABDF with claims that the date change had been “a huge success” and that the main trade halls buzzed. Last year one industry leader commented to Ian he had seen more customers at his local car boot sale than were present on day two and that most of the people wandering around were, in fact, bored trade stand and cattle exhibitors.
Well, next week’s two day event will be the last Livestock Event and in 2017 the RABDF will revert to a one day event called “The National Dairy Event” on 6th September 2017 at the NEC.
Clearly with the now firmly established Holstein UK’s Dairy Day Show there simply isn’t room for two specialist dairy events in England let alone two within only 7 days of each other. With the announcement that next year’s RABDF one day show will not include any cattle showing it’s a near certainty which of the two will be the first choice of dairy farmers.
The two organisations are already in negotiations with a view to holding one joint event each year. If those negotiations fail, one of the events is likely to be axed by 2018 at the latest.
Given the RABDF Event has had so many name changes in the past decade or so, we reckon it’s at least five; we are tempted to run a competition for the name of the 2018 event.
28ppl farmgate milk price from wwwfreerangemilk.net from September (1st July 2016)
In an update from The FreeRange Milk Marketing Board (FRMMB) founder Nick Hiscox is “still set on 28ppl for September for those producers set up to supply our milk”.
Those interested should form an orderly que girls on the right, boys on the left but don’t hold hands! For more information email firstname.lastname@example.org or mobile 07931 581381.
Tesco (TSDG) Cost of Tracker is almost unchanged (1st July 2016)
The second quarterly TSDG Cost Tracker review has confirmed that a small nett 0.02ppl increase in the COP taking the current 28.69ppl to 28.71ppl from August 1st.
In addition Tesco has unveiled a new Fresh Milk Fair for Farmers Guarantee on all of its fresh milk which is 100% British sourced from 600 farms.
Tesco claim that since it started its TSDG relationship with farmers it has paid a whacking £240 million above the market price. Note the market price is taken as the AHDB average published price.
From Monday next 4th July the switch of around 200 million milk litres of liquid from Arla to Muller together with Tesco farmers will take place.
CAR WANTED BY IAN (1st July 2016)
Small to Medium Automatic car required to be used as a run around vehicle, low mileage preferred – please email email@example.com
2.5ppl milk price increase for Dairy Partners (Newcastle Emlyn) suppliers (PRODUCER NOTIFIED) (24th June 2016)
The announcement comes in two stages:
1.5ppl on July 1st
1.0ppl on August 1st
2ppl milk price increase for Wyke Farms – from 1st August (24th June 2016)
This takes producers manufacturing standard litre price to 21ppl www.milkprices.com
1.5ppl milk price increase for suppliers to Glanbia Cheese – from 1st August (24th June 2016)
This takes producers manufacturing standard litre price to (18.54ppl) www.milkprices.com
1ppl milk price reduction for suppliers to Booths supermarkets – from 1st August (24th June 2016)
This takes producers standard liquid litre price to 31ppl www.milkprices.com
0.9ppl milk price increase for Arla Directs – from July 1st (24th June 2016)
This takes producers standard liquid litre to 16ppl. Arla members price for July will be stand on.
0.68ppl milk price reduction for Sainsburys suppliers (24th June 2016)
The reduction will apply for the 3 month period 1st July to 30th September and is down to reductions in feed, fuel and fertiliser prices as published by AHDB.
The following Sainsbury www.milkprices.com standard litre prices will be:
29.3ppl for Muller
29.18ppl for Arla
29.24ppl for Direct Milk (Ex-Dairy Crest Direct now Muller)
Meadow Foods 2ppl increase (24th June 2016)
Last week’s newsflash that Meadow Foods had announced a 2ppl producer milk price increase in two stages triggered a flurry of interesting emails to Ian.
The bulk of them came from suppliers to Meadow Foods who were keen for Ian to highlight that the 2ppl increase only applies to the A deliveries, which amounts to 80% of deliveries. A number of suppliers were keen to highlight the fact Meadows B price during April and May, has been under 12ppl. However, the B price is expected to up around 2ppl to over 13ppl for June and rising.
In addition a couple of readers questioned Ian’s claim
last week that Meadow announced a 5ppl increase in 2007. Having checked our records and compared them
.com the Meadow price was increased by +8.79ppl over a seven month period
split as follows:
May’07 +1.0ppl, Aug ’07 +1.8ppl, Oct’07 +4.99ppl and Nov’07 +1.0ppl = Total +8.79ppl in the 7 month
Paynes Dairies axe B litres – Is that fair? (24th June 2016)
Producers supplying Paynes Dairies have been informed that their B litres will be abolished and become 100% A litres with immediate effect from 20th June. Some producers have rightly questioned whether this is how A&B milk pricing is designed to operate. The reality is what should happen is the B price should lead the A price up and on occasions overtake it.
Charlie Payne is coming in for some criticism with this latest surprise move having recently paid only 9ppl for B litres and as soon as the spot price is rallying (today 20ppl) he intends to buy all milk at a standard litre (A) price as well as require production profiles from producers.
As stated in this week’s AHDB Dairy Market Commentary “B prices should be the first to move upwards – assuming they work as they were intended to.” Now it seems the ending to that sentence should be … “work as they were intended unless the milk processor suddenly scraps alphabet milk pricing.”
Arla and Muller make the top 20 league (24th June 2016)
The 2015 ICFN league table of the top 20 milk processors by volume puts Arla at no. 4 (no. 5 in 2014) with 14.2m tonnes and Muller no. 14 (no. 17 in 2014) with 6.3m tonnes.
The top 20 processors account for 25% of the worlds milk processing.
Belton Cheese is officially recognised as one of Britain’s fastest growing international sales businesses (24th June 2016)
The latest Sunday Times HSBC international league table of 200 businesses has seen Shropshire based Belton Cheese ranked 135th as a mid market private company with fast growing international sales.
Belton produce 8,000 tonnes of handmade cheese a year from milk sourced from 85 local farmers of which 15% is now exported to the USA, EU, Canada, South Africa, Australia, China and Japan and growing at a pace.
Sorn Milk producers call it a day (24th June 2016)
David Shaw’s Sorn Milk business in Ayrshire will make its final collections from its 49 supplying farmers next Thursday, June 30th after which its doors close.
Recently the business has failed to pay its farmers anything more than what is almost certainly the lowest milk price and the final straw was a nett milk price paid to producers of 10ppl when the milk was delivered into Yew Tree’s new drier in Lancashire at 14ppl. It is claimed that 48, if not all 49, Sorn producers tendered their resignation because they simply couldn’t take any more pain.
The loyal producers, some of whom have been with Sorn for almost 22 years since it started, wanted owner David Shaw to share the pain and take a haircut on his margin but it didn’t happen.
Ironically, many of those Sorn producers from July 1st will be supplying Yew Tree direct achieving 16ppl and trending upwards whilst some have joined First Milk.
One of the major problems Sorn encountered was when their relationship with Arla irretrievably broke down. Had that situation been handled differently, particularly in terms of a Sorn margin haircut the closing of the doors next Wednesday would likely not have happened.
Sorn farmers have been quick to alert Ian to the fact that David Shaw has stated that he is not selling his milk tankers and that they are bought and paid for. That’s led at least one Sorn producer to discuss the matter with his lawyer because he claims that earlier in the year a 2ppl milk price deduction for 3 months was taken by Sorn to finance the purchase of a new lorry.
Let’s all hope it all ends amicably, peacefully and financially fairly for all involved in the shut down.
!!!!!!!!!MILK PRICE NEWS FLASH!!!!!!!
2ppl milk price increase from Meadow Foods breaks the log jam early (17th June 2016)
Last week in this bulletin Ian made it abundantly clear that the UK milk market is on the move and even suggested the possibility that the odd milk purchaser might announce an August producer milk price increase.
Well, once again, Meadow Foods have come up trumps by today announcing a 2ppl producer price increase split over two months, with 1ppl from 1st July and the same from 1st August.
This is a very important signal to other milk purchasers to step forward and pay farmers a fair share of what they are entitled to, especially those involved in the liquid and spot market.
Back in 2007 Meadow shook the industry when they announced a whopping 5ppl price increase. They had correctly read the market signals then and only a fool would suggest that the bean counters in Meadow have got it wrong this time.
Some milk purchasers will be desperate to re-build their own balance sheets and would love to be able to delay producer milk price increases by a month or more. Well, Meadow has once again broke rank and announced that they will pay producers any extra as soon as they can. Now all eyes will be on who follows suit. It’s a certainty that the two price drops for July 1st from cheese makers Dairy Crest and Wyke must be the last and there will even be pressure on them to rescind part or all of their July cut. It’s time to cut out the spin and for the market to follow Meadow’s lead, which Ian believes is not only a UK first, but possibly a European and world first price increase following this serious milk price crisis.
Simon Chantler, Chief Bean counter at Meadow commented:
“We are starting to see the green shoots of recovery in the price we are able to pay for our milk and wanted to pass this on to our producers as soon as it was possible.”
Although there is still some way to go before the pressure is lifted from producers, we feel that the slowdown in EU milk production over the flush period, a general tightening of supply are offering a better market outlook. These developments are the most positive we have seen for a number of months and this has led us to adopt a more optimistic position for the recovery of milk prices in the medium term.
We know the last two years have been incredibly difficult for producers across the UK, Europe and the world and Meadow Foods hopes to be writing again soon to producers with further positive news on the market and milk price.”
1ppl milk price reduction for Dairy Crest/Davidstow producers – from 1st July (10th June 2016)
This takes producers manufacturing standard litre price down to 20.72ppl (www.milkprices.com)
1ppl milk price reduction for Wyke Farms producers – from 1st July (10th June 2016)
This takes producers manufacturing standard litre price down to 18.92ppl (www.milkprices.com)
2ppl performance bonus from First Milk together with further price cuts (10th June 2016)
It’s a bitter sweet combination from First Milk with its latest price cut announcement plus its performance bonus.
A 2ppl business performance payment will be made to all members during the coming months starting now with the first 0.25ppl.
This means the net outcome to producers allowing for the extra 0.25ppl will be the following June 1st price cuts
0.44ppl price reduction for Haverfordwest, Lake District, Arran & Campbeltown cheese suppliers
0.34ppl price reduction for the Scottish mainland pool
0.32ppl price reduction for the Midlands pool
The resulting www.milkprices.com standard litre prices are still under 15ppl for liquid and 16.51ppl to 16.64ppl for manufacturing/cheese so there is a lot of work to be done to lift member milk prices out of the relegation zone into those of the main pack. However, just over 12 months ago most First Milk producers knew they were staring down the barrel of a very large gun, which would see the co-op fold. Things have changed since Mike Gallacher took to the helm and he knows he still has a lot of work to do but he should be over the worst part of the turnaround work or should we say what was on day one a rescue plan.
More signals that the bottom of this crisis is well and truly behind us (10th June 2016)
A few weeks ago Ian said we were at the bottom and since then all of the signals are pointing north.
Commodity prices are moving higher and quickly. They are moving A LOT!
Not that anyone would get this from AHDB's latest market bulletin which drably states in the headline that "EU prices picking up...a bit". In the commentary it says that "Average monthly prices still showed little change, although the feeling seems to be that the market has hit the bottom".
NO AHDB! Wrong! The market hit the bottom seven weeks ago and has been climbing ever since. Now prices are shooting up!
There are good reasons to talk the market up for your levy payers so come on! Get with it! This is not what you would call cutting edge market intelligence.
Ian has also stated that when major processors start to talk about holding prices for two or three months to give stability to their supplying farmers it would be a clear signal that the bottom had passed.
Dairy Crest have announced a 1ppl price drop for July with a guarantee that no further deductions to farm gate milk prices will take place until at least the end of September. Well the reality is they and others know that the next move will be upwards and Dairy Crest along with others will soon be looking at a September milk price increase.
B prices should be moving up and are highly likely to overtake A prices within a few months until processors push the A prices up. Ian’s best guess is that at least one of our major processors will go for a September price increase and possibly even an August one but that’s perhaps a bit optimistic.
Some of the July milk price cuts are a combination of needs as well as the fact processors know this is the last cut they can get away with. Ian is hopeful that Arla and Muller will not have to cut producer prices further and that their next move will be up.
Farmers will need to have good memories as to whether their processor treated them fairly during this crisis and if they didn’t the next 12 months will present opportunities to change processor.
That’s certainly the case with Sorn Milk whose processors are leaving David Shaw like rats jumping off a sinking ship as soon as they possibly can.
There are now a number of producers who were under notice from their current milk buyer to leave who are now receiving letters saying the notice is rescinded. The next move will be a recruitment drive, which could come by the end of the year. There is a long way to go in what will be a long haul but at least we have passed the bottom of the crisis.
SMP volumes smash the Intervention ceiling (27th May 2016)
It’s a little over a month since the Intervention door opened to a doubling of the tonnage it would accept a €1698/tonne (£1300). The new tonnage capacity of 218,000 tonnes was filled on 24th May and moves are already afoot to add more than 60% to a new ceiling of 350,000 tonnes. That sounds good but it’s a ridiculously high tonnage which still has to be sold out of store and will certainly check any recovery.
Milk production up 10% (27th May 2016)
According to AHDB Dairy EU milk deliveries for the 12 month period to the end of February are up an eye watering 10%.
0.67ppl milk price reduction for Waitrose suppliers - from June 1st (27th May 2016)
This takes producers’ standard liquid litre down to a healthy 30.88ppl.
1ppl milk price reduction for Arla members – from June 1st (27th May 2016)
It’s a 1.3 Euro Cents litre reduction equating to 1ppl for 13,000 Arla members, which takes their liquid standard litre price down to 19.12ppl, including the current forecast 13th payment of 0.73ppl (www.milkprices.com)
Will this be the last Arla member price reduction? (27th May 2016)
It’s a hefty one at 1ppl and given the comments made at the DIN Conference last week by Peter Giortz-Carlsen, Head of Arla Europe, it’s clear Arla are successfully moving large quantities of milk from commodities into higher value branded products and there was more than a slight hint of optimism from the very positive looking Carlsen that prices had reached the bottom. There was no doubt that Carlsen is acutely aware of the financial pressure his 13,000 members are under.
Ian’s bet is this is likely to be the final Arla member price cut but that does not mean prices will start to increase soon.
All eyes will be on other processors next week to see who sticks or chances a further farm gate price drop. This market is fragile but privately virtually all processors who are in the real world acknowledge commodity prices have certainly passed their low point.
Sainsbury’s tender results in processor changes and swap shop for farmers (27th May 2016)
When Muller announced its plan to acquire Dairy Crest’s liquid business Ian posed the question whether Sainsbury’s would be comfortable having virtually all of its liquid and cream business in the hands of Muller. The no answer comes as no surprise.
It was a near certainty the retailer would bring in a third wild card processor to mix things up but few, if any, anticipated the introduction of two processors.
The Sainsbury’s farmer merry-go-round will see Medina (South of England) and Tomlinson’s Dairies (Wales & Cheshire area) supplying milk to three Sainsbury’s regions from July 2017.
It’s easier to get the Pope’s mobile number than to get information on how the new arrangement is likely to pan out but the following will be very close to the reality of the new split.
Sainsbury’s have around 270 producers in its aligned SDDG supplying circa 450 million litres of which more than 95% are currently under the Muller umbrella with the remaining 5% (13 farmers) with Arla.
From July 2017 Muller will surrender four of the regions they currently service, with two moving to Tomlinson’s, one to Medina and one to Arla. This gives Arla 2 regions.
Simple maths means an average region is circa 50 million although at least two of the switched regions are understood to be larger than 50 million litres and one is bang on 50 million.
It is believed there are 9 Sainsbury’s regions, which leaves Muller with 5 or 55% (250 million litres) and still the main supplier having lost four regions and close to 200 million litres.
The 120 or so SDDG farmers in the four regions will not be affected in terms of milk price but they will be requested to do a Bossman transfer from Muller to one of the three successful processors,
In the case of the 30 or so who are involved in the Bossman transfer from Muller to Arla they will be given the additional option to become Arla directs or full Arla members. Conversely a handful of the existing Arla SDDG farmers will transfer to Muller. For most of the former Dairy Crest Sainsbury’s suppliers they will have been transferred from Dairy Crest to Muller and now to Medina or Arla in less than 18 months.
This could perhaps be interpreted that Sainsbury’s support the dairy co-operative model more than their rivals Tesco do.
What’s next in the liquid retailer merry-go-round? (27th May 2016)
All eyes will now turn to the outcome of the ongoing Lidl liquid milk tender and the co-op (CTRG) liquid tender.
Muller currently supply almost 100% of the liquid milk to the co-op (CTRG) and the lion’s share, if not 90% plus, to Lidl. Sod’s law says these tenders will result in more chaos and destruction as processors once again knock seven bells out of each other.
Fonterra raise its forecast farm gate milk price (27th May 2016)
Fonterra has increased its 1st June milk price forecast for the new season by 35 cents to NZ $4.25 per kg milk solids, which converts to 15ppl.
Many analysts had hoped predicted the opening price forecast would have been at $4.50 but understand why Fonterra are airing on the side of caution.
DEFRA meeting to discuss the current crisis (27th May 2016)
Liz Truss, Secretary of State for Environment Food & Rural Affairs, was congratulated for hosting this week’s dairy industry meeting but she quickly realised, whichever muppet or organisation who briefed her is not to be trusted in future.
The meeting was held at Nobel House in London involving representatives of the main processors, Dairy UK, EC and European Investment Bank, farmers and the NFU.
Unfortunately, Liz’s opening comment was that “the reason that dairy GB farming is struggling is because there is not enough processing capacity and investment in GB processing has been adequate.”
Jaws were heard to hit the tables at which point Dairy UK informed her that during the past 5 years a total of £876 million had been invested in UK processing and that an unprecedented increase in global milk production was at the heart of the crisis.
1ppl milk price reduction for suppliers to Dale Farm (20th May 2016)
This takes effect for March deliveries and reduces suppliers’ standard liquid litre price to 17.74ppl and for United’s Dale Farm Kendal to 22.14ppl (www.milkprices.com)
1ppl milk price reduction for Crediton Dairies suppliers – from 1st June (20th May 2016)
This takes producers liquid standard litre price down 22.36ppl (www.milkprices.com)
0.95ppl milk price reduction for Heler’s Cheese suppliers – from 1st June (PRODUCER NOTIFIED) (20th May 2016)
0.75ppl milk price reduction for Yew Tree Dairy (Woodcocks) suppliers – from 1st June (20th May 2016)
This takes producers liquid standard litre price down to 20ppl (www.milkprices.com)
0.129ppl milk price reduction for Muller/Direct Milk DPO formula contracted suppliers – from 1st June (20th May 2016)
This is the sixth consecutive price reduction and takes the core and simplified formula standard litre price to 24.47ppl – 24.661ppl.
GDT average index up 2.6% (20th May 2016)
Tuesday’s auction saw the lowest volumes of product on offer for over three years so the increase needs to be balanced against the tightening of supply with only 18,113 tonnes sold averaging US$2283.
Butter up 3.8% to average US$2697 tonne
WMP up 3.0% to average US$2252 tonne
SMP down 0.9% to average US$1658 tonne
Cheddar down 0.8% to average US$2693 tonne
Glanbia rescind part of a 2ppl price cut (20th May 2016)
Glanbia has written to producers to inform them that the previously notified 2ppl price cut for May 1st will be reduced to 1.5ppl.
This takes producers standard manufacturing litre price to 16.54ppl as opposed to the planned 16.04ppl (www.milkprices.com)
In addition, Glanbia has capped its seasonality deductions at 4.2ppl reduced from 6.3ppl as additional help to its hard pressed suppliers. A rebate will be paid on April deductions to those who were deducted above the new 4.2ppl cap.
The move has been interpreted as Glanbia sensing a glimmer of light that commodity prices have passed the bottom (see below).
Intervention stocks are rocketing (20th May 2016)
When the Commission doubled the SMP intervention limit from 109,000 tonnes to 218,000 tonnes most believed that would comfortably get the EU dairy industry through the flush.
Well the way it’s going the new ceiling could be hit before the end of this month and last week a staggering 22,018 tonnes was placed in to store taking the total to 182,518 tonnes, leaving only 35,482 tonnes which could be filled in less than two weeks. At this week’s DIN Conference Tom Tynan from the EU Commission confirmed that if the new ceiling is reached the Commission “will continue to support the dairy market” but he didn’t say at the same level.
Note, the intervention price for SMP is €1698/tonne or £1300.
World dairy markets have passed the bottom (20th May 2016)
Whilst few, if any, processors and traders are informing the town crier the conversations Ian had at this week’s Dairy Industry News Conference reinforced his belief that the world dairy commodity market has already passed the bottom.
All the signals are pointing north; especially the upward movement in dairy futures and the fact the Dutch Dairy Board have this week raised all of their dairy commodity prices up. New Zealand’s farm gate milk price pay out is also moving upwards. Spot price in GB is not in single figures as some suggested and is 10ppl plus and we are now just past peak daily production. Throw into the mix the increase in cull cow slaughtering and worldwide, especially EU, production cuts and it looks to be a certainty that the positive talk is fully justified.
It’s positive news but it’s certainly not recovery and any road to recovery is set to be a long one. Several are predicting average prices around 20ppl to 23ppl for the next 5 or even 10 years with most, if not all, believing 30ppl plus could be a once in a lifetime experience.
Anyone banking on recovery equating to 30ppl is likely to be very disappointed but miracles do happen like Leicester winning the Premiership.
Dairy Industry Conference (DIN) (20th May 2016)
Ian has attended most of the DIN Conference’s but never one where the room was packed to capacity with the majority of Europe’s big hitters in the dairy industry keen to listen to the speakers.
There was a positive buzz in the air at this week’s event tempered by the acknowledgement that farmers cannot continue at current farm gate milk prices and processors are also under the cosh.
More on the Conference in Ian’s next Dairy Farmer article but for the 2017 Conference it looks like either a larger room is required or the ceiling on attendees could be reached well ahead of the main event.
OMSCO’s claim to be the first into China is under attack (20th May 2016)
OMSCO issued a press release this week, which in its opening paragraph claimed:
“Following a historic international partnership between leading global organic cooperatives, Organic Valley/CROPP and the Organic Milk Suppliers Cooperative (OMSCo), the first shipment of UK produced organic UHT milk, has been delivered to China under this collaboration.”
According to Ian this is factually incorrect because Daioni from South Wales have been exporting organic UHT milk to China for at least four years.
Rather cheekily OMSCO’s PR spin doctors responded to Ian’s request for clarification by claiming that the wording “refers to the fact it’s a first for OMSCO since the collaboration with Organic Valley”
Daioni have subsequently confirmed that they have already raised a complaint with OMSCO and are seeking a correction and apology having read the press release as Ian did.
All eyes are now on other claims made by OMSCO to check for accuracy and possibly even a correction and apology from its PR spin doctors.
It’s great news that OMSCO are continuing to find new markets outside the EU but they need to check they hold sufficient evidence to back up any claims.
Arla to incentivise farmers to convert to GM Free Feed (20th May 2016)
Arla believe they have a consumer driven market opportunity for milk and dairy products produced using GM Free Feed for which consumers will pay a premium.
There will inevitably be some segregation and logistical issues to resolve but from work in Germany it is believed it’s a commercial marketing opportunity, which Arla intend to capitalise on.
The expectation is to pay invited farmers an additional 1 Euro Cent (0.8ppl) a litre for GM free milk to defray the on farm cost of conversion for those who are interested.
The money will also be paid to members who currently produce GM free milk for Arla, particularly; those in Sweden where all milk is produced with GM free feed.
Note, Arla are the biggest organic milk processor in the world and along with the other GM free milk it collects translates to 20% or Arla’s total milk intake as GM free.
As the Status Quo 1975 lyrics go Down, Down, Deeper and Down..
1.75ppl a milk price reduction for producers supplying Grahams Scotland – from May 1st (PRODUCER NOTIFIED) (6th May 2016)
This takes producers standard liquid litre price to 20.5ppl (www.milkprices.com)
1ppl milk price reduction for producers supplying Paynes Dairies – from May 1st (PRODUCER NOTIFIED) (6th May 2016)
This takes producers standard liquid litre price to 18.2ppl (www.milkprices.com)
1ppl milk price reduction for producers supplying The Fresh Milk Company MSA (Lactalis) – from June 1st (PRODUCER NOTIFIED) (6th May 2016)
This takes producers standard manufacturing litre price to 17.06ppl (www.milkprices.com). According to milkprices.com his latest price cut means since June 2014 the producer milk price has halved.
1ppl milk price reduction for producers supplying Dairy Crest Davidstow – from June 1st (6th May 2016)
This takes producers standard manufacturing litre price 21.72ppl (www.milkprices.com)
1ppl milk price reduction for producers supplying Belton Cheese – from June 1st (6th May 2016)
This takes producers standard manufacturing litre price to 19.75ppl (www.milkprices.com)
1ppl milk price reduction for producers supplying Meadow Foods – from June 1st (6th May 2016)
This takes producers standard manufacturing litre price to 17ppl (www.milkprices.com)
0.75ppl milk price reduction for producers supplying Pensworth Dairies – from June 1st (6th May 2016)
This takes producers standard liquid litre price to 18.65ppl (www.milkprices.com)
0.72 to 0.66ppl milk price reductions for First Milk members – from May 1st (6th May 2016)
The reductions are as follows:
0.72ppl for First Milk’s Midlands and East Wales pool
0.66ppl for First Milk’s North of England and four creamery pools
0.61ppl for First Milk’s Bute and Scottish mainland pools
This takes producers standard manufacturing litre price to 16.97ppl (Lake District) and 16.52ppl (Haverfordwest, excluding the TSDG supplement)
0.49ppl milk price reduction for producers supplying Muller (Wiseman) – from June 1st (6th May 2016)
This takes producers standard liquid litre prices to: (www.milkprices.com)
Muller Wiseman Group 18.66ppl
Muller Direct (Ex-Dairy Crest) 18.00ppl
As pointed out in the latest Direct Milk Newsletter (Ex-Dairy Crest) the 18ppl June price is the lowest for over 10 years and producers milk prices have been slashed by 45% in only 24 months (excluding retailer supplementary payments)
GDT results are still unsettled (6th May 2016)
Tuesday’s GDT auction results produced an all products average down 1.4% and the hope and expectation had been for a third consecutive auction rise.
Fortunately, prices for the key product WMP were slightly up (+0.7%) to average US$2176 tonne, perhaps further confirming analysts belief that we have just passed the bottom of the price curve.
Other notable price movements were:
Butter down 5.5% to average US$2601/tonne
SMP down 3.6% to average US$1676/tonne
Cheddar up 1.8% to average US$2727/tonne
When will the peak spring flush come? (6th May 2016)
Likely in the next two weeks and fortunately it will be lower than first feared on account of recent weather and increased cullings. Meanwhile, the quantity of SMP going into EU intervention stores is rising rapidly including SMP coming from the UK and a staggering 7,100 tonnes from France in one week!
Total EU production in January 2016 was up 5.3% or 620 million litres with Irish production up a staggering 33% in January and 28% in March.
South Caernarfon Creameries (SCC) gain Sainsburys own label cheese business at the expense of Arla (6th May 2016)
Sainsburys have switched a significant tonnage (rumoured to be circa 5,000 tonnes) of its own label cheese from Arla in favour of SCC which will be a major boost to the West Wales Co-ops expansion plans.
Currently the factory is geared to produce around 12,000 tonnes of cheese a year with further expansion plans in the pipeline. An orderly switch in suppliers is likely to be completed towards the end of this year or early 2017 by which time Arla will have emptied their stores of all cheese made on behalf of Sainsburys. So hopefully no surplus stocks to be offloaded as feared by some.
Up until last year SCC supplied own label cheese to Tesco on a time limited contract which was not renewed however it is believed that the tonnage involved in the Sainsburys deal eclipses that of the Tesco deal and in addition it is better quality business for SCC.
Several in the industry claim the switch would not have happened in the old Milk Link days due to the extremely close relationship between Milk Link Mangers and Sainsburys.
Muller closure of Hanworth is reversed (6th May 2016)
Muller has reversed Dairy Crest’s earlier decision to close the former Dairy Crest Hanworth Dairy, near London, now owned by Muller. This is welcome news to milkmen given the fact Hanworth is one of the country’s largest glass bottling facilities for Milk More and doorstep milk. It is also welcome news for the 170 or so employees.
Compulsory milk levy is suspended from May 1st (6th May 2016)
Recognising how tough it is for dairy farmers Ornua (AKA the Irish Dairy Board) have suspended monthly levy payments from its Irish dairy farmers. Estimates from Ornua indicate the levy suspension will be worth €6 million to Irish dairy farmers (£4.8m).
German farmers receive less than 12ppl / 15 Cents Litre (6th May 2016)
According to DIN, German milk processor, Wiegert, are paying some farmers who had no home for their milk only 11.8ppl (15 Euro Cents)
It can only be called cheese if it’s made from animal milk (6th May 2016)
A German court has ruled on this point in a court case involving Tofu Town, a vegan cheese processor, who claimed they were within the EU law when they advertised cheese made from plant based ingredients as cheese.
If there is one thing that sparks a reaction from Ian its people selling meat free sausages and burgers. What’s all that about, its’ loonacy!
Cheap Milk Watch – 4 litres (7 pints) for £1 (6th May 2016)
Yes, 25p a litre for FarmFoods milk supplied by Paynes Dairies on sale across 300 plus GB stores.
Perhaps this is what Charlie Payne was referring to in his 28th April letter to producers notifying them of a 1ppl milk price reduction from the 1st May when he stated:
“But if the customer is adamant that they want the lowest milk price then we have to be reactive and negotiate a deal, which inevitably means lowering the price. If we lose the customer then that milk has to go somewhere! That means either the spot market or no market.”
Earlier in the letter a current spot price of 13 to 14ppl is quoted.
MCVE 38.8p to 15.7p in 30 months (6th May 2016)
AHDB Dairy’s MCVE figures confirm it is now at a record low of 15.7ppl compared to its 38.8ppl high point in September 2013, which means today it stands at only 40% of its high point.
£1 million plus for former Westbury Chairman – who has been accused of milking it (6th May 2016)
Richard Ashworth, Former Chairman of United Milk, who built the Westbury plant prior to it going into administration, is reported to have received more than £1 million from the EU over the past 5 years in salaries, expenses and allowances etc. for his position as an MEP. According to an article in The Sun, the ability to receive a basic salary plus £237 day tax free sustenance allowance helped boost the pot.
It’s not the first time Richard has been in the news for his EU expenses claims and one of the previous headlines he attracted was “Tory MEP Expenses Milker”.
HMRC lose in relation to input VAT for Single Farm Payment Entitlement (6th May 2016)
This is a very interesting case for farmers who have purchased any Entitlements since 2006. Thanks to UHY Hacker Young for the details.
Please click on the link to see the full article: Single Farm Payment Entitlement – Rural Payment VAT Flash
0.9ppl milk price reduction for Arla Directs (non members) – From 1st June (22nd April 2016)
This reduces producers’ standard litre price to 15.1ppl
0.75ppl milk price reduction for Arla members (22nd April 2016)
This reduces members’ standard litre price to 20.12ppl
1.49ppl milk price reduction for Muller Wiseman Co-operative Group suppliers – from May 1st (22nd April 2016)
This reduces producers’ liquid standard litre price to 25.94ppl (www.milkprices.com)
0.265ppl milk price reduction for Muller Direct suppliers – from May 1st (22nd April 2016)
This is a reduction in the liquid formula and takes producers liquid standard litre price to 24.79ppl (liquid core formula) and 24.60ppl (simplified liquid contract) (www.milkprices.com)
2.045ppl retail supplementary payment on March deliveries for Muller Wiseman non-aligned producers (22nd April 2016)
The payment will be made to the non-aligned producers in both the Muller Direct and Muller Milk Group pools
Second consecutive lift in GDT auction prices (22nd April 2016)
This week’s GDT auction produced a 3.8% average price increase to average US$2263.
The big story was the rather surprising 7.5% jump in the key commodity WMP to average US$2156/tonne. SMP held its own at US$1727, Cheddar down 3.9% to average US$2636/tonne.
Traders claim the auction’s results instantly injected life into the world’s WMP trading activity.
98% of Dairy Crest Davidstow suppliers sign the new milk balancing contract (22nd April 2016)
The contact kicked in on April 1st and the opening price was a stand on 22.72ppl manufacturing standard litre price (www.milkprices.com)
Booker Cash & Carry selling 2 litres for only 59p (22nd April 2016)
The hard sell from Booker states “you can quite easily sell below the discounters and supermarkets; you could even sell two (as in 4 litres) for £1.50 and make a fair margin.”
The promotion is branded as Robert Wiseman milk but we don’t think it’s that old and should state Muller Wiseman milk.
One off opportunity for Arla Tesco suppliers to switch to become Tesco Direct contracted producers (22nd April 2016)
The Arla AMBA Board have agreed a short window for current Arla members to switch to a Tesco Direct contract. The window is open until the 30th April.
The Arla members who decline to make the switch and sign up to remain full members of the co-op will receive a one-off 2ppl lump sum payment based on the volume of milk they delivered in 2015. The lump sum will be paid either at the end of this month or in May, depending on the date they decide to reject the switching offer. Note, the 2ppl bonus is in addition to the 1.42ppl paid by Arla to enable members to fulfil the Tesco supplier requirements.
Suspension of the ability to switch was instantly implemented by Arla in early February when the news broke that Arla had lost 200 million litres of Tesco liquid business to Muller. The argument put forward to the Arla board was that immediate suspension was unfair without giving prior warning and that the right thing to do was to re-open the window to give producers one last opportunity to make the switch. However, given the 2ppl bonus the likelihood is that very few will actually make that switch.
Of the Arla Tesco Directs, 39 are on a Bosman free transfer to Muller predominantly located in the South-West and Midlands area.
Managing Dairy Volatility Conference – 5th May – Lisburn, Northern Ireland (22nd April 2016)
The Conference is organised by Dairy UK and the Ulster Farmers Union with a view to examining international responses to cripplingly low milk prices and market volatility.
For full details click on this link http://www.dairycouncil.co.uk/news-events/2016/04/managing-dairy-volatility-conference
GDT auction prices lift 2.1% (all prices are in US$) (8th April 2016)
This week’s GDT auction produced an average price of $2188, which was a 2.1% increase on the average recorded two weeks ago which was down 2.9% at that time.
According to New Zealand analysis the $2188 is only 70% of the estimated $3000 required to cover the full cost of production.
Notable movers were:
Cheddar + 10.5% to average $2778 tonne
WMP + 1.5% to average $2013 tonne
SMP + 0.1% to average $1721 tonne
Butter – 2.0% to average $2702 tonne
The original intervention tonnage limit was hit in March (8th April 2016)
Had the European Commission not doubled the tonnage of SMP, which could go into intervention stores from 109,000 to 218,000 tonnes, we could be looking at further downward pressure an EU milk prices.
The European Commission’s original limit of 109,000 tonnes was hit in March, which is weeks before Europe’s spring flush.
Formal ratification of the proposal to double the tonnage is yet to be confirmed but traders and processors believe this is an automatic formality and indeed a necessity. However, because the limit has been hit and the 218,000 tonnes ceiling is yet to be ratified it’s back to bi-weekly tenders for SMP, which will not help prices.
Rabobank report writes off any recovery of milk prices in 2016 (8th April 2016)
Rabo quarterly global dairy report reinforces what most others have concluded that any global price recovery in 2016 is unlikely. They can’t say impossible but that’s what should be said because global markets and its dairy farmers will be depressed throughout 2016. The report comments that “EU exporting countries will find 2016 equally, if not more, challenging than 2015.”
DEFRA’s February milk price increase is a joke at 27ppl (8th April 2016)
In last week’s bulletin we highlighted the bizarre and irresponsible claim by DEFRA that the average UK farm gate milk price for February had increased by 2.48ppl (+10.8%) compared to that recorded in January due to the Arla 13th payment.
Well it gets worse because the average farm gate milk price paid to dairy farmers in Northern Ireland in February was 18.54ppl. When you do the maths this means DEFRA are stating that the average February price paid to GB farmers was a staggering 26.9ppl or as near as damn it 27ppl.
During the week DEFRA have resisted all complaints and dug their heels in and stand firm on their figures.
Dairy industry journalist Chris Walkland has received an acknowledgement that his official complaint to the National Statistics office has been received and is under consideration/investigation.
He, like most others, believes the reporting of the increase fails to meet the high quality standards required by DEFRA.
Questions have also been asked as to the reaction from AHDB Dairy whose remit is supposed to be to deal with market failure on behalf of its levy paying farmers. Its chairman, Gwyn Jones, has commented that AHDB Dairy has no influence whatsoever with DEFRA in this area. Meanwhile, the NFU Dairy are on mute which is very unusual for them. They usually issue a press release if they change their toilet roll brand.
The big question is, are DEFRA the big bad wolf they are all afraid of?
The matter is now bringing into question DEFRA’s credibility and it’s unlikely to disappear until DEFRA hold their hands up and issue revised figures which reflect the real situation.
Big changes in new Tesco Cheese Model (8th April 2016)
Tesco have completed their review of their cheese model and a new TCG - Tesco Cheese Group model will be operating from 18th April 2016.
The new model will involve a market tracker based on a basket of cheese processors milk prices, which are transparent and easy to calculate plus a 2ppl uplift/premium which is partly attributable to the farmers compliance with Tesco’s farm assurance and welfare standards.
The 26 farmers supplying Parkham Farms have enjoyed a Tesco Cost of Production model for almost four years and have now been given 12 months notice that this ends on the 17th April 2017, when the new TCG market tracker model will be used.
First Milk’s Haverfordwest producers move onto the new model almost immediately in 10 days time on 18th April 2016. Note, between September and April Tesco have paid First Milk’s Haverfordwest producers a winter supplement, which ends this month.
The changes will not be welcome but looking forward the Cost of Production (COP) cheese model was unsustainable and it’s hoped the new model will be sustainable for all involved, not just the farmers.
Put simply the supplement and the cost tracker were good whilst they lasted. It’s a big cut for Parkhams Farmers but both First Milk and Parkham will want to remain on the Tesco cheese bus.
The likelihood is that the Tesco cheese model would pay a farm gate price in the early/low 20ppl’s, including the 2ppl bonus today.
The new model will instantly breed competition amongst First Milk farmers because in 12 months time Tesco plan to operate the model with a dedicated group of Haverfordwest suppliers.
That gives First Milk a 12 month transition period to work out the detail and decide which of the 200 or so members will be on the Tesco bus. Only the selected dedicated Tesco’s farmers will receive the 2ppl bonus in 12 months time post the transitional period.
The penny will drop very quickly with the realisation that the Tesco cheese model is not one which automatically encourages production but one which pushes farmers to cut cost to be the best. Tesco, by nature, will want the best farmers and that’s their direction of travel with their cheese and liquid models and those who don’t want to listen or deliver will be dropped.
Tesco have confirmed that they anticipated in excess of 100 dedicated producers from First Milk and Parkham will be involved in the cheese group by April 2017, including all 26 farmers currently supplying Parkham Farms.
The new cheese model will cover all Tesco’s British hard cheese.
Note, one of Tesco’s competitors, Lidl, are out to tender for cheese at the moment and that’s making grown man cry!
CORRECTION & Apology (8th April 2016)
0.43ppl milk price reduction for suppliers to Waitrose – from 1st April (PRODUCER NOTIFIED)
The resulting standard liquid litre price will be 31.55ppl not 19.4ppl as incorrectly quoted in last weeks bulletin. Apologies.
It's no April Fool as DEFRA's average UK milk price soars by 11% and 2.48ppl in February! (4th April 2016)
According to DEFRA’s latest UK average farm gate milk price calculation the average February milk price soared by 2.48ppl and 10.8% from 23.09 to a whopping 25.57ppl!
Ian and others have challenged both AHDB and DEFRA over what they believe is a wholly irresponsible and totally misleading calculation, but to date DEFRA is digging their heels in and refusing to explain the numbers or back down while AHDB seems to be sitting back putting absolutely no pressure on DEFRA whatsoever to review the figure. In an email received by Ian from DEFRA they basically stand firm on the numbers.
The 2.48ppl uplift predominantly originates from Arla’s 13th payment to members amounting to 0.73ppl. The bean counters in DEFRA have allocated all 0.73ppl (around £22million) of Arla’s 13th payment to February’s milk income, as opposed to spreading it across the whole year to the tune of around 0.2ppl. At least Arla and www.milkprices.com allocate the 0.73ppl across each month.
Frankly, this is just ridiculous and irresponsible and paints a far, far rosier picture of the dairying situation than is the case and sends completely the wrong signal to everyone. At 25.57ppl the industry would not be in difficulty, although losses would be made by many farmers still, let alone be in crisis!
So let's consider the implications: FFA held a march in London a few days ago and delivered a letter to The Prime Minister outlining the crisis the industry faces. David Cameron will respond, but if he sees the average UK milk price paid to farmers for February INCREASED by 2.48ppl he will say “What’s the problem Handley & FFA and farmers? Stop moaning!” And it doesn't look as if AHDB Dairy wants to do anything about this absurd portrayal of the reality of the current crisis situation! GET A GRIP AHDB! CAN YOU NOT SEE HOW SERIOUS THIS COULD BE?
Once again, first out of the traps and onto the case was George Dunn and the TFA, whose input and pressure is very professional and visible. The farming press and media have also jumped onto the story.
The issue is one of a number of dairy statistical errors DEFRA have recently been pulled up on only this one puts its credibility firmly on the line as well as the market intelligence at AHDB in terms of its potency or impotency to persuade DEFRA to issue a correction. DEFRA have now stated that they hope to produce a February average milk price excluding bonus payments by 28th April. This is a very poor show given to obtain this information they only need to contact a handful of the 34 milk purchasers they survey.
2ppl milk price reduction for suppliers to The Fresh Milk Company (Lactalis) – from 1st May (PRODUCER NOTIFIED) (4th April 2016)
The resulting manufacturing standard litre price will be 18.1ppl on their GDT price linked contract. (www.milkprices.com)
2ppl milk price reduction for suppliers to Glanbia Cheese – from May 1st (4th April 2016)
This reduces producers’ manufacturing standard litre price to 16.04ppl. (www.milkprices.com)
Tesco COP drops below 30ppl with a further 1.39ppl price reduction – May 1st (4th April 2016)
Tesco’s new quarterly cost tracker review (May to July 2016) has resulted in the Cost of Production dropping from its present 30.08ppl to 28.30ppl from May 1st. However, added to the 28.30 will be 0.39ppl as a one off retrospective payment as previously agreed in respect of the new version of the calculation used by Promar, which will be removed next time around.
Note from May 1st Tesco will pick up the Promar costings invoice for each farm, which will see removal of the 0.5ppl Promar costings addition. It is now compulsory for all Tesco dairy farmers to participate in the Promar costings.
The resulting liquid standard litre price will be 28.69ppl.(www.milkprices.com)
The next eagerly awaited Tesco dairy announcement will be in respect of its forward plans, if any, to support First Milk’s Haverfordwest cheese pool. Will Tesco stick or twist with the co-op’s Welsh men and women?
1ppl milk price reduction for suppliers to South Caernarfon Creameries – from May 1st (4th April 2016)
The resulting manufacturing standard litre price will be 17.03ppl (www.milkprices.com)
1ppl milk price reduction for suppliers to Paynes Dairies Limited (Charlie Payne_ – from 1st April (PRODUCER NOTIFIED) (4th April 2016)
The resulting liquid standard litre price will be 19.2ppl (www.milkprices.com)
1ppl milk price reduction for suppliers to Barbers Cheese – from May 1st (4th April 2016)
The resulting manufacturing standard litre price is 20.92ppl (www.milkprices.com)
1ppl milk price reduction for suppliers to Belton Cheese – from May 1st (4th April 2016)
The resulting manufacturing standard litre price will be 20.75ppl. (www.milkprices.com)
0.95ppl milk price reduction for suppliers to Joseph Heler Cheese – from May 1st (4th April 2016)
0.85ppl milk price reduction for suppliers to Muller (Wiseman) – from May 1st (4th April 2016)
This takes producers’ standard liquid litre price down to 19.15ppl and for the former Dairy Crest Direct group 18.49ppl (www.milkprices.com)
In a newsletter to members the Muller Direct Milk DPO (Farmer Dairy Crest Directs) it confirms that this latest cut means more than 14ppl has been top sliced from the milk price standard litre high point in less than two years, excluding any retail supplements.
0.83ppl milk price reduction for suppliers to Marks & Spencer – from May 1st (PRODUCER NOTIFIED) (4th April 2016)
0.5ppl milk price reduction for suppliers to Pensworth Dairy – from May 1st (4th April 2016)
The resulting standard liquid litre price will be 19.4ppl. (www.milkprices.com)
0.43ppl milk price reduction for suppliers to Waitrose – from 1st April (PRODUCER NOTIFIED) (4th April 2016)
The resulting standard liquid litre price will be 31.65ppl.
First Milk Price Reductions – 1st April (4th April 2016)
The following are First Milk’s 1st April standard litre prices (www.milkprices.com)
0.97ppl reduction for Arran & Campbeltown suppliers resulting in a standard litre price of 16.04ppl
0.95ppl reduction for Bute (excluding the 0.57ppl ScotGov transport supplement) resulting in a standard litre price of 15.93ppl
0.9ppl reduction for Midlands Pool suppliers resulting in a standard litre price of 16.38ppl
0.72ppl reduction for the North of England Pool suppliers resulting in a standard litre price of 16.80ppl
0.68ppl reduction for mainland Scotland suppliers resulting in a standard litre price of 16.83ppl
0.45ppl reduction for Lake District suppliers resulting in a standard litre price of 17.06ppl
0.33ppl reduction for Haverfordwest (excluding the Tesco supplement/premium which was 4ppl in February) suppliers resulting in a standard litre price of 17.18ppl
The Haverfordwest and Lake District standard litre prices factor in average transport charges as independently referenced by www.milkprices.com
6ppl April B price is floated (4th April 2016)
There are still concerns that at peak production the UK will have insufficient processing capacity to handle all the milk. Already there are letters out to some farmers warming them up to the possibility of an average April B milk price pay-out of only 6ppl.
Buckle up this could last until Spring 2018! (4th April 2016)
Westland, a New Zealand dairy co-op and milk processor, has informed its farmer owners that it is expecting two more seasons of low milk prices at an average farm gate milk price of around 14ppl or under.
Muller to close its Aberdeen and East Kilbride processing facilities (4th April 2016)
A 45 day consultation period has commenced with staff at Mullers Aberdeen and East Kilbride facilities, which will affect 229 employees as well as 43 dairy farmers in Aberdeen.
Assuming the closures are confirmed all 43 dairy farmers will be given the option to continue milking and for the milk to be shipped to Bellshill, however, it will mean a flat rate deduction of 1.75ppl for the 300 mile round trip. The same distance as Aylesbury to Leeds minus the M1.
Any producer who does not wish to supply Bellshill and wear the transport charge deduction can leave after 12 months notice and will not have to pay the charge during their notice period.
Muller have stated that its currently Aberdeen Dairy is operating at only 40% of its capacity, which is a key factor in the move.
In addition, Muller has announced a three year investment programme in its Bellshill plant amounting to £15 million.
Discounted England Football Tickets (4th April 2016)
England V Australia – Sunderland’s Stadium of Light – Friday 27th May 2016
If any readers are interested in the discounted tickets in any section of either stadium please email firstname.lastname@example.org
0.94ppl milk price reduction for Arla members – from April 1st (24th March 2016)
This is a 0.75ppl milk price reduction plus a 0.19ppl exchange rate smoothing reduction.
The reduction takes the liquid standard litre price down to 20.87ppl (www.milkprices.com)
0.39ppl milk price reduction for Sainsburys aligned suppliers – from April 1st (24th March 2016)
The reduction is due to reduced prices for the 3 F’s. This takes producers standard liquid litre price to 29.98ppl for Muller, 29.86ppl for Arla and 29.92ppl for the former Dairy Crest Direct producers. (www.milkprices.com)
FFA march is a credit to the Handley’s and all involved (24th March 2016)
Estimates suggest around 2,000 people joined yesterday’s FFA march in London and there is little disputing the fact that if some had fully backed and promoted FFA and the Handley’s more numbers could easily have ramped up to 5,000. However, it was a well organised peaceful march which received widespread media coverage for the right reasons.
It was so successful that a second march on Wednesday 22nd June will take place just 24 hours prior to the EU referendum.
German co-op informs its farmers exactly how it is (24th March 2016)
German dairy co-op Milchwerke Berchtesgadener has circulated a very blunt flyer to its members, which amongst other things features two highway STOP signs.
The poster basically instructs its members to:
(a) Stop producing additional unwanted milk
(b) Stop using milk powder to feed calves and to use raw milk
The flyer states that the co-op has its back against the wall and all they can do with the extra milk is to sell it on the spot market for 17 Cents (13.4ppl). It also states that the co-op has seen deliveries from members increase by 11% and continuing to grow resulting in “our dairy is now close to collapse” and “in the name of all members of our co-op we request you reduce the milk supply”.
Meanwhile, GB production is on target to be up 3% for the year ending 31st March 2016 with cow numbers up.
First Milk announce plans to convert around £60 million loan capital into tradable shares (24th March 2016)
First Milk under Mike Gallacher have taken yet another bold step in a bid to re-shape the business and this time it’s a complete re-shaping of its capital structure.
The move comes almost 12 months to the day since Gallacher took up the challenge to turnaround the fortunes of the business and it is perhaps his biggest and boldest decision.
Total member loan capital is estimated by Ian to be in the region of £60 million and one of the key points is that by far the lions share belongs to existing supplying members. It is clearly the interests of those supplying members and the future of the business that Gallacher and his new board decided to make the change.
Unless they were numerically naïve by February 2015, at the latest, all First Milk current and former members had psychologically written off receiving any capital repayments. In early 2015 the talk was that First Milk were sinking quickly and most farmers were worried whether they would lose both capital, milk cheques and be forced out of dairying with nowhere to go. A number feared the writing was on the wall and there was no one banking on capital repayments.
Gallacher surprised most by taking on a huge turnaround challenge and on this occasion had a straight choice. Do we do what’s in the best interests of the current supplying members and the business or what’s in the interests of those who have ceased to supply?
The capital restructuring announcement was made on the 17th March, a week ago, and Ian has had a few enquiries from members but no complaints because most seem to understand the situation that the £60 million loan capital is set against minimal nett asset value, which could easily be in the region of 10p in the £1. Put bluntly, the situation whereby First Milk continued to pay out the capital £1 for £1 was unsustainable.
Trading in the shares is some months away but if Gallacher his team invest wisely in the business it should by default increase the share value.
Intervention ceiling is doubled (24th March 2016)
The European Commission has doubled the volume of SMP, which can be placed into intervention at the full price (€1698/tonne) to 218,000 tonnes. Simultaneously it has lifted the quantity of butter which can be placed into store from 60,000 to 100,000 tonnes.
The aim is to stabilise the market, particularly through the imminent spring flush, however, the more product which goes into intervention stores the more drawn out any recovery will be because it has to come out of store on to the market within a relatively short time frame. Hopefully the intervention price is at a level which will dissuade most, if not, all EU dairy farmers from producing more milk and ideally less.
AHDB backs milk promotion and market development with up to £3.5m (24th March 2016)
AHDB Dairy has revised its three year business plan and one outcome is a board decision to allocate “up to” £3.5m over three years for promotion and market development. This is an additional £1.8m on top of the previously allocated £1.7m. Note, the exact wording states up to £3.5m.
The plan is for AHDB Dairy to work with Dairy UK to apply for European Union co-funding to boost the total pot.
Never forget to kick a man when he is down (24th March 2016)
Congratulations to Public Health England who have issued new dietary guidelines in an Eatwell Guide recommending that our consumption of dairy is cut by 50%. The guide is circulated to GP’s, nurses, midwives, schools, teachers, dieticians, nutritionists and caterers.
The best analogy Ian heard was that it’s like knowing someone is dead but for Public Health England to load its gun and shoot another bullet into the head to be sure. Just when dairy farmers thought it couldn’t get worse. Public Health England give them another kicking. It wouldn’t happen in countries like France & Germany.
1ppl milk price reduction for Meadow Foods suppliers – from April 1st (11th March 2016)
This reduces producers standard liquid price down to 18ppl (www.milkprices.com)
Note, in order to achieve the standard litre producers must be within plus or minus 10% of their first three months milk production forecast.
1ppl milk price reduction for suppliers to The Fresh Milk Company (Lactalis) – from 7th April (PRODUCER NOTIFIED) (11th March 2016)
This takes producers manufacturing standard litre down to 20.17ppl for the GDT linked contract (www.milkprices.com)
1ppl milk price reduction for co-operative South Caernarfon Creameries (SCC) suppliers – from April 1st (11th March 2016)
This takes producers manufacturing standard litre price down to 18.03ppl (www.milkprices.com)
Note, SCC having lost the Tesco cheese contract also lost the Tesco Winter supplement, which, for February would have been worth 4ppl.
1ppl milk price reduction for suppliers to Crediton Dairy – from April 1st (11th March 2016)
This takes producers manufacturing standard litre down to 23.26ppl (www.milkprices.com)
Fonterra’s forecast farm gate milk price relates to 13.77ppl (11th March 2016)
Fonterra has announced a further 6% reduction in its 2015/16 farm gate milk price forecast from NZ $4.15 to NZ $3.90. This equates to a farm gate milk price of 13.77ppl and a total forecast payout between 15.3 to 15.7ppl for the year. Note, New Zealand’s total milk production is running 4% less than last year.
County Milk Products milk price to be biased towards commodity returns (11th March 2016)
In a recent letter to producers, County Milk Products have stated that their farm gate milk price from now on will be “biased towards that of commodity returns in the short term”.
Short term includes the April to June period where County state prices are “likely to be significantly down …”
Watsons Dairies (Medina) short notice changes to milk contracts (11th March 2016)
Watsons Dairies have given less than one months notice of a change to producers milk contracts, which means from April 1st seasonality will be introduced for the rest of 2016 and into 2017. This will be a one way negative downward price adjustment only of up to 1.5ppl on deliveries in the period April to July and up to a 1ppl deduction for the period August to January (2017).
Any aggrieved producers have the option to serve 20 weeks notice to terminate their milk contract if they give proper notice by around the 24th March. Note, this date must not be relied on and is based on the fact the letter to producers was sent out on the 3rd March.
UK deliveries for January (11th March 2016)
January milk production weighed in at 1.226 million litres up 2.7% to January 2015 production.
German and France calling for quotas (AKA Supply Management) (11th March 2016)
Through a joint statement from their respective governments both countries are proposing the European Commission allow the introduction of supply management/quotas to reduce the amount of European milk output. George Eustice has stated in a DEFRA response that the UK is against the European Commission introducing any supply management measures or further market support measures for the European dairy industry.
Farmers for Action march attracts evil forces (11th March 2016)
There are strong rumours and accusations that at least three industry leaders/senior people are not only paying lip service in giving minimal, if any, support or credit for FFA’s 23rd March London event but one of them is accused of actively encouraging both sponsors, businesses who have pledged support and the farming press to pull back or at least dilute their enthusiastic promotion. The question is why would they spend time doing this?
For details of the London event and transport from your local area log onto www.farmersforaction.org
Arla to close Hatfield involving 230 employees (11th March 2016)
Arla has announced the closure of its Hatfield Peverel in Essex liquid plant by the end of July, which processes around 170 million litres a year. The move will impact on 230 employees. The majority of the milk will be processed through its Aylesbury plant.
Incredible Deals (11th March 2016)
3 packs of Anchor (Arla Westbury) butter for only £5 will likely translate to a milk price of under 19ppl!
FOR SALE (11th March 2016)
Clamp silage – a quantity of 400-500 tonnes – Stoke on Trent area - Please contact Edward on 07970 258854
1.75ppl milk price reduction for suppliers to Wyke Farm (Cheese) – from 1st April (4th March 2016)
This reduces producers’ standard liquid litre milk price to 19.3ppl and the manufacturing standard litre price to 19.96ppl.
1.5ppl milk price reduction for suppliers to Woodcocks – from 1st April (4th March 2016)
1.35ppl milk price reduction for suppliers to Muller Wiseman – from 1st April (4th March 2016)
This reduces producers’ liquid standard litre price to 20ppl and for former Dairy Crest suppliers to 19.34ppl (www.milkprices.com)
1.0ppl milk price reduction for suppliers to Glanbia (Cheese) – from 1st April (4th March 2016)
This takes producers liquid standard litre price to 17.47ppl and the manufacturing standard litre price to 18.04ppl (www.milkprices.com)
0.75ppl milk price reduction for suppliers to Pattemores – from 1st April (4th March 2016)
Note, Pattemores do not have A & B pricing.
0.75ppl milk price reduction for suppliers to Pensworth Dairy – from 1st April (4th March 2016)
Note, Pensworth do not have A & B pricing or seasonality.
First Milk A price reductions – 1st March (4th March 2016)
0.6ppl milk price reduction for suppliers to its Haverfordwest, Aspatria/Cumbria, North of England, Arran and Campbeltown milk pools.
0.42ppl milk price reduction for suppliers to Scottish balancing pools.
The reductions will result in the following standard litre prices (www.milkprices.com):
Haverfordwest standard litre prices for liquid to 21.16ppl and manufacturing 21.63ppl (note, this includes the Tesco winter cheese supplement, see story below)
Cumbria/Aspatria liquid standard litre price to 17.54ppl and manufacturing 18.23ppl
North of England liquid standard litre price to 17.52ppl
GDT auction posts a modest 1.4% increase (4th March 2016)
This week’s auction saw average prices increase by 1.4%.
Notable movers were as follows:
WMP up 5.5% to average $1974/tonne
SMP up 1.3% to average $1802/tonne
Cheddar down 0.7% to average $2528/tonne
Dairy Crest introduce A & B pricing (4th March 2016)
Most farmers supplying Davidstow will be on A & B pricing from April 1st 2016. Signing up to the new contract is optional, however, for those who do make the move there is a 0.8ppl incentive.
This will mean on April 1st those on the new contract will receive a manufacturing standard litre price of 22.72ppl whilst those who opt to remain on the old/existing contract will receive 21.92ppl (www.milkprices.com)
50 Arla Directs are given 12 months notice (4th March 2016)
Around 50 Arla Directs have been served notice to find a new milk purchaser from 1st March 2017, assuming they don’t quit. The total litreage involved is around 40 million litres.
Tesco winter cheese supplement is extended to First Milk (4th March 2016)
Having given co-op members of Arla a beating and bloody nose over the short notice switching of 200 million litres of its liquid contract to Muller in addition dumping co-op members of South Caernarfon Creameries by ending the contract to supply cheese as well as producers 2.5ppl winter cheese supplement at least Tesco haven’t completely turned against all UK operating dairy co-ops.
The Tesco winter cheese supplement was due to end on the 29th February and for First Milk’s Haverfordwest producers has been extended until 17th April 2016. This means Tesco will continue to pay First Milk 29.58ppl for the milk, which goes into their own label cheese.
The January payment was worth 3.65ppl to First Milk members who supply the creamery and for December it was 2.55ppl.
Farming to London March – 23rd March (4th March 2016)
FFA are calling for all farmers to join them in London on 23rd March for what has been billed as “a celebration of farming” which will also highlight the current situation down on the farm. For more information log onto www.farmersforaction.org
December milk production in Southern Ireland up 30% compared to the year before (4th March 2016)
That’s according to AHDB Dairy and its an eye watering increase even though they were pulling back production in an attempt to avoid super levy in the final year of milk quotas.
Cheap (jaw dropping) milk and dairy products (4th March 2016)
6 litres of milk for £2 – Farm Foods – who supplies this milk, which is selling for 33ppl.
OMSCO’s new cheeses bound for the USA (4th March 2016)
OMSCo has developed two new cheeses for the US market. Both are cheddars, one with caramelised onion and one with cracked black pepper.
0.75ppl milk price reduction for suppliers to Wensleydale Creamery (Hawes) - backdated to 1st February. (12th February 2016)
This takes producers manufacturing standard litre down to 23.07ppl (www.milkprices.com)
UK Production continues to head North (12th February 2016)
December’s production weighed in at 1.215 million litres +5.1% compared to December 2014 (+ 59 million litres)
“Payne’s dairies edges back into profit after cutting farmer prices” (12th February 2016)
That’s a headline from an article in the Grocer which goes onto report that Payne’s 30th April 2015 profit of £69,000 reverses two years of losses and is some way off the 1.6 million profit in 2010. From the outside it looks like Payne’s, fell into the same trap as others in 2012 to 2014 trying to keep up with the likes of Arla in the price it paid producers for milk.
PTF scoops the Top Industry Award for a 2nd consecutive year (12th February 2016)
The Provision Trade Federation (PTF) has been named Best Trade Organisation at the Food Management Today Industry Awards for the second consecutive year.
The PTF represents in excess of 90% of the UK trade in Dairy and pigment but it’s in dairy where those involved in the UK Dairy Industry regularly appreciate its forward thinking regular updates, alerts and market predictions.
Its dairy predictions and market outlook simply eclipse and dwarf the very basic outlooks produced by other organisations.
For example, in its latest edition it calculates that 20% of the milk cheque money goes to 12% of the dairy farmers with the expectation those 12% (1500 farmers) will soon take 25% of the money, the 1500 farmers are those on retailer aligned contracts (Tesco, Sainsbury’s, Co-op, Waitrose, M&S, Nestle etc).
In Scotland the figure is closer to 40% going to 23% of dairy farmers.
On a more amusing but never the less serious note there is an opening article in the PTF’s latest dairy update headed
“Our Father, who art in heaven…”
Reporting that 140 representatives of the European Milk Board (100,000 members) met his Holiness Pope Francis in late January at the Vatican where they were blessed and all prayed for divine intervention.
“Hats off to them for doing something that doesn’t involve tipping milk in the streets or burning tyres. Given that The Almighty hasn’t got much on his plate these days the job should be sorted quite soon…” commented Walkland in the PTF bulletin.
The Author of the PTF’s Dairy report is Chris Walkland who will make a guest appearance at the NFU AGM Dairy Break out session at its conference in 10 days (23rd & 24th February) time where he will provide a Dairy Market Outlook & update. It’s sure to be hard hitting with no primary school basic analysis as to where the UK Dairy Industry is and what the outlook for the rest of 2016 and beyond is.
First Milk pricing changes see the A litres increased from 80% to 90% (12th February 2016)
First Milk has written to members confirming a schedule of pricing changes which take effect from April 1st
The key changes include the following:
A). The current A literage will increase from 80% to 90%.
b). A new milk price index will be utilised to track First Milks price against its main competitors and will be independently audited by www..milkprices.com and reported to members on a quarterly basis.
c). The current complex matrix of milk price schedules will be cut and this will be simpler for First milk to manage and easier for members to audit and monitor.
d). For members supplying First Milks Haverfordwest and Lake District Creameries there will be a transport charge ranging from zero to 1.5ppl according to the distance between the factory and the supplying farm.
e). Move money will be paid for quantity and less on hygiene. There are more details on this to be circulated to members and whilst there will be winners and losers the nett overall effect to First Milk are basically cash neutral. In other words it’s NOT a sneaky price cut but a re jig which is market related and visible.
Another disastrous GDT auction (Tuesday 2nd February 2016)
Today’s GDT auction results were nothing short of a disaster with the average price plunging 7.4% to US$2276.
All products dropped in value compared to the results achieved only two weeks ago, in particular, WMP which suffered the heaviest fall down 10.4% (US$236 tonne to average under US$2000 tonne).
Notable movers were:
WMP down 10.4% to average US $1952/tonne
Butter down 8.3% to average US $2905/tonne
Cheddar down 4.2% to average US $2807/tonne
SMP down 2.2% to average US $1792/tonne
The WMP crash prompted an instant reaction from several New Zealand processors whose farm gate milk price is now at or close to $4 compared to an industry wide accepted breakeven figure of $5, which the majority of New Zealand’s diary famers need.
One significant contributor to the fall is credited to the lack of demand from countries heavily dependent on oil revenue.
1ppl milk price reduction for suppliers to Joseph Heler Cheese – from 1st March (PRODUCER NOTIFIED) (5th February 2016)
ASDA confirm its commitment to Arla until at least 2019 (5th February 2016)
There were concerns that following the Tesco decision to switch around 40% (180 to 200 million litres) of their Arla supplied milk to Muller that other retailers would jump on the merry-go-round piling further pressure on non aligned milk prices.
Whilst such pressure from ASDA cannot be completely ruled out they have at least re-affirmed their commitment to source all its circa 600 million litres of fresh liquid milk from Arla until 2019.
In addition Asda has confirmed it will continue to support and promote the Arla (quality) mark landed last year with a minimum price guarantee of 28ppl.
Given this commitment it must surely be fair to assume that as part of the new 3 year deal a minimum price at a similar level of around 28ppl will be part of the package.
Meadow Foods to hold its March milk price (5th February 2016)
Meadow Foods have written to suppliers confirming that the March milk price will be stand on meaning a standard liquid litre price of 19ppl (www.milkprices.com)
New younger enthusiastic faces wanted on the NFU Dairy Board
The NFU Dairy Board is looking for up to four new appointees. Active dairy farmers with an interest or skills in the dairy supply chain, retail or processing, skills and training, large scale/intensive production, seasonal and extensive production, novel business structures, producer groups and succession are welcome to apply. More information can be found by pressing the link: http://www.nfuonline.com/sectors/dairy/dairy-must-read/driving-the-dairy-agenda-join-the-dairy-board/.
If interested please contact Sian Davies, Chief Dairy Adviser c/o Nancy.Fuller@nfu.org.uk with a CV and covering letter by 9th March.
Private Storage Aid extended (5th February 2016)
The European Commission announced last Friday that it has extended Private Storage Aid (PSA) for butter and skimmed milk powder until September 30th, 2016. PSA was scheduled to close at the end of February. Regrettably, the announcement didn’t mention a an extension to the PSA scheme for cheese..
Under PSA processors retain ownership of the products and receive EU payments for leaving them in store off the market
Responses to AHDB Dairy’s 3 year business plan (5th February 2016)
Following several requests Ian has decided to publish his response to the AHDB Business Plan. Click on this link: Ian Potter response
In addition, Kite Consultancy have published their response. Click on
A couple of Kite’s comments jump out at readers: “They (Kite’s clients) think it (AHDB Dairy) produces far too much information that is relatively basic, focused on average operators.”
Also “Many also believe that some of the intelligence work AHDB Dairy carries out is a waste of time and resources.” “There is no need for Market Intelligence to report on general dairy news, which is more than adequately covered by the general farming media, industry websites and social media.”
In AHDB Dairy’s news article published 11th January the commentary read:
“A recovery in prices to more sustainable levels for the whole supply chain is needed but, when this will happen, and how quickly, relies on a combination of three key events: a reduction in milk production, the sale of excess stocks and a rise in demand.” This supports the view that it is, indeed, teaching Grannie to suck eggs. If a dairy farmer doesn’t understand those fundamentals there is no hope!
Another comment in a previous report from AHDB diary stated that one of the really important findings in the report was that there is a big gap between current farmgate prices for aligned and no aligned fresh milk.
As one farmer emailed – No shit Sherlock and we pay levy money for this sort of commentary which is about as much use as tits on a bull!
From emails Ian has received there appears to be a significant number of levy payers who want to see AHDB Dairy bin its 3 year plan and rewrite it, in particular with an emphasis to support domestic dairy promotion, assist with an export strategy, help farmers in these unprecedented times to make tough decisions and big changes as well as up their game on communication and what is currently below average market intelligence commentary.
AHDB states that “AHDB’s dairy staff and Board have been out meeting and listening to levy payers in Scotland, England and Wales.” Well they might be claiming to listen, but the jury is out as to whether its board will take any notice or change!
One things for certain they are going to have to overcome their genetic phobia of associating themselves as the messengers for bad news when attempting to inform farmers of what they term as news.
NFU Vs AHDB (5th February 2016)
In Robert Forster’s excellent Beef Newsletter he recently referred to a disagreement between The NFU and AHDB, which appears to be spearheaded by the high heels of presidential candidate, Minette Batters. Her stance is evidently in contradiction to the position adopted by both the current and former NFU presidents Meurig Raymond and Peter Kendall.
The snippet reads as follows:
If Meurig wants to calm the waters in the run up to the NFU presidential election by supporting his old mate Kendall it could be his ultimate downfall. Farmers across all sectors want someone who will stand up for them and make a difference.
As a famous quote goes “Anyone can hold the helm when the sea is calm”
That sea is far from calm now so far as the UK dairy industry is concerned or AHDB and its three year plan.
Note, Minette Batters Semex Conference comments feature in Ian’s response to the AHDB Dairy Business plan. Click on the link: Ian Potter response
AHDB Dairy price reporting back on the radar (5th February 2016)
DIN has highlighted the decision by AHDB Dairy’s Market Intelligence analysts to cease publishing an average wholesale cheese price whilst continuing to publish the MCVE price.
Given the fact anyone with any idea of how to add up can calculate the cheese price from MCVE it’s a puzzle as to why publication of a key price like wholesale cheese has ceased.
DIN commented that “It is believed that AHDB Dairy are not publishing a mild Cheddar quote because they don’t trust the market reports they are getting.”
Ian questioned the cheese price quoted by AHDB in his October Dairy Farmer article. He questioned AHDB over who they contacted for prices, tonnes traded and how the average was calculated. Alas, the response was “It’s commercially sensitive information.” It appears that since that article no cheese price has been published.
It’s likely that in obtaining their prices either AHDB analysts asked the questions in the wrong way, leading to questionable answers or simply took shortcuts. Similar concerns have been voiced over AHDB’s bulk cream prices as to what questions are asked, and to whom, in arriving at the published prices.
Dairy UK publish its Export Strategy (5th February 2016)
Dairy UK have published “UK Exporting Dairy to the World”, where they highlight what’s required to allow the industry to unlock the potential in international markets.
In the report is a list of actions and recommendations that will boost our exports, including creating a one-stop shop for dairy exporters.
Farming Minister, George Eustice, commented “Exports are a crucial part of growing and strengthening the dairy industry and a key part of our plan is to see new markets opened, so that the sector can become more resilient, competitive and profitable.”
Now, how do the Minister’s words of encouragement fit with AHDB’s three year zero budget to help exports and this strategy? As it stands they don’t, and a revolt is brewing.
500 jobs axed at Arla (5th February 2016)
Arla has announced its global restructuring including a 500 head count reduction. Staff involved are expected to all be consulted and notified by mid March.
It’s a sad fact that across the world dairy processors of all sizes are cutting back on staff in order to remain lean and competitive.
In addition to announcing it’s plan current head of Arla UK Peter Giortz-Carlsen will take on the new position as Head of Europe and his UK role will be taken by Thomas Pietrangeli who is currently in charge of Arla Denmark
Another disasterous GDT auction (3rd February 2016)
Today’s GDT auction results were nothing short of a disaster with the average price plunging 7.4% to US$2276.
All products dropped in value compared to the results achieved only two weeks ago, in particular, WMP which suffered the heaviest fall down 10.4% (US$236 tonne to average under US$2000 tonne).
Notable movers were:
WMP down 10.4% to average US $1952/tonne
Butter down 8.3% to average US $2905/tonne
Cheddar down 4.2% to average US $2807/tonne
SMP down 2.2% to average US $1792/tonne
The WMP crash prompted an instant reaction from several New Zealand producers who’s farm gate milk price is now at or close to $4 compared to an industry wide breakeven figure of $5, which the majority of New Zealand’s diary famers need.
One significant contributor to the fall is credited to the lack of demand from countries heavily dependent on oil revenue.
3.25ppl milk price reduction for Arla Direct suppliers – from March 1st (1st February 2016)
This takes their standard liquid price to 16ppl & manufacturing price to 16.78ppl (www.milkprices.com)
With the real possibility that all of them could soon be given 12 months notice to find a new milk purchaser (see Tesco story below)
2ppl milk price reduction to only 9ppl for suppliers to Payne’s Dairies Limited (PRODUCER NOTIFIED) – from February 1st (1st February 2016)
This is a sudden drop communicated to farmers on the 27th January with the B litre price dropping from 11ppl to only 9ppl from today, February 1st and this from a liquid premium processor.
In addition, producers paid a 0.35ppl balancing charge deducted from the January milk statement against milk delivered over the Christmas and New Year period.
1.0ppl milk price reduction for suppliers to Payne’s Dairies Limited – from February 1st (PRODUCER NOTIFIED) (1st February 2016)
This takes their standard liquid price to 20.20ppl.
1.6ppl milk price reduction for suppliers to Dairy Crest Davidstow – from March 1st (1st February 2016)
This takes their standard liquid price to 21.64ppl & manufacturing price to 22.72ppl (www.milkprices.com)
1.5ppl milk price reduction for suppliers to County Milk – from February 1st (PRODUCER NOTIFIED)
1.5ppl milk price reduction for suppliers of Woodcock’s (Yew Tree Dairy) – from March 1st
This takes their standard liquid price to 22.25ppl.
1.3ppl milk price reduction for suppliers to Glanbia – from March 1st (1st February 2016)
This takes their standard liquid price to 18.43ppl & manufacturing price to 19.04ppl (www.milkprices.com)
1ppl milk price reduction for suppliers to South Caernarfon Creameries Limited – from March 1st (1st February 2016)
1ppl milk price reduction for suppliers to Belton Cheese – from March 1st (1st February 2016)
This takes their standard litre liquid price to 21ppl & manufacturing standard litre price to 21.75ppl (www.milkprices.com)
1ppl milk price reduction for suppliers to Pattemores – from March 1st (1st February 2016)
0.75ppl milk price reduction for suppliers to Pensworth Dairy – from 1st March (1st February 2016)
This takes producers liquid standard litre price down to 20.65ppl (www.milkprices.com)
0.62ppl milk price reduction for suppliers to First Milk’s Midlands & East Wales balancing group – from February 1st (1st February 2016)
This takes their standard liquid price to 17.28ppl.
0.19ppl milk price reduction for suppliers to First Milk’s Scotland balancing group – from February 1st (1st February 2016)
This takes their standard liquid price to 17.93ppl.
Tesco drop industry bombshell moving circa 180 million litres of milk from Arla to Muller (1st February 2016)
Speculation on the shock surprise by Britain’s biggest retailer Tesco to switch up to 200 million litres of its Tesco aligned milk from Arla to Muller has now been confirmed and it’s piled on the negative PR, the Tesco Comms Team will have to wrestle with.
Ian has exchanged emails with Tesco and had several conversations with them as he attempted to obtain answers to basic questions for example:
All three questions are currently commercially sensitive and a secret, however the switch will not take place until after the spring flush. So on the basis Tesco’s track record is not to do anything for free one has to assume that money is changing hands as usually happens when big milk volumes switch.
For GB milk its neutral. For the chosen few in Muller its good news, for the rest it will further fuel the argument that the non aligned (the have nots) are subsidising the chosen few.
Many in the industry believed that Muller’s take over of Dairy Crest’s liquid division effectively making 3 liquid processors become one would be good news for the industry but following this move the jury is out.
What it means for Arla? (1st February 2016)
Tesco have stated that the Arla Tesco direct farmers “will be protected and continue to be aligned directly to Tesco”.
Translating this must mean that if the 300 million or so litres Arla retain of the Tesco liquid business the Tesco Arla directs are protected. This means the 200 million or so litres Arla has lost is a loss to Arla Co-op members at the Tesco price. More evidence that the non aligned are paying for the chosen few.
This sounds very much like a deal has been struck to favour Arla (direct) Tesco producers which is certainly not one of the core foundation stones a Co-op is built on of working of working for its members.
In addition Tesco Arla directs look likely to be one of the last dominos with the announcement of a 3.25ppl price cut and the real possibility that in 12 months time their milk will need to find another home unless this market turns North before then.
Arla now need to find a home for an extra 200 million litres of milk. In addition with immediate effect no Arla member can switch to become an Arla Directs or vice versa. This means whatever happens to the Tesco Arla Directs they will not be able to join Arla as members.
Let’s hope the Tesco move doesn’t energise the liquid merry go round where the only people who can’t afford the ride are dairy farmers.
John Beckett 1935 – 2016 (1st February 2016)
It is with great sadness we announce the passing of John Beckett after a long and distinguished career in the agricultural industry.
John was a highly respected Director of Belton Cheese and recently retired as Chairman of the family business.
Away from Belton Cheese, John has been a champion for the dairy industry. He has been a past President of the Royal Association of British Dairy Farmers (RABDF), Chairman of Cheshire County Landowners Association and in 1977 he became the Chairman of NWF Group for 11 years.
In 2012 John was presented with the Royal Association of British Dairy Farmers’ Princess Royal Award. The honour was made for his outstanding services to the industry. The following year John received the National Agricultural Award from the RASE.
The transformation of Genus is probably one of John’s greatest achievements. In 1994 John was appointed Chairman and 7 years later the Genus business became the biggest breeding company in the world, trading in 70 countries.
Despite wearing many hats, John’s passion was to help young people acquire the business knowledge that he felt was lacking in some parts of the industry, believing that if farmers are to compete on more equal terms they need to fully embrace the science of management.
To this end John established the MBA Agrifarm Charitable Fund, administered by The Worshipful Company of Farmers, which would enable enterprising farmers to study for an MBA alongside executives from other sectors at the Cranfield School of Management. This is an initiative that will pay dividends for generations to come.
John was also past Chairman of The 300 Cow Club, Farmhouse Cheesemakers Ltd, Goodwin’s Cheese Ltd and M K Richmond Ltd John Deere dealership. He was a Liveryman of The Worshipful Company of Farmers and Honorary Fellow of Royal Agricultural Society of England.
A Service of Thanksgiving is to be held at St. Alkmunds’s Church, Whitchurch, and Shropshire at 12 noon on Friday 18th March 2016.
Tesco – guilty again (25th January 2016)
The Groceries Code Adjudicator (GCA) Christine Tacon has today published her report into her investigation into Tesco PLC in terms of how Britain’s biggest retailer has failed to comply with the supply code of practice. Her conclusion is simple: Tesco have seriously breached paragraph 5 of the code.
In her report she states she found evidence that Tesco deducted or deferred payments owed to suppliers for goods with some payments taking up to two years to be paid by Tesco.
In addition, she saw instances where Tesco overcharged or underpaid supplies without rectifying the matters.
“It was clear from the evidence that a major focus of the Tesco Commercial Team during the investigation was on hitting budgeted margin targets”.
It’s a report full of examples about Tesco charging extra fees, delaying or failing to pay, and for its buyers leveraging (i.e. leaning on!) suppliers.
She concludes her report with five recommendations and I guess if she could add number six it would be for her to fine Tesco for its breaches (legally she can’t.)
Tesco could be fined £500m (25th January 2016)
This comes on top of an ongoing Serious Fraud Office investigation into the £326 million Tesco accounting scandal. One city analyst has warned that Tesco could face a £500 million fine for the scandal. The big question will be who will Drastic Dave Lewis get to pay the Tesco’s fines?
Do leopards change their spots? We shall see, but they certainly don’t change into pussy cats. At the moment they look as if they have the morals of an alley cat (25th January 2016)
Britain’s biggest retailer (but far from being its favourite) Tesco are having a PR kicking on a scale never seen before in the UK with any retailer.
Drastic Dave Lewis, CEO, will be scratching his head with his bean counters as to how he can prop up his margins and pay the fines whilst turning in a healthy profit. It’s a near certainty Tesco will find a way for suppliers to pay for its errors and mistakes because that how the track record reads. We had better hope, pray and be ready to ensure that Tesco’s dark forces don’t try and recoup their fines, lost margins, and lost routes to margins by pick-pocketing hard working dairy farmers in an already crippled dairy industry (that’s apart from its pampered directs whose bonus money indirectly comes from non-aligned farmers). If they do the industry will have to put differences to one side and stand shoulder to shoulder to take them head on, no matter how big they are.
Tesco V NFU (25th January 2016)
The Tesco PR nightmare and how the NFU handle it is now favourite to be the deciding factor at next month’s NFU elections. Deputy president Minette Batters won over most of the audience with her measured, professional presentation at the Semex conference two weeks ago. President Meurig Raymond will get his main chance at the NFU conference at the end of February.
Who will have the nerve to go head to head with Tesco, because that is what is required and what will make or break the presidential bid. Career defining speeches beckon, and the reputation of Tesco and its allies in the supply chain are hanging in the balance.
Will the next NFU president wear black lace up shoes or high heels? Either the way, as the Nancy Sinatra song goes, the boots need to be made for walking…walking all over Tesco until it really does change its spots.
1.5ppl milk price reduction for Grahams Dairies (Scotland) producers from the 1st February (22nd January 2016)
This takes producer’s standard liquid litre down to 22.25ppl.
0.8ppl milk price reduction for Arla members – from 1st February (22nd January 2016)
This is 1 Euro Cent and takes producer’s standard litre price to 21.81ppl liquid & 22.68ppl manufacturing (www.milkprices.com). The 0.8ppl comprises of a 0.75ppl price reduction plus a 0.05ppl forecast 13th payment increase.
GDT Auction down 1.4% (22nd January 2016)
This weeks GDT Auction average continued to head South with the average price down 1.4% to US$2,405/tonne.
Notable movers were:
Butter down 5.9% to average US$3724/tonne
Cheddar down 3.4% to average US$2867/tonne
SMP down 3.2% to average US$1835/tonne
WMP down 0.5% to average US$2188/tonne
What’s coming down the line? (22nd January 2016)
Between now and February 1st it is a near certainty that most, if not all, milk processors have already decided to announce price reductions for 1st February or 1st March.
There is simply no light at the end of this tunnel, in fact the tunnel is getting longer each day. A group of farmers in Scotland are reporting a current brutal 14ppl milk price and post 1st April it could easily be lower when they are forced to change the destination of their milk.
Add to this rumours of one or two extremely aggressive liquid processors (one XL and one medium) raiding existing contracts by offering eye-wateringly cheap milk to attract new and existing customers and the end result is simply lower ex-farm gate milk prices. It’s grim and it’s going to get a damn site worse.
AHDB Dairy Market Intelligence raises eyebrows (22nd January 2016)
AHDB Dairy attracted the attention of two eagle eyed Potter bulletin readers with their news item produced by the Market Intelligence Department.
The top story was headed “DAIRY MARKET RECOVERY RESTS ON THREE KEY FACTS”
It went on to explain that “A recovery in prices to more sustainable levels for the whole supply chain is needed but, when this will happen, and how quickly, relies on a combination of three key events: a reduction in milk production, the sales of excess stocks and a rise in demand.”
As one reader commented “Is this the sort of Peter & Jane market analysis our levy money pays for? Heaven help the famers who hadn’t figured this out months ago”.
Llaeth Cymreig Accounts show £714,000 loss (22nd January 2016)
The accounts for the milk processor to the 31st March 2015 show a £714,000 loss and declare that a much lower loss of £70,000 has been recorded in the period April 1st 2015 to October 2015.
Worryingly is the note on page 4 of the Independent Auditors Statement indicating the existence “of a material uncertainty which may cast doubt about the company’s ability to continue as a going concern”. In the Directors report they, like others, incurred significant losses having to deal with surplus milk. They refer to an extra 143 artic loads of milk amounting to 4 million litres and state the calculation summary as resulting in a 12 to 15ppl spot market sale loss. 12ppl x 4 million = £480,000. They certainly are not alone with such problems.
1ppl milk price reduction for Muller Wiseman - from 15th February (15th January 2016)
The new standard litre prices will be:
21.35ppl Muller Wiseman non-aligned.
20.69ppl Muller Direct (ex-Dairy Crest liquid).
Increased volume payments boost Glanbia’s farm gate milk price by 0.25ppl (15th January 2016)
Whilst Glanbia decided to hold its February milk price its increased volume bonuses mean a standard 1 million litre producer will benefit from a 0.25ppl increase and for those producing more than 20,000 litres/day it is worth 1.5ppl.
The volume bonuses increase the www.milkprices.com liquid standard litre to 19.68ppl and its manufacturing standard litre increases to 20.34ppl.
First Milk exit Westbury (15th January 2016)
First Milk have wanted out of Westbury for some time to rid themselves of what has been a millstone and now they have concluded the deal to exit the facility for an undisclosed sum. For First Milk relieving itself of the burden to pay half the cost of running the Westbury plant with a one off payment to Arla of a few million will be good business and further evidence that Mike Gallacher is determined to turn the business around.
Westbury Dairies Limited is now 100% owned by Arla along with the site, which Arla acquired in December 2013.
Arla are now free to further develop the 750 million litre a year site where it currently produces Anchor butter, own label butter for retailers as well as powder.
It’s a certainty that First Milk do not require circa 350 million of balancing capacity with a maximum 1 billion litre member milk field only to lose money on every litre of milk processed through Westbury. Actually some might claim in doing so First Milk were carrying a balancing charge and running half a plant to benefit the rest of the UK dairy industry.
Note going forward, First Milk have negotiated preferential access to the facility during the Spring flush and at other times.
The exit from the Westbury joint venture is another smart move by Gallacher in connection with his turnaround plan. The savings from the exit form Westbury should unlock milk price moves for members in the coming months.
Ian has also been reliably informed that First Milk are now on the front foot and actively looking for additional milk in Cumbria, West Wales and the West Midlands.
First Milk Sharpen’s its act again – by name and by nature (15th January 2016)
Experienced businessman Clive Sharpe has filled the position of First Milk’s Chairman from February 1st, following the departure of Sir Jim Paice.
Sharpe has been involved in food manufacturing for 35 years and comes with an impressive CV having been Chairman of Quorn Foods and Burton Biscuits, former CEO of WT Foods, Golden Wonder and Homepride Foods and former non-executive director of Duerr’s Jams and Tangerine Confectionery as well as his current role as Chairman of Peters Foods, which he retains.
Looking at his track record he certainly appears to know his way around the food industry and hasn’t previously shied away from challenges. He is badged as a self-made down to earth man, with experience and buckets of energy. On paper it should be considered a coup for First Milk to get someone with Sharpe’s pedigree and experience.
Meadow Foods under attack (15th January 2016)
The NFU’s Dairy Board chairman has lambasted Meadow Foods in a press release following its 13.7m pre tax annual profit announcement.
In the release he highlights the fact that Meadow languish at the bottom of the milk price league table. According to AHDB Dairy they sit only second from bottom.
The NFU has hit out at the fact Meadow pay one of the lowest milk prices, do not participate in the Voluntary Code of Conduct have no formal producer representation and last week announced that only 80% of the A litres delivered from April will receive the headline A milk price.
Ian admits that until he posted his news item on Meadow’s decision to cut the A litres it pays for milk to 80% from April he hadn’t appreciated how much anger and unrest there is among Meadow producers.
Intervention storage increases (15th January 2016)
During the past couple of weeks the quantity of SMP placed into EU intervention stores has escalated with EU wholesale SMP prices now trading below the Intervention level of €1698/tonne (approximately £1280/tonne), which is a 6 year low.
In the past four weeks to 4th January, 16,286 tonnes of SMP have gone into EU intervention representing a 54% increase in the tonnage placed into store.
Of the total 46,639 tonnes of SMP offered into intervention nearly 5% (2,183 tonnes) has originated from the UK. In December a token 882 tonnes of SMP were removed from EU intervention stores.
Butter stocks offered into EU Intervention have also steadily increased with 166,914 tonnes by 4th January of which 4.2% (7,065 tonnes) originated from the UK.
Arla launches BOB brand (15th January 2016)
Arla has launched the Arla Best of Both (AKA Arla BOB) branded milk, which utilises the same filtration process used with Cravendale and they claim it tastes as good as semi-skimmed and has taken three years to develop.
It is on sale at RRP £1.50 for 2 litres and £1 for 1 litre packs and will be launched and supported by a £7 million advertising campaign, including TV campaign, which starts on 8th February. It’s classed as a fat free containing no more than 0.5% fat. It’s more innovation, and hopefully more added value milk from GB processors.
Danish Dairy Farmers to receive EU cash (15th January 2016)
The Danish Government have decided to pay the lion’s share of the $12 million (£8.4 million) the country receives from the EU emergency agriculture aid fund to its hard pressed dairy farmers who are “having difficulty making ends meet”.
Tracking Quads, RTV’s, Tractors, Cars, Husbands & Wives (15th January 2016)
Would you like to monitor the mileage your vehicle is doing over the year or make sure your trailer is where you left it? Then look no further, Pinpointpal tracking device is small, efficient and easy to use and has a huge variety of benefits. Whether its a farmer wanting to check his workmen are where they should be or have checked the livestock they should have, or a contractor wanting to make sure his loadall is where he left it. You can calculate mileage claims, set movement alerts and its even possible to monitor the hours a machine has been in use. The list is endless. Recommended retail price £250 however we have a special IPA offer of £150 + VAT this includes 2 years free monitoring and its only £25 a year thereafter.
For more information on the device please contact Lydia on 01335 324594 or email@example.com
0.25ppl and 0.18ppl First Milk price reductions - from 1st January (8th January 2016)
Those affected are as follows:
0.25ppl reduction for suppliers to Campbeltown, Arran, Lake District, Haverfordwest & North of England balancing.
0.18ppl reduction for the Scottish balancing pool.
The resulting www.milkprices.com 1st January standard litre prices are:
Liquid Standard Manufacturing Standard
(includes the 2.24ppl Tesco winter cheese payment) 20.35ppl 20.84ppl
Lake District 18.14ppl 18.85ppl
North of England 18.12ppl
Scottish Balancing Pool 18.12ppl
Midlands & East Wales 17.90ppl
GDT auction prices down on average 1.6% (8th January 2016)
There were no surprises in the first auction of the year, which continued to trend slightly down.
Notable price movements were:
Cheddar up 3.5% to average US $2964/tonne
SMP down 0.8% to average US $1890/tonne
WMP down 4.4% to average US $2210/tonne
UK milk production continues to rise (8th January 2016)
November milk production totalling 1.163m litres shows a 3.8% (43m litre) increase on that recorded in November 2014.
In the first 8 months of the dairy year to the end of November the UK has produced an extra 303 million litres (+3.13%) compared to that produced in 2014 equivalent to an extra 1.26 million litres everyday.
Meadow Foods milk price calculation changes (8th January 2016)
Meadow Foods will change how they pay suppliers from April 1st with the A price paid on 80% of producers 100% A (quota) allocation with any remaining production paid at the B litre price.
Is this a price cut, a price adjustment that will be more or less neutral or will producers never know the truth?
The reality is just like most, if not all, milk processors Meadow simply has too much milk on its hands and a limited number of resignations and/or farmers quitting. With this move Meadow have decided to spread the risk across all producers making those who produce any B litres plus 20% off the A litres take the pain.
If Meadow are paying the A price on only 80% of the milk it should mean that the A price improves. If that happens the adjustment will be neutral and if the B price is say 15p those who produce the extra litres bear the pain until prices turn the corner and head North. At this point the B price will be the first move and will drag the A price up with it.
Only time will tell whether Meadow’s A price improves on April 1st.
MCVE and AMPE continue to head south (8th January 2016)
AHDB’s dairy market indicators MCVE and AMPE next month are likely to both hit their all time record lows. The December MCVE stands at 18.9ppl and AMPE at 16ppl (see the table at the top of this bulletin).
Dutch cull cow slaughtering rocket with 1.5ppl premium (8th January 2016)
Within a matter of hours cull cow prices in Holland fell 15 cents per kg (11p/kg) as cow numbers sent to slaughter rocketed resulting in slaughter houses bursting at the seams and waiting lists forming.
One of the key factors has been the decision by Friesland Campina who are now paying a 2 Euro cents kg (1.5ppl) to members who supply the same or less milk between 1st January to 11th February compared to the base period of 13th to 27th December. It does not apply to organic producers where extra milk is required. The fact is Friesland Campina members are producing far more milk than the company requires or can handle.