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Note all standard litre prices quoted are before seasonality, balancing charges, capital retentions or production incentive payments/bonus.
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1.75ppl milk price cut for Helers Cheese producers - from 1st January (12th December 2014)
This takes Helers producer standard litre price down to around 25.55ppl.
1.5ppl milk price cut for Yew Tree Dairy (AKA Woodcocks) producers - from 1st January (12th December 2014)
This takes the producers standard litre price down to 26ppl (www.milkprices.com)
1.2ppl milk price cut for Muller (Wiseman) non aligned producers - from 10th January (12th December 2014)
This takes the producers standard litre price down to 25.9ppl (www.milkprices.com)
0.306ppl milk price cut for Dairy Crest formula contracted producers - from 1st January (12th December 2014)
This takes the producers standard litre price down to 29.287ppl (www.milkprices.com). A producer price advantage of +3.377p over Dairy Crest’s standard litre price.
Fonterra offer no Christmas cheer as it slashes its producer price (12th December 2014)
Fonterra has, for the third time, reduced its forecast producer member payout for 2014/15 by a further 11% from $5.30/kg of milk solids to $4.70.
Converting this from milk solids into ppl at 4% butterfat and 3.3% protein produces a forecast farmgate price of 17.62ppl, which including a forecast dividend/bonus is likely to weigh in at just under 19ppl assuming between now and Fonterra’s year end, at 31st May 2015, there are no further price adjustments.
The original forecast price announced in May was $7.00 NZ so the latest drop gives a cumulative forecast reduction of 33%. That’s a hell of a drop in 12 months.
FFA broker transparent deal with Iceland (12th December 2014)
Those who comment that FFA are only about protesting and that no good comes of it will be left with red agitated faces
with today’s news that, following recent protests at two Iceland distribution depots FFA have negotiated a new way for Iceland to price its liquid milk requirements.
Presently Iceland obtain all of their liquid milk from either Arla or Muller non aligned farmers and going forward Iceland are prepared to be open and transparent and, if required, will open their books up to scrutiny to prove that they are not responsible for applying any pressure to their processors on liquid milk prices. The deal means Iceland will simply move their price by the amount their processor moves its non aligned farmgate milk price.
So if Arla or Muller’s milk price goes down 1ppl Icelend pay 1ppl less. If the farmgate price moves up 1ppl the opposite happens.
Whilst there will be some fine detail to iron out at least this should take Iceland out of the equation as a potential retailer who is exerting further unnecessary downward pressure on already weak farmgate milk prices.
Second Iceland FFA announcement (12th December 2014)
By the second week in February, at the latest, Iceland, have confirmed to FFA than at least 70% of their in store packed cheddar, which they deal with will be British and will bear the Red Tractor logo. All of this cheese is packed at Leek by Adams.
Another positive move. In one week that’s Iceland off the FFA radar having accumulated several gold stars.
UK November Milk Production (12th December 2014)
November output stood at 1.1174 billion litres up 4.7% on November 2013 production. Cumulative production for the first 8 months of the quota year is up 677 million litres (+7.5%).
The mould is certainly set for this year’s total milk production to be the highest on record during the 30 years of quota.
Irish Dairy Board (IDB) set to be renamed Ornua (12th December 2014)
The IDB board has approved the name change to Ornua as part of its preparation for the post quota world opportunities and its corporate identity review. It’s a take on the Gaelic Or Nua, which means new gold. That’s exactly what a Commission report “prospects for agricultural markets and income 2014 to 2024” called milk. “Milk remains the white gold for the next decade”
This year’s Ceremony of The Christmas Cheeses (12th December 2014)
Ian was fortunate to be invited to last week’s annual Ceremony of the Christmas Cheeses at the Royal Hospital, which for him is the first signal that Christmas is getting close.
Close to a quarter of a tonne of our finest British cheese was donated by our cheesemakers for the pensioners to enjoy.
The Ceremony has been organised by The Dairy Council for more than 50 years and as Sandie Wilkie, The Dairy Council Chairman, commented “This year is all the more special as we commemorate the 100th anniversary of the outbreak of WW1”
16 PRICE CUTS IN 5 DAYS (5th December 2014)
6.19ppl milk price cut for Muller formula producers - from 1st January (5th December 2014)
This confirms last week’s predicted price fall and takes the producers standard litre price down to 22.95ppl (www.milkprices.com)
2ppl immediate milk price cut for South Caernarfon Creameries – from 1st December (5th December 2014)
This takes the producers standard litre price down to 24.78ppl (www.milkprices.com)
1.87ppl milk price cut for The Fresh Milk Companu (AKA Lactalis) – from 1st January (5th December 2014)
This takes the producers standard litre price down to 25.39ppl for those on a 3 month contract (www.milkprices.com)
1.6ppl immediate milk price cut for Paynes Dairies suppliers – from 1st December (5th December 2014)
This takes the producers standard litre price down to 25ppl (www.milkprices.com)
The cut comes in two parts with 0.8ppl price cut plus 0.8ppl haulage charge. (See story below)
1.5ppl milk price cut for Belton Cheese suppliers – from 1st January (5th December 2014)
This takes the producers standard litre price down to 25.65ppl (www.milkprices.com)
1.5ppl milk price cut for Crediton Dairies suppliers – from 1st January (5th December 2014)
This takes the producers standard litre price down to 29.36ppl (www.milkprices.com)
1.5ppl milk price cut for Glanbia suppliers – from 1st January (5th December 2014)
This takes standard litre price to an estimated 25.37ppl (www.milkprices.com)
1.4ppl milk price cut for Wyke Farms suppliers – from 1st January (5th December 2014)
This takes the producers standard litre price down to 25.05ppl (www.milkprices.com)
1.25ppl price cut for Dairy Crest suppliers – from 3rd January (5th December 2014)
This takes the Davidstow producers standard litre price down to 27.78ppl (www.milkprices.com)
This takes the liquid producers standard litre price down to 25.79ppl (www.milkprices.com)
1.25ppl milk price cut for Meadow Foods suppliers – from 1st January (5th December 2014)
This takes the producers standard litre price down to 24.6ppl
1ppl milk price cut for First Milk liquid suppliers – from 1st January (5th December 2014)
This takes the producers standard litre price down to 21.7ppl (www.milkprices.com)
1.1ppl milk price cut for First Milk cheese suppliers – from 1st January (5th December 2014)
This takes the producers standard litre price down to 22.90ppl (www.milkprices.com)
1.0ppl milk price cut for Barbers suppliers – from 1st January (5th December 2014)
This takes the producers standard litre price down to 26.92ppl (www.milkprices.com)
1.1ppl milk price cut for Waitrose (Dairy Crest) suppliers – from 1st January (5th December 2014)
This takes the producers standard litre price down to 33ppl (www.milkprices.com)
0.81ppl milk price cut for SDDG (Sainsburys) suppliers – from 1st January (5th December 2014)
This takes the producers standard litre price down to 31.6ppl (Muller), 31.54ppl (Dairy Crest) and 31.48ppl (Arla) (www.milkprices.com)
0.5ppl milk price cut for Booths suppliers (via Muller) – from 1st January (5th December 2014)
This takes the producers standard litre price down to 34.5ppl (www.milkprices.com)
This means taking the two extremes from above on 1st January Muller Booths suppliers will receive a standard litre price of 34.5ppl and a First Milk liquid supplier will receive 21.7ppl. A difference of 12.8ppl, which for the 1 million litre standard litre producer equates to £128,000 a year.
Or to put it another way those farmers aligned to Booths and their family retail business will receive 60% more for every litre of milk they produce than a First Milk liquid producer will receive.
No Christmas cheer from Paynful Paynes (5th December 2014)
In addition to a no notice haulage charge and price cut totalling 1.6ppl (see above) comes another painful blow in the form of immediate cancellation of Paynes seasonality, which allowed a 5% tolerance above a producers level profile. This has been replaced from November with what Stephen Bradley of www.milkprices.com describes as “the ultimate discretionary balancing charge.”
Basically, if you produce any extra milk you will be paid on realisation and this has been backdated a month to include November delivered milk.
Milk delivered above Paynes planned requirements, which are secret, will be paid at a spot price, which is also top secret and verified by Paynes. Despite the fact the letter to producers went out at the very end of November the company were unable to say what they had achieved on the November spot market. However, the letter does suggest a current spot market price, as at the 27th November, of 18 to 20ppl and goes onto suggest prices as low as 12 to 14ppl this month. The milk prices guru Stephen Bradley is certainly correct to question these appalling numbers as have other processors. They are off the mark and the 14ppl price can only be for a few days over the Christmas period and having said that the lowest Christmas price we have heard is 16ppl.
In addition, Paynes are investigating the introduction of A and B pricing.
Mixed results in this weeks GDT auction (5th December 2014)
Overall the average all products index was down 1.1% compared to the result achieved only two weeks ago, however, the 1.1% fall is heavily influenced by the 7.1% fall in WMP prices due to the fact 65% of the product auctioned is WMP. WMP has halved in value in less than 9 months and was last seen at this level in July 2009.
The key movers were (all prices in US $)
WMP down 7.1% to average $2229/tonne (£1423)
SMP up 5.7% to average $2423/tonne (£1547)
Cheddar up 5.2% to average $3017/tonne (£1926)
Butter up 7.3% to average $2849/tonne (£1820)
Inserting the GDT average for butter and SMP into the 2014 AMPE formula gives a price of only 18.7ppl, which does not factor in the cost of transporting the milk from farm to processor, which takes the simple ex-farmgate AMPE on these figures down to between 15.7 to 16.7ppl.
Baltic states milk producers take a beating (5th December 2014)
There is little wonder the European Commission realise Estonia, Latvia and Lithuania milk producers desperately need some help. These are the countries hardest hit by the Russian import ban and farmgate prices have collapsed to under 13.5ppl!
Crediton Dairy sack employee for Bin Laden selfie (5th December 2014)
The employee was dismissed for gross misconduct following a selfie photograph of him wearing an Osama Bin Laden rubber mask at the dairy, which he then posted on his Facebook page. The matter has gone to an employment tribunal.
Friesland Campina December cut is not good news (5th December 2014)
European milk processing giant Friesland Campina (FC) have announced a 3.75 Euro Cent (3ppl) December milk price cut to give a standard payout of 30.75 Euro Cents, which equates to 24ppl.
In eleven months the FC guaranteed price has fallen by 12.25 Euro Cents (9.6ppl) from a top of 43 Euro Cents in February. Why is this relevant to the UK? Simply because the one milk processors price Arla AMBA monitor and track is that paid to farmers by FC so if FC sneeze, Arla are likely to catch a cold and the majority of the UK processors and farmers could easily end up with the flu.
1.63ppl milk price cut for Arla AMBA Co-op members - from 1st December (28th November 2014)
This takes Arla members standard litres price down to 26.84ppl and Tesco producers standard litre down to 27.54ppl (www.milkprices.com)
1.75ppl Milk price cut for Dale Farm Kendall Producers for October Deliveries (28th November 2014)
This takes producers standard litres price down to 29.14ppl (www.milkprices.com)
1.5ppl milk price cut for United Dairy Farmers Co-op members October Deliveries (28th November 2014)
This takes members standard litres price down to 24.44ppl (www.milkprices.com)
6ppl milk price cut for Muller Formula contracts must be on the cards (28th November 2014)
The Muller formula is a straight forward number crunching exercise and given the current AMPE @ 21.5ppl MCVE @ 25.6ppl and likely competitor prices the smart money is on a 1st January formula price close to or under 23ppl.
This price will run for the first 3 months of 2015 and compares to the October to December current formula price of 29.13ppl and if confirmed will be a drop in excess of 6ppl (-20%).
The Muller formula is transparent and based on AMPE 50%, MCVE 25% and a basket of competitor prices 25%. It’s a price based predominantly on the real value of milk turned into commodities and according to Ian’s number crunching 23ppl will be very close to the confirmed figure unless Santas Muller & Kerrs are feeling particularly jolly and generous on which odds of 1000 to 1 are on offer.
100 redundancies in Arla UK (28th November 2014)
They say firms cut cost when things get tough and Arla are doing that in the UK. (Note it appears some in the industry are taking the opposite view and have spent more money but that’s for another day.)
Around 100 staff will be made redundant to provide a leaner (Arla didn’t say meaner) Arla as they restructure.
FFA target Iceland (28th November 2014)
Iceland’s current promotion of 4 pints for 89p triggered two protests by FFA at Iceland distribution depots this week at Warrington and Swindon. Senior management at Iceland were quick to respond and speak to General Handley in an attempt to understand why they were targeted.
EFRA Dairy Prices hearing (28th November 2014)
Tuesdays EFRA select Committee enquiry into Dairy Prices heard evidence from David Handley (FFA), George Dunn (TFA), Rob Harrison (NFU Dairy Board), Dr Judith Bryans (DairyUK) and Christine Tacon (The Groceries code adjudicator).
The committee were quick to challenge Rob Harrison as to why in 2012 the NFU backed FFA and its direct action and protests yet in 2014 the NFU do not support FFA. In response Rob Harrison stated that on this occasion there is no individual bogey-man or company which needs to be exposed and that his organisation (NFU) were working constructively with retailers and processors.
The Tenant Farmers CEO George Dunn supported FFA and peaceful direct action pointing out that it was one of the few ways that angry upset dairy farmers who can see their businesses going down the pan can vent their frustration as opposed to sitting back and doing nothing.
The NFU have convinced themselves that all FFA protests are blockades and are under the impression that FFA led by Handley and “idiots” are wasting their time and protesting for the sake of it.
The jury is out on that but judging by the noises coming from the NFU’s top table trio the NFU are certainly feeling FFA and its supporters are well ahead of them in terms of both farmer and consumer support and, as such, the NFU feel threatened. Note, Handley is due to appear on BBC1’s The One Show on Monday at 7pm.
There were loud calls from Handley and Dunn for the Groceries code adjudicator to be given powers to look at dairy, in particular the section between processor and retailer/ food service etc.
Handley went on to promote the case for his A + B quota idea but when asked by the EFRA committee why it was not receiving more industry support he stated that the fact the initials FFA were involved was a barrier.
Another organisation who should be starting to feel the heat are Dairy Co.
Dunn drew the committee’s attention to the fact they collect £7million a year from producers and at times like this producers expect them to spend money on promotion. He commented “they (Dairy Co) are two years out of date with their thinking and Dairy Co need to be more accountable.” (Some will accuse Dunn with being far too generous to credit Dairy Co with being just two years behind the thinking and aspirations of farmers.)
The need for additional funding to go from Dairy Co to the Dairy Council came over loud and clear with claims by Handley that the Dairy Co levy money was not directed in the right way.
Ian’s summary would be
Dairy Crest Sack Milkman following his appearance on The Jeremy Kyle Show (28th November 2014)
Shaun Dodds, a Dairy Crest Milk and More milkman, was immediately sacked following a recent appearance with his wife on the Jeremy Kyle Show.
The show headline was “Is my husband cheating on his milk round?” and during the interview Shaun’s wife commented “it says you deliver milk and more but more seems to be the only thing that you deliver.”
Shaun called in sick in order to appear on the show and failed all the lie detector tests on the show.
Taking the facts into account Dairy Crest reportedly found him guilty of gross misconduct due to dishonesty.
It’s a good job Ernie (AKA Benny Hill & the fastest milkman in the west) didn’t work for Dairy Crest in the 1970’s because he, too, would have been sacked. As the song goes ‘a milkman’s life is full of fun in that fairy dairy land.’
And guess where his nibs is staying tomorrow evening. You got it, Quedgeley, in Gloucestershire where the Dodds live! No doubt he will be enquiring whether the local Ernie is around!
If you spot any similar Dairy related stories please alert us to them.
GDT auction results crash again to record low points (21st November 2014)
This week’s GDT auction saw average prices weaken further with 39,613 tonnes sold to average $2,561 US dollars per tonne representing a 3.1% drop on the average achieved only two weeks ago. The tonnage on offer was down 5,886 tonnes (-13%) to the quantity sold only two weeks earlier yet still prices weakened.
The biggest drop was in WMP, which averaged $2,400 tonne a fall of $122 (-4.1%) with March delivered WMP falling 8.7%. The price of WMP has halved since February 2014.
Average SMP prices dropped a further 5.7% to average $2,299 with January delivered product down 7%. This is easily the lowest price recorded since the GDT auction started in July 2008 and the average price has more than halved in only eight months from the $4,584 recorded in March 2014. These are markets processors are selling into and when you have oceans of milk you either sell at the going price or you don’t sell and stock pile.
Arla Westbury SMP down to $2,240 (£1,428) from $2,415 a month earlier representing a further fall of $175 tonne
Cheddar was up 5% to average $2,861 tonne.
AMPE & IMPE (21st November 2014)
The current October AMPE stands at 21.4ppl and if you insert this week’s average GDT prices it gives a sobering AMPE figure of only 17.3ppl. Using the GDT price achieved for Westbury Powder gives an AMPE price of 16.9ppl. Note, the AMPE figures do not allow for the cost of transport to dairies which can knock off a further 2 to 3ppl. With the intervention price at just under 17ppl the fear that product will go into intervention in early 2015 grows closer to reality by the day.
“Houston we have a problem” (21st November 2014)
European and world milk prices are falling and, bar a miracle, the majority of UK farmgate prices are almost certain to fall further and in some cases monthly from now until well into 2015. It’s a global trend and will continue until supply and demand get back in balance.
Milk buyers are not only refusing to take on new suppliers, many are desperate to offload as many existing suppliers as they can in a bid to balance orders to supplies.
The best advice is not to upset your milk purchaser if they are prepared to collect every litre of the milk you produce and can find a home for it, especially in the spring flush of 2015. Some will not find this message palatable but the reality is this situation is extremely serious and there is no end in sight. Time to buckle up and to a certain extent keep your head down and button it, unless you intend to cut production.
First Milk win super gold (21st November 2014)
A bit of good news for First Milk with its Haverfordwest extra mature cheddar taking super gold having been judged to be one of the world’s best cheeses at the World Cheese Awards.
25th Semex International Dairy Conference, Radisson Blu Hotel, Glasgow (21st November 2014)
Sunday 11 to Tuesday 13 January 2015
This is not a sales pitch on behalf of SEMEX but in complete contrast to the demand for milk, demand for places at The SEMEX Conference are record breaking, having passed the 200 milestone. If you want to go, move quickly.
Call Helen on 0800 86 8890 or email firstname.lastname@example.org
Sunday 11 January
From 19.30 Conference Gala Reception and Grand Buffet
Monday 12 January
Chairman, John Allen, Senior Partner, Kite Consulting
Session 1: 09.15 to 10.30
• Meurig Raymond, President, National Farmers Union • David Handley, Chairman, Farmers for Action
Session 2: 11.00 to 12.45
• Ake Hantoft, Chairman, Arla Foods amba • Neil Kennedy, Interim Chief Executive, Adams Foods • Danielle Pinnington, Managing Director, Shoppercentric
Session 3: 13.45 to 15.30
• Gwyn Jones, Chairman, RUMA (Responsible use of Medicines in Agriculture Alliance) and Chairman of DairyCo • Paul Larmer, Chief Executive, Semex Alliance • Dr Lewis James, Lecturer in Sports Nutrition, Loughborough University
18.30 25th Anniversary Civic Reception
19.00 Burns Supper
Tuesday 13 January
Includes visit by HRH The Princess Royal
09.00 Opening by conference chairman, John Allen
Session 4: 09.10 to 10.20
• Clay McCarty, Partner, McCarty Family Farms, Kansas, USA • Steve Miller from award-winning Shanael Holsteins, Worcester
Session 5: 10.45 to 12.15
• John Fetrow, Professor of Dairy Production Medicine at the University of Minnesota • Sally Wilson, Partner, Evolution Farm Vets
Session 6: 13.15 to 15.15
• Liz Philip, Principal, Askham Bryan College • David Yates, dairy farmer, Castle Douglas • David Swale, Partner, Joylan Farms, Lancashire • Conference close
UK milk production +625 million in 7 months (14th November 2014)
UK milk production continues to soar and for the seven months to the end of October stood at 8.5 billion litres (not adjusted for butterfat), which represents close to an 8% increase.
For October the increase was +6.2% compared to October 2013. The last time the UK produced 8.5 billion litres by the end of October was 11 years ago in 2003/04 when very painful over production super levies totalling £8 million were paid by dairy farmers on a smaller total quota.
Butterfat tests for October stand at 4.10% +2 points on October 2013 with a cumulative butterfat of 3.94%.
0.798ppl milk price cut for Dairy Crest formula contracts – from 1st December (14th November 2014)
The reduction applies to all three formulas resulting in standard litre prices falling below 30ppl.
The new standard litre prices are:
April 2014 core formula contract 29.783pl
Simplified formula & July/October 2014 core formula contract 29.593pl
These figures compare favourably with the current DC standard litre liquid price of 27.04ppl.
Russia – The world’s no. 3 dairy importers milk production to decline (14th November 2014)
Russia’s domestic milk production is forecast to drop in 2014 and 2015 by 2.5% according to a USDA report. Given the fact they are the third largest dairy importers in the world there will certainly be some pressure on Mr Putin & his advisors when a 2.5% drop in domestic production is married with his 12 month EU dairy import ban, which is not scheduled to end until August 2015.
Is this Britain’s cheapest milk? (14th November 2014)
2 litres for 69p (34.5ppl)
This is the price in The Manchester superstore, Florence Street, Bradford BD3 8EX and is milk supplied to them by Paynes Dairies.
Up until this point Costco, Gateshead wore the badge for the cheapest milk with 4 litres for £1.55 (38.7ppl) but this deal certainly top trumps Costco.
It looks like a farmer visit could be on the cards.
The superstore is a 2014 Manchester Food & Drink Award Best Newcomer nominee. They certainly won’t be getting a Christmas card from FFA or a bag of presents from Santa’s helpers in the names of Handley or Rowbotham.
GDT auction average -0.3% but the devil is in the detail (7th November 2014)
The gains were clocked up in the March 2015 and beyond delivery contracts for WMP with gains of 7.5% and 10.4%. Given the fact around 60% of the product sold on GDT is WMP it has a huge influence on the outcome of the auction average.
Key movers of interest:
Cheddar down a whopping 9.2% to average $2728 tonne (£1710)
Butter down 4.1% to average $2505 tonne (£1570)
SMP down 1.2% to average $2457 tonne (£1540)
WMP up 1.6% to average $2522 tonne (£1580)
If you insert these figures into the DairyCo AMPE calculator you come up with a sobering AMPE of only 17.4ppl. It’s a simplistic view but it’s a sobering indicator.
Dairy Crest half year results (7th November 2014)
Whilst the main news has been DC’s sale to Muller they simultaneously released their half year results to the end of September. The results were in line with city analysts expectations.
Profit before tax is down 95% from £19.7 million (2013) to only £900,000.
The liquids division lost £12 million (excluding a £7.5m property sale proceeds)
Net debt has risen by 9% from £192.3 million (2013) to £209.6 million. Note, this reflects the significant investment DC are making at Davidstow and its DLVP processing plant.
Dairy Council for Northern Ireland secure £400,000 (7th November 2014)
The Dairy Council for NI has secured £500,000 of EU funding out of a total available of just under £4 million.
The funds will be used to support the promotion of cheese in Northern Ireland as well as exports to Third Country markets. The promotions run for three years and are match funded so the total spend will be around £800,000.
The Northern Ireland Third Country export programme will target China, Japan, South East Asia and Middle East.
Other countries to benefit from the promotional funds include GB, France, Ireland and Denmark.
Dairy Crest’s Philippines call centre cops for some stick (7th November 2014)
According to an article in The Western Daily Press Dairy Crest’s doorstep customers have “been left with a sour taste in their mouths for having to call The Philippines to order milk from a depot a mere two miles away from their homes.”
Residents in Henry Road, Hempsted, Gloucester were far from happy at knowing they were calling The Philippines capital city, Manilla, to handle their daily pinta orders and payments.
UK Milk Production (7th November 2014)
UK milk production for October was up by 67.2 million litres compared to production in October 2013.
Cumulative production up the end of October 2014 is up by 625.1 million litres compared to the same period in 2013.
Cheap Milk Watch (7th November 2014)
Costco, Gateshead selling Lanchester Dairies milk – 4 litres for £1.55 = 38.7ppl - That’s cheap milk!!
FREE TO GOOD HOME (7th November 2014)
1 x Pure Light Sussex Bantam Cockerel
2014 hatch very well marked. We could meet someone along the main roads or motorway between Newton Stewart down to Penzance if it helps. Email email@example.com
Muller to buy Dairy Crest’s struggling liquids division & an extra 1.3 billion litres of milk (6th November 2014)
Dairy Crest has agreed to sell its liquids division and assets to Mullers for £80 million. The deal includes DC’s liquid milk, cream, Frijj & flavoured milk, bulk butter and powder businesses. In terms of plant it includes DC’s Foston, Hanworth, Chadwell Heath and Severnside operations plus 73 depots.
The deal could take most of 2015 before it is given the green light from both Dairy Crest’s shareholders and the relevant Competition Authorities.
What does it mean?
It’s difficult to find any negatives in the marriage, which appears to be a very neat solution, which benefits the whole dairy industry.
It leaves DC with a very tight supplying farmer milk pool, amounting to 400 farmers, around its Davidstow factory, plus its spreads factory at Kirby, packing at Frome and its Nuneaton distribution depot. DC will be able to focus on its Davidstow demineralized whey powder and infant formula project.
It gives Muller an extra 1.3 billion litres of milk supply to make a 3.0 billion litre milk pool (Arla is circa 3.4 billion litres)
It adds 700 farmers to total 1900 plus Muller suppliers or 16.5% of the 11,500 GB producers (Arla has 3,300)
In addition, the milk fields Muller will take on compliment their existing fields.
No one will argue that consolidation has to happen, particularly, in the struggling liquids sector. If approved it will mean the GB dairy industry has two well invested, scale and efficient liquid milk processors in Muller and Arla and that must be a plus. Let’s face facts DC had a liquids division turning over nearly £1 billion a year making close to zero profit. That is unsustainable.
Muller will consolidate and its inevitable some operations and depots will be closed as Muller strive to strip out and reduce cost.
What next? Well other than the two approvals required as mentioned above the question is when will GB dairy see the middle ground consolidation starter horn sounded. They simply cannot all survive and its looking like a disaster zone today as they all chop the legs from under each other.
Finally, maybe a profitable shrunk DC will attract a takeover bid for the rest of its business and prized Cathedral City cheese brand aswell as Country Life butter and Clover brands.
The share price jumped 55p within minutes of today’s announcement and city analysts were telling clients to buy DC shares “today”, especially with the cash flow injection the sale to Muller will bring. At 14:00 hours today (Thursday) it’s share price was up almost 60p at £4.85.
1.8ppl milk price cut for First Milk’s cheese supplying farmers – from 1st December (6th November 2014)
This takes producers standard litre price down to 24.00ppl (www.milkprices.com)
1.4ppl milk price cut for First Milk’s so-called liquid pool supplying members – from 1st December (6th November 2014)
This takes producers standard litre price down to 22.7ppl (www.milkprices.com)
1.21ppl milk price cut for Lactalis suppliers – from 1st December (6th November 2014)
0.75ppl milk price cut for Barbours cheese suppliers – from 1st December (6th November 2014)
This takes producers standard litre price down to 27.92ppl (www.milkprices.com)
0.6ppl milk price cut for Wyke Farm suppliers – from 1st December (6th November 2014)
This takes producers standard litre price down to 26.45ppl (www.milkprices.com)
3ppl milk price cut for Arla Directs – From 1st December (31st October 2014)
This comes on the back of the 3ppl cut for November 1st so 6ppl in a month and it seems inevitable more price cuts will take place in the coming months especially in the first four months of 2015.
This takes producer’s standard litre down to 24.8ppl.
The direct pool totals around 40 million litres which is a little over 1% of the total Arla UK milk intake.
Arla have a choice.
(1) Reflect the real value of the milk given the fact that its direct pool is badged as surplus to their retail requirements.
Or (2) Maintain a price closer to the current Arla members price of 28.47ppl effectively cross subsidising.
Option 2 would risk a back lash from Arlas member suppliers so option 1 is the road they have taken and it’s a steep rocky road.
The issue for those Arla directs who are unhappy with the price is that whilst they could leave in three months time finding an alternative milk purchaser who will pay them the same or more for their milk will be an almighty challenge especially next spring.
1.5ppl milk price cut for suppliers to Grahams Dairies – From November 1st (31st October 2014)
This drop is certainly not a code complaint notice to producers.
It takes producers standard litre price down to 27.5ppl (www.milkprices.com)
No change for Dairy Crest prices for December (31st October 2014)
It’s stand on for Dairy Crest suppliers for December.
No Change for Muller Wiseman non aligned suppliers for December (31st October 2014)
It’s stand on for Muller Wiseman non aligned suppliers for December at 27.1ppl.
First Milk December price announcement (31st October 2014)
As we go to press First Milk have announced embargoed price adjustments on both its cheese and liquid contracts from December 1st. Ian has an important local charity fund raising event to attend so respecting the embargo you will hear more on the two price reductions next week.
GDT Auction next Thursday (31st October 2014)
The worlds dairy traders will be eagerly awaiting the results of next weeks GDT auction.
Forecast volumes of SMP and WMP to be auctioned in the next three auctions through to December have been reduced by Fonterra.
Fingers crossed less = more and the + 1.4% all products average price recorded at the last auction continues to rise.
Large numbers picket Irish owned Adams Foods (31st October 2014)
FFA paid a visit with 400 supporters to Adams Foods Leek which is owned by the Irish Dairy Board. The main gripe was the fact Adams are importing cheap cheese from its mother land which is going into value packs for caterers and retailers often irritatingly claiming it’s made from British and Irish milk.
Ian has had confirmation that Irish cheese is been touted at £2150/ tonne.
The outlook for Dairy is bleak (31st October 2014)
October AMPE stands at 21.4ppl down 17.5ppl in only 9 months and MCVE at 26.3ppl down 11.6ppl the same period. What are some of the key factors affecting ex-farm gate milk price forecasts.
i. New Zealand output to September 1st is up 12.5%
ii. The Russian import ban means 3% of EU milk output has to find a new home.
iii. UK milk production + 8.1% and EU 28 milk production + 5% to the 1st September.
iv. Chinas WMP and SMP imports have plummeted.
Its September SMP imports are down 45% (13,315tonnes) compared to those recorded in September 2013.
Its September WMP imports are down 37% (16,207 tonnes) compared to those recorded in September 2013.
The worlds Dairy Industry certainly needs China to get its shopping trolley out again and to return to the market.
Until then the outlook is bleak unless something happens to trigger a dramatic cut in world milk output.
Lake District Dairy Co Secure contract with Brakes (31st October 2014)
The Lake District Dairy Co, owned by First Milk, has announced a deal for its 2kg catering packs of Quark will be sold to Brakes catering suppliers who will deliver the products nationally to hotels, restaurants and catering outlets etc. This is a significant win for the commercial team at First Milk.
Dale Farm (United Dairy Farmers Co-op) secures cheese export business to Japan (31st October 2014)
Dale Farms stand at this weeks Paris show (SIAL) was a media and agricultural top brass magnet following their exciting announcement of a “significant contract” to sell Dale Farm cheddar into Japan from December.
The deal is with one of Japans leading food manufacturing companies Hoko Co Ltd.
Dale Farm recently completed a £50 million processing investment the result of which is its ability to produce 1,000 tonnes of quality cheddar each week.
Dale Farms milk comes from its 1,500 co-operative members.
Dairy Crest recalls two batches of milk from Foston (31st October 2014)
According to the Food Standards Agency (FSA) Dairy Crest have withdrawn two batches of milk from Morrisons and Budgens as a precaution after the discovery of cleaning fluid contamination. Both batches originated from Dairy Crests Foston, Derbyshire processing plant.
Story taken direct from Dairy Industry Newsletter (31st October 2014)
Dairy Crest's half-year results, due to be published on Thursday next week (November 6) will show zero pre-tax profit growth, according to a report in today's Investors Chronicle. The report says DC's dairies, which have produced tiny profits in recent years, will actually produce losses in the period, despite an £8m contribution from property profits. Things might improve in the second half but analysts aren't expecting profit growth for the full-year either. Rumours of contract renegotiations with Marks & Spencer and Wm Morrison are described as "unhelpful".
Phenomenal story as organic chocolate milk production increases by 4000% in October (31st October 2014)
Its an incredible story but in early October New Zealand dairy Lewis Road Creamery launched a Whittakers organic chocolate flavoured milk producing 1,000 litres a week.
Today the creamery is on double shifts and sweating its machinery & staff to turn out 40,000 litres a week.
The demand has been phenomenal with some shops limiting customers to two bottles each and one claiming it has had to put a security guard by the shelves to police purchasers.
Retail prices are 300ml bottles £1.80 and 750ml bottles £3.10.
Regrettably with the success has already come copy cat counterfeit product.
2ppl milk price cut for suppliers to The Wensleydale Creamery - from 1st November (24th October 2014)
This takes producers standard litre price down to 28ppl (www.milkprices.com)
No change to Arla’s November milk price (24th October 2014)
One swallow does not make a summer but the news that Arla has decided to hold its October milk price for its 13,500 owners through November is good news. Note, the forecast 13th payment has reduced to 0.57ppl (-0.08ppl). This takes Arla’s standard litre price down to 28.47ppl (www.milkprices.com) before the 0.45ppl AMCO fat tax.
However, you should not read too much into the decision to hold prices because regrettably the long term fundamentals have not changed. There is no sign of recovery in milk prices and further price falls seem inevitable.
What to do with DairyCo’s £600,000 windfall (24th October 2014)
DairyCo are one of the few businesses to benefit from the massive increase in GB production and have comfortably netted an additional £600,000 of revenue in the past 12 months alone, and its growing daily. It’s money they didn’t anticipate, didn’t budget for, and consequently shouldn’t have earmarked for anything.
But what to use this windfall on? Simple, in the opinion of Ian, David Handley and an increasing number of farmers. They need to use it, together with any match funding they can attract, to help farmers adapt and plan in this new volatile world, and to increase the promotion and defence of milk products to help them on the domestic market.
DairyCo desperately need an intravenous injection to improve their credibility with levy paying farmers who are in uncharted waters and facing a crisis. They have a new chairman at a time when many farmers are increasingly questioning what they achieve with the levy money.
Let’s hope DairyCo step forward and use the windfall wisely in areas like providing better quality information, analysis and signposting to dairy farmers and to promote dairy against a relentless attack of the anti dairy brigade.
Arla call on its 3,000 UK members to promote British dairy products (24th October 2014)
Arla are calling on its 3,000 UK farmer owners to help promote their own dairy products to British shoppers.
The campaign will call for shoppers to put British dairy products in their shopping baskets like Anchor, Cravendale and Lurpak under the banner of “Support Our Farmers”.
In one of the largest consumer advertising and PR campaigns the dairy industry has seen for years, perhaps ever, and which marks a major strategic change for the company to link farmers and their brands with consumers, the campaign is being backed up with advertisements in the national press, together with leaflets and social media. The face of the campaign is the industry’s new pin-up Pirelli calendar girl Barbara Hughes.
Let’s be honest if one in four British dairy farmers can’t back and promote the campaign and their own products it’s a poor show. Who better to promote the brands than the farmers who own them, and who get the profit from the sales.
Arla’s Support our Farmers initiative in numbers (24th October 2014)
One Goddess fronting up the initiative (Barbara Hughes).
One twitter account @arlafoodsuk #supportarlafarmers.
Five brands being highlighted. Cravendale, Lactofree, Anchor, Castello, Lurpak.
Twenty newspaper insertions in National daily and Sunday papers.
Hundred (+) major retailers, discounters, food service businesses being spoken to about the merits of trading with a farmer-owned business.
Three thousand UK farmer owners set to benefit.
Four thousands Arla employees mobilised to support the campaign.
Thousands of leaflets and fliers printed and distributed.
Millions of consumers being communicated to through PR and newspaper adverts.
Billions of words spoken by farming leaders over the years calling for initiatives to better connect farmers with consumers, and hundreds of articles and opinion pieces written by the likes of The Farmers Weekly reiterating the need for those initiatives.
Six lines of copy (yes, six lines) devoted by the self same Farmers Weekly when a scheme that does EXACTLY what it has been rabbiting on for years about, actually does come along.
One word to sum up our leading agricultural paper: Shameful.
European cheese is filtering into Russia (24th October 2014)
Evidence has emerged that EU cheese is entering Russia through the back door in what is effectively a grey market.
Whilst Russia banned the direct importation of a number of EU dairy products, notably cheese, it appears to be turning a blind eye to the re-export of EU cheese which will help reduce the downward spiral.
England V Lithuania – Euro 2016 Qualifier (24th October 2014)
Venue: Wembley Date: Friday 27th March 2015 Time: 19:45 hours
Ian has priority booking for up to 8 tickets. If you are interested email firstname.lastname@example.org for more details.
READER OFFER – Free pinpointpal GPS tracker (24th October 2014)
Some new technology we just instantly know is applicable for farming.
Ian Potter Associates has partnered with a pinpointpal to bring you a fantastic reader offer in this weeks newsletter.
Pinpointpal is a British designed and made GPS vehicle tracker. Easily installed into your chosen vehicle or piece of equipment, pinpointpal then connects to a free downloadable app on any apple or android device, or connect via the internet, to give you real time location information every minute of everyday. To learn more simply visit www.pinpointpal.com
To that end we want to find farmers to test out this new generation of very small, very cost effective type of vehicle tracker.
Why should you consider fitting a tracking device? Well, the latest NFU Mutual Rural Crime Survey found that rural theft now stands at £44.5m (2013) up 5.2% on the previous year. Thieves are targeting both high value tractors, but also lower value equipment that are not fitted with high tech systems.
Quad bikes and ATVs are increasingly being targeted with the cost of thefts up a staggering 14% in 2013.
To help combat this, one of the many free services included with pinpointpal are free movement alerts, sending notification direct to you if your vehicle has been moved outside of its own personal ‘defined limits beyond which an alert will be generated’ boundaries you set. If this is because it has been stolen then simply keep the police informed of its location and recovery can be made quickly before any harm is done.
This is a fantastic device (Ian has got one) and clearly the major benefits of the device are for normal theft tracking and health and safety in remote locations. And the good news is that we have 10 units to give away to 10 lucky readers. To take advantage of this great offer just mail us at Lydia@ipaquotas.co.uk and tell us what application you plan to use it for and why you would benefit from pinpointpal. The unit is totally free, normal price £250 inc. vat and includes 2 years free monitoring. There are no hidden cost extras!
2.29ppl milk price drop for Tesco cheese suppliers – from 1st November (17th October 2014)
This takes producers standard litre price down to 33.36ppl (www.milkprices.com)
0.843ppl milk price drop for Dairy Crest Formula Contracted producers (17th October 2014)
This takes producers standard litre price down to 30.48ppl for the liquid core formula contract and 30.391ppl for the simplified and core formula contracts for those who signed in July/October and 30.581ppl for the April Core formula signees. (www.milkprices.com).
It leaves the DC formula price a healthy 3.23ppl higher than the current DC standard liquid price.
0.8ppl milk price drop for Waitrose suppliers – from 1st November (17th October 2014)
This takes producers standard litre price down to 34.1ppl (www.milkprices.com)
World auction average up 1.4% - but don’t put the bunting up yet (17th October 2014)
It was certainly an encouraging sign to see this week’s GDT auction price average 1.4% more than it did two weeks ago. Key details of the movers were as follows:
WMP up 3.1% to average $2503 / tonne
Butter up 3.9% to average $2614 / tonne
Cheddar down 1% to average $3007 / tonne
SMP down 3.6% to average $2462 / tonne
Westbury SMP down 4.7% to average $2415 / tonne
The last time the average SMP price was at this level was in early June 2011 and at the current level of $2462 it’s close to 50% of its value recorded 10 months ago in early January.
The slight upward movement in this week’s average GDT price is, fingers crossed, a small glimmer of light in an otherwise very long and dark tunnel dairy farmers are stuck in.
EU Commission report predicts a 3.7% milk production increase (17th October 2014)
The Commission’s latest dairy report confirms that to the end of July 2014 the twelve month increase in production from 27 member states amounts to +5.8%.
The report also states that the average time lag between low commodity prices translating to farm gate milk prices is between 3 to 6 months.
By November EU milk production is expected to dip below that of November 2013 and during 2015 is expected to increase by a more moderate 1.6%.
The cumulative 2014 milk production is predicted to be +3.7% on that recorded in 2013.
Big turnout for FFA protests (17th October 2014)
Co-op Andover, Hampshire – 300 farmers plus 6 tractors
Dairy Crest, Foston, Derbyshire – 200 farmers plus vehicles.
Iceland Junction 21 M6 (Thelwell) - Towards 150 farmers. No doubt numbers were boosted following claims made earlier this week by Iceland that they have “The cheapest milk in the UK” offering 4 pints for 89p!!!!!!
Penrith dairy farmers meeting – 560 attended
TV crews have struggled to get up and down the country to keep up with the swelling numbers of meetings.
Lactalis rub salt in wounds of struggling producers (17th October 2014)
Below is an extract from an article written by Douglas MacSkimming of The Scottish Farmer. One question is, does the Voluntary Code offer any help?
A GROUP of 20 milk producers supplying cheese manufacturer Lactalis at Stranraer have been rocked by the news that their milk cheque is to be cut by three pence per litre to cover the cost of collection.
The producers – all from over the Border in Cumbria – were given the shock news at the beginning of this week.
Wigtownshire farmer Rory Christie, chairman of the Milk Supply Association which supplies Lactalis and the Caledionian Cheese Company, told The Scottish Farmer: “I am in critical discussions with Lactalis over this matter. This is not the way producers should be treated.
“Some 26 Cumbrian producers have been supplying Lactalis on a year’s contract which came to an end on October 1,” he explained. “Five were lucky to leave and find another buyer, but the remainder have been told that, while their milk will still be collected until they find a new buyer, they will be charged 3p. This is not a good situation.”
The Dairy Council hits out at anti-dairy extremists (17th October 2014)
This week the Daily Express headlined an article “Is milk giving you concern? Seven reasons to ditch dairy.” It follows hot on the heels of a similar extremist article, which appeared in the Daily Mail.
Fortunately, the Dairy Council stepped forward onto the front line to defend the image of British dairy products and published a hard hitting industry response to the article with well research facts. Well done.
Financial support is on the radar for dairy farmers in Finland, Estonia, Lithuania and Latvia (17th October 2014)
The EU Commissioner has indicated that targeted financial support could be made available to support dairy farmers in the above countries who are judged to be hardest hit by the Russian embargo.
In terms of the percentage of their dairy output exported to Russia pre-7th August 2014 the numbers are:
Arla explores new ways to allow dairy to be included in food aid programmes (17th October 2014)
Arla are calling for industry support for dairy ingredients to be included as part of emergency food programmes. Dairy ingredients are not included at present due to cost concerns, however, Arla are hoping to demonstrate from its research that dairy ingredients are affordable and cost effective due to how nutritionally packed
3ppl milk price drop for Arla Directs suppliers from 1st November 2014 (10th October 2014)
This takes producers standard litre price down to 27.8ppl (www.milkprices.com)
2.4ppl milk price drop for Paynes Dairies suppliers from 1st October 2014 (10th October 2014)
This takes producers standard litre price down to 26.6ppl (www.milkprices.com)
2.25ppl milk price drop for Meadow Foods suppliers from 1st November 2014 (10th October 2014)
This takes producers standard litre price down to 25.85ppl (www.milkprices.com)
1.75ppl milk price drop for Yew Tree Dairy (Woodcocks) from 1st November 2014 (10th October 2014)
This takes producers standard litre price down to 27.5ppl (www.milkprices.com)
1.65ppl milk price drop for Helers Cheese suppliers from 1st November 2014 (10th October 2014)
This takes producers standard litre price down to 27.44ppl (www.milkprices.com)
1.5ppl milk price drop for Belton Cheese suppliers from 1st November 2014 (10th October 2014)
This takes producers standard litre price down to 27.15ppl (www.milkprices.com)
1.5ppl milk price drop for Glanbia Cheese producers from 1st November 2014 (10th October 2014)
This takes producers standard litre price down to 26.9ppl (www.milkprices.com)
Gwyn Jones takes on the challenge of DairyCo Chairman (10th October 2014)
It is six months since Tim Bennett finished as Chairman of DairyCo and at last the government has announced the appointment of Gwyn Jones as replacement Chairman.
Peter Kendall will no doubt be pleased to have one of his NFU’s dream team whom he can trust working with him again.
Gwyn has certainly taken on a big job because DairyCo takes £6.5 million of farmers’ money and the grass roots current feedback is that they are considered poor value for money and have gone into ostrich mode and have buried their heads in the sand when it comes to tackling difficult issues, particularly posting its levy paying farmers as to where milk prices are heading.
NFU claims are jaw dropping (10th October 2014)
Until this week the NFU have been publically invisible in connection with the current dairy industry milk pricing crisis. On Monday their communications and spin department welded into action as the so-called big gun was quickly wheeled out.
On the NFU’s website President Meurig Raymond opened up a piece on milk prices with what was an astonishing claim.
“Today the issue of milk prices has made it onto the BBC after press briefing from the NFU.”
Sorry, but I think we all know the issue of milk prices made it onto the BBC following FFA’s comments, dialogue, protest announcements and media briefings at the weekend and during the previous week.
On Tuesday a second NFU press release stated when referring to the 2012 crisis “The NFU led the way with SOS dairy holding peaceful protests, and taking the campaign to retailers and processors. We engaged directly with the public and their support continues to stand us in good stead today.”
This second statement smacks of breath taking arrogance and a re-writing of history and simply cannot go unchallenged.
David Handley and FFA led SOS dairy where they galvanised unprecedented public support. FFA even had the SOS song written by one of its supporters The Dobro Doctor.
Granted the NFU did wheel out its top gun Peter Kendall who stood shoulder to shoulder with David and whilst the two didn’t always agree they did work well with each other for the benefit of the industry for a while. In fact, it was a gritty Northern branch of FFA from Yorkshire who kick started the protests.
For the NFU’s spin doctors to make such a claim is disrespectful to FFA and every person who stood on the picket lines in 2012.
Farmers look to David Handley & FFA to take the lead (10th October 2014)
FFA has been quick to come out to face and help dairy farmers who are witnessing a serious winter of milk price meltdown and despair.
Monday saw Muller take on FFA head to head with the release of an antagonistic press release headed “Militants asked to stop and think before damaging the industry”
Muller pre-judged the protest as one threatening illegal blockades and referred to FFA as a militant group like some sort of radical fundamentalists.
One commentator drew the comparison between Kerrs and his press release being like as new willy-waving pupil going to a new school and walking into the playground and smacking the biggest older lad in the month in front of 500 of his mates and expecting to get away with it.
Regardless of the press release there were huge turnouts of 1200 farmers for this week’s protests at Market Drayton (Monday) and Bridgwater (Wednesday). On Monday the protest was at the Muller factory whilst on Wednesday it was the turn of Morrisons whose current liquid milk tendering and lack of commitment to UK dairying is quickly attracting attention and making them dairy farming’s number 1 enemy and a prime FFA target. If that translates to consumers voting with their feet Morrisons boss Dalton Phillips will be very lonely.
The Voluntary Code Review (10th October 2014)
It’s taken almost 8 months for The Rt Hon Alex Fergusson MSP to review and report on the Voluntary Code of Best Practice the results of which were released this week.
The unfortunate timing of the codes review means it is of less interest to farmers that it was six months ago when responses and submissions were invited. Not that it was ever a must read.
The big issue now is collapsing milk prices not notice periods or the ability to sell milk to two processors. For some finding one processor willing to accept milk is a real issue with some farmers having to accept under 18ppl at farm gate level.
The staunch defenders of the code will continue to refer to it whenever they can but with co-op’s operating as they do it’s hard to see how the review will help gain traction and interest. The reality is you could probably count the number of people seriously interested in the code on one hand.
UK Milk Production is still strong (10th October 2014)
UK milk production for September was up 7.4% (+79 million litres) compared to production in September 2013.
Cumulative production for the first 6 months of the quota year is up 8% (+552 million litres) to 7.4 million.
Muller suffers £55 million loss (10th October 2014)
This was the headline in this week’s Shropshire Star.
A large part of the loss is attributed to the integration of all Mullers UK businesses which were brought into one entity.
Muller maintains the underlying profit of the business compares favourably to the previous year, however, no numbers or meat on the bones were volunteered.
How do Handley’s find the time? (10th October 2014)
Whilst David Handley is the leader and ambassador for FFA, like most people behind every good man is a good woman kicking him up the arse. Not only does Marilyn run the farm in his absence she is also very active behind the scenes with FFA as well as putting up with David!
This is the outcome of her recent complaint to the Press Complaints Commission, which as been published on their website this week and is a credit to her:
Mrs Marilyn Handley
Clauses Noted: 1
Publication: Daily Mail
Mrs Marilyn Handley complained to the Press Complaints Commission that the newspaper had breached Clause 1 (Accuracy) of the Editors' Code of Practice in an article containing advice on how to stem constant tiredness. The complainant said that cows are not injected with hormones to keep them producing milk; that they are not treated with antibiotics which can pass into milk consumed by humans; and that it was inaccurate to say that milk is allowed to have a certain number of red and white pus cells in it.
The complaint was resolved when the PCC negotiated the removal of the article from the newspaper's website and the publication of the following correction in the print newspaper:
"A book serialisation of The Tiredness Cure by Dr Sohere Roked on September 1 said that hormones and antibiotics injected into dairy cattle can pass into retail milk, that there is a legal limit for the number of pus cells it may contain, and that most flour is ‘bleached'. We are happy to clarify that it is illegal to use hormones to stimulate milk production in the UK, that testing prevents antibiotics from passing into retail milk, and that the limit relates to all somatic cells. Flour is no longer bleached in the UK."
Date Published: 06/10/2014
Independent Press Standards Organisation
c/o Halton House
London EC1N 2JD
The Daily Mail earlier printed:
2.25ppl milk price drop for South Caernarfon Creameries suppliers – from 1st November (3rd October 2014)
This takes producers standard litre price down to 26.76ppl (www.milkprices.com).
2ppl milk price drop for suppliers to The Fresh Milk Company (Lactalis) – from 1st November (3rd October 2014)
This takes producers standard litre price down to 28.45ppl (www.milkprices.com).
1.9ppl milk price drop for Muller Wiseman suppliers – from 1st November (3rd October 2014)
This takes producers standard litre price down to 27.1ppl (www.milkprices.com). The total cut in recent months amounts to 6.5ppl.
1.75ppl milk price drop for Barbers suppliers – from 1st November (3rd October 2014)
This takes producers standard litre price down to 28.85ppl.
1.5ppl milk price drop for Wyke Farms suppliers – from 1st November (3rd October 2014)
This takes producers standard litre price down to 27.05ppl (www.milkprices.com).
1.5ppl milk price drop for Blackmore Vale Farm suppliers – from 1st October (immediate) (3rd October 2014)
This takes producers standard litre price down to 29.75ppl (www.milkprices.com).
1.3ppl milk price drop for all Dairy Crest producers – from 1st November (3rd October 2014)
This takes producers standard litre price for DC cheese (Davidstow) contracted producers down to 29.04ppl and for its liquid contracted producers down to 27.04ppl (www.milkprices.com). For DC’s organic milk suppliers the price remains unchanged at 39.68ppl.
1ppl milk price drop for First Milk liquid contracted members – from 1st November (3rd October 2014)
This takes producers standard litre price down to 24.1ppl (www.milkprices.com). Members have seen 8.4ppl (26%) wiped of their milk price in only 6 months.
0.3ppl milk price drop for First Milk Cheese contracted members – from 1st November (3rd October 2014)
This takes producers standard litre price down to 25.8ppl (www.milkprices.com).
GDT prices fall a further 7.3% (3rd October 2014)
This weeks GDT results could only be described as a disaster as an average 7.3% was wiped off prices recorded only two weeks ago.
Key movers were as follows:
WMP down 10% to average US $2443/tonne
Butter down 6.6% to average US $2514/tonne
Cheddar down 1.2% to average US $3028/tonne
SMP down 2.7% to average US $2540/tonne
Westbury SMP down 1.2% to average US $2535/tonne
One of the concerns behind the numbers is the fact that in the case of WMP the biggest drop of 10.7% occurred for the January delivery powder.
Similarly the biggest drop in SMP prices came for April 2015 delivery, which fell 5.8%. Clearly the long term view is not good based on these trades.
GDT auction prices for WMP have more than halved in the space of 8 months (-52%) whilst average SMP prices are close behind having dropped 48% in the past 9 months.
What do these numbers mean? (3rd October 2014)
If you take an EU butter price of £2300/tonne and the average Westbury GDT price of £1563/tonne the resulting AMPE is 21.3ppl.
Note, there are some who are incorrectly inserting a world butter price of £1550/tonne, as per the GDT auction results, which delivers an AMPE of only 17.6ppl. This is inaccurate and ignores EU import taxes. It does, however, give a pointer towards ex-farm gate milk price.
SFP exchange rate for 2014 payments (3rd October 2014)
The exchange rate will be 1 Euro = 77.73p. Another blow for dairy farmers as the rate paid drops by 5.875p (7.0%) compared to last years.
Previous rates have been:
1.7ppl milk price drop for United Dairy Farmers members - from 1st August (26th September 2014)
This takes producers standard litre price down to 27.24ppl (www.milkprices.com)
1.75ppl milk price drop for Grahams Dairies suppliers - from October 1st (26th September 2014)
This takes producers standard litre price down to 29ppl (www.milkprices.com)
Dairy Crest (DC) to close two more factories (26th September 2014)
DC are in consultation with 260 employees at its doorstep glass bottling plant at Hanworth, London and its cream potting plant in Chard, Somerset, both of which will close by 2016.
The anticipated closure costs amount to £15million.
At the same time, DC informed the city that its 6 monthly financials to the end of September are in line with expectations, however, it also confirmed that despite its dairies (liquid) operation has once again made a loss despite a sizeable increase in property sale profits.
EU close Private Storage Aid (PSA) for cheese after less than 3 weeks (26th September 2014)
The EU has closed the doors on further PSA for cheese due to an unexpected tonnage coming from areas of Italy who do not traditionally export to Russia. The door closing was done to give the EU some thinking time in order to avoid the possibility of hitting the 155,000 tonne limit quickly, however, there are no immediate plans to re-open PSA for cheese.
In the 13 days between the 8th and 21st September a staggering 100,000 tonnes of cheese were offered into the PSA scheme. Of this, the Italians accounted for 84,000 tonnes yet their total exports of cheese to Russia in 2013 totalled 7,000 tonnes.
1.67ppl (2 Euro Cents) price drop for Arla Foods AMBA members (25th September 2014)
Arla have announced one of their biggest producer price drops for their 13,000 members, of 2 Euro Cents from 29th September. The total GB adjustment equates to 1.67ppl, including a quarterly currency exchange rate adjustment. At the same time the butterfat reconciliation (AKA the fat tax) has been reduced from 0.6ppl to 0.45ppl from 1st October.
In addition Arla’s forecast end of year (31st March) 13th payment has been adjusted down from 0.81ppl to 0.65ppl (-0.16ppl) and whilst this is constantly under review producers should plan for this to either hold or be adjusted down further by the end of the year.
Arla’s problem appears to be the same as that of all other Dairy Companies - their European milk intake is up 7% and turnover/revenue is declining due to the dramatic impact from falling global dairy commodity prices in particular those driven by China and more recently the Russian import ban.
There are numerous questions which spring to mind in relation to future milk price drops, four of which are: (25th September 2014)
32ppl Tesco milk price until Spring 2015 (24th September 2014)
Tesco have announced the TSDG price for the next six month period to 1st May 2015, commencing 1st November 2014, which will be a healthy 32.01ppl, including the 0.5ppl Promar supplement or 31.51ppl excluding this element.
All of Tesco’s liquid processors are paying prices well below the Tesco cost tracker, hence the new price is a cost of production price.
Whilst the new price represents a reduction to the current one few, if any, TSDG members will blink realising that Tesco had good grounds for reducing the price they pay for liquid milk several months ago. As it is Tesco have cushioned any blow during those months and have actually held the price they pay for the past 7 months.
The next review will be for prices from 1st May 2015.
GDT auction average unchanged (19th September 2014)
Tuesday’s Global Dairy Trade auction produced an average all products index identical to that recorded two weeks ago.
Within the average were some notable movements and scary averages:
Cheddar Cheese down 6.5% to average $3077 tonne (£1885)
BMP down 6.9% to average $3140 tonne (£1925)
Butter down 2.5% to average $2698 tonne (£1641)
WMP up 0.6% to average $2692 tonne (£1650)
SMP up 0.9% to average $2619 tonne (£1605)
Westbury/Arla SMP down 6.2% to average $2565/tonne or £1570 …. Ouch!!
Spot Milk Price Watch (19th September 2014)
Current prices vary on a daily basis but seem to be around 27ppl +/- 2ppl. A cold snap of weather would do a lot to boost liquid milk sales and spot milk sales.
2.27ppl milk price drop for Muller Wiseman formula contracted suppliers – from 1st October (19th September 2014)
This takes producers standard litre price down to 29.14ppl. Muller Wiseman’s total 2014 formula price cut amounts to 5.41ppl.
0.5ppl (0.498ppl) milk price drop for Dairy Crest Formula contracted suppliers – from 1st October (19th September 2014)
This takes producers standard litre price down to 31.43ppl (liquid formula) and 31.23ppl (simplified liquid formula), which is a tasty 3.2ppl above the current standard Dairy Crest liquid standard litre price. Dairy Crest’s total 2014 formula price cut amounts to 1.3ppl.
0.62ppl milk price drop for Sainsburys aligned suppliers – from 1st October (19th September 2014)
This is a cost of production adjustment and takes producers standard litre price down to a respectable and for some an envious:
32.41ppl – Muller Wiseman
32.29ppl – Arla
32.35ppl – Dairy Crest
Sainsburys total 2014 price cut is therefore 1.74ppl
All standard litre prices quoted are those calculated by www.milkprices.com
Milkprices.com commented as follows:
“If the current level of production cost in the SDDG milkpool is supposedly 32.41ppl, (a First Milk producer) having to run a business moving forward on a milk price of 25.1ppl and 26.1ppl depending on whether supplying Liquid or Manufacturing pools respectively, is to put it mildly, a hymulayan task. With a respective difference of 7.3ppl and 6.3ppl for our standard 1mltr/yr supplier, this accounts to annualised differences of £73k and £63k compared with our SDDG supplier—serious sums of money when one considers the prospect that total annual milk revenues from this size of businesses is around £250k to £260k based on the latest First Milk prices.”
The only issue here is that our contention is that First Milk’s liquid contract is not what it states on the label.
Big turn out at FFA dairy meetings (19th September 2014)
FFA have held two meetings one in Frome and last night a second in Market Drayton. Producers attending both meetings and representing in excess of 1 billion litres have pledged their support to FFA and last night’s crowd of 500 plus took Chairman David Handley by surprise. There was clear evidence of real pain and hardship from the audience. Several reports confirm that NFU Dairy Chairman Rob Harrison came under attack from the audience with reference to his presentation and comments at the Telford Dairy Day Show only 24 hours earlier.
For the moment, FFA and Handley are keeping their powder dry until at least the 1st October by which time Tesco’s cost of production will be public and any further price cuts for 1st November will be known.
In connection with any additional price cuts Ian is firmly putting his money on the fact some liquid processors will struggle to explain and justify why they need to cut further and that that will be the overnight trigger for Handley & FFA to step onto the front line with their troops to try and change the game plan.
DAIRY CRISIS MEETING - CARMARTHEN LIVESTOCK MARKET - THURSDAY 25 SEPTEMBER 2014 - 7.30pm for 8pm
FFA will welcome members and non members to another Dairy Crisis Meeting at Carmarthen Livestock Market on Thursday 25 September 2014. 7.30pm for 8.00 pm when the speaker will again be David Handley.
Bring along your neighbours and friends, he says, to make up a car load and share your views on the way forward in the current turmoil within the industry. The restaurant will be open to serve light refreshments.
Arla Announcements (19th September 2014)
Arla have announced two international investments.
The first is a new factory in Denmark, which will triple Arla’s capacity to produce whey protein hydrolysates, which is a key ingredient in sports, nutrition as well as infant allergy products. It should be up and running in around two years and will cost an estimated £32.5 million.
The second announcement is Arla’s bid to acquire an Egyptian firm Arab Dairy Products as Arla seeks to establish itself as one of the big 6 dairy players in Egypt.
Next Week (19th September 2014)
It is anticipated that Tesco will announce its half yearly cost of production number crunching and the TSDG milk price from 1st November.
1.9ppl milk price drop for Meadow Foods suppliers – from 1st October (5th September 2014)
This takes producers standard litre price to 28.1ppl (www.milkprices.com)
1.8ppl milk price drop for Glanbia Cheese – from 1st October
This takes producers standard litre price to 28.34ppl on the constituent contract (www.milkprices.com)
This takes producers standard litre price to 28.40ppl on the base contract (www.milkprices.com)
1.5ppl milk price drop for Crediton Dairy suppliers – from 1st October (5th September 2014)
This takes producers standard litre price to 30.86ppl (www.milkprices.com)
1.0ppl milk price drop for Paynes Dairies – with immediate effect from 1st September (5th September 2014)
This takes producers standard litre price to 29.00ppl (www.milkprices.com)
1.0ppl milk price drop for South Caernarfon Creameries –from 1st October (5th September 2014)
This takes producers standard litre price to 29.01ppl (www.milkprices.com)
The Russian EU dairy product import ban (5th September 2014)
The rumours of a possible truce between Russian and the Ukraine desperately need to be converted into reality asap following which pressure should be applied to re-open the export trade from the EU to Russian in a bid to stabilise EU dairy product prices. As it is Russia is attempting to replace EU product from other sources and its struggling.
One of the volume sources for product is Argentina, however, they have thrown a spanner in the works with a limit on exports of dairy products with the introduction of high minimum export prices.
For example, SMP is trading at around $2700/tonne (GDT auction average was only $2600/tonne) and Argentina’s minimum export price is $4000/tonne.
According to Greenmark Dairy Ingredients so far as the EU is concerned to put the Russian ban into perspective during 2013 Russia’s total EU dairy imports was equivalent to 2.2 million tonnes of milk.
Bringing this back to a butter and SMP equivalent the 2.2 million tonnes represents 268,000 tonnes of SMP and 70,000 tonnes of butter.
The bad news continues with GDT average down another 6% (2nd September 2014)
Today’s GDT auction results hold no cheer and not even a glimmer of light for dairy farmers as the average price weighed in at $2787 down 6% on that achieved two weeks ago with all prices recording negative movements. The last time the average was at this level was in July 2012.
Key prices of interest:
SMP down 9.5% to average $2600/tonne – a drop of 45% in only 7 months
BMP down 12.9% to average $3174/tonne – a drop of 34% in only 7 months
Cheddar down 4.9% to average $3275/tonne – a drop of 34% in only 7 months
Butter down 5.6% to average $2753/tonne – a drop of 42% in only 7 months
WMP down 4.3% to average $2673/tonne – a drop of 47% in only 7 months
Arla Westbury SMP down 8.7% to average $2735/tonne down 31% in less than 5 months
To put this into context at current exchange rates if you insert today’s GDT average for butter (£1657/tonne) and the Westbury SMP GDT average (£1646/tonne) into the AMPE formula you get a figure of under 19ppl - Ouch
3ppl milk price cut for all First Milk members – from 1st October (1st September 2014)
It was black Monday for First Milk members most of whom were no doubt shell shocked to learn of this latest 3ppl across the board price cut. First Milk have not dressed up the background to the latest cut simply to state it gives them a milk buying price in line with current market returns.
In terms of its milk buying competitors the gap between First milk and others is certainly widening but they have to do what they have to do in an attempt to balance the books. One thing is certain some of their members have no alternative but to either buckle up and accept the cut or exit the industry because changing milk buyers is not an option.
So in the space of 5 months First Milk’s liquid contracted producers have seen 7.4ppl knocked of their milk price equivalent to an eye watering 30% drop to give a 1st October standard litre price of only 25.1ppl.
For its cheese contracted producers it’s been a case of five consecutive cuts totalling 6.4ppl to produce a new 1st October standard litre price of 26.1ppl.
It’s for First Milk members to ask questions and comment but no doubt their initial reaction will be the same as Ian’s as the thud of his jaw hitting the floor could be heard.
This is starting to look like an industry plunging into crisis at speed and whilst only one month ago in this column Ian stated that some producers would be on 25p before Xmas he never imagined it would be by 1st October.
There are now suggestions that some could receive a milk price below 22p by January and even 20ppl has been mentioned. It’s grim and as one recognised EU guru commented to Ian today “It’s going to be a blood bath with casualties.”
1.5ppl milk price reduction for suppliers to Yew Tree Dairy (Woodcocks) – from 1st October (1st September 2014)
This takes producers standard litre price to 29.25ppl (www.milkprices.com)
1.75ppl milk price reduction for suppliers to Dairy Crest – from 1st October
This produces the following standard litre prices:
1.5ppl milk price drop for Wyke Farms suppliers - from 1st October (1st September 2014)
1.5ppl milk price drop for Belton Cheese suppliers - from 1st October (1st September 2014)
This takes producers standard litre price to 28.65ppl (www.milkprices.com)
1.8ppl milk price reduction for Muller Wiseman non aligned farmers –from 1st October (29th August 2014)
This takes producers standard litre price down to 29ppl (www.milkprices.com)
1.75ppl milk price reduction for Dairy Crest non aligned farmers –from 1st October (29th August 2014)
This is yet to be confirmed and is the word on the street!
1.03ppl milk price reduction for United Dairy Farmers Co-op members – for July deliveries (29th August 2014)
This takes producers standard litre price to 29.34ppl (www.milkprices.com)
European Commison (EC) step forward with emergency measures (29th August 2014)
The EC will open up Private Storage Aid for butter, SMP and some exported cheeses in an attempt to cushion the fall out from the Russian import ban. The storage aid will cover the storage costs for between three to seven months.
In addition intervention for butter and SMP will continue until at least the end of 2014.
Commissioner Ciolos commented
“Where material risks of market destabilisation appear, I will continue to use the new CAP to act pre-emptively to stabilise the market.”
Note the Commission has already agreed emergency support measures for peaches and nectarines and perishable fruit and vegetables.
Lets hope the scheme covers cheddar.
Dairy SOS 2014 targets DEFRA/Government (29th August 2014)
The deepening dairy crisis, which has been escalated as a result of the Russian ban on all major EU dairy products, has triggered a change of focus by FFA. Dairy markets were already falling and the Russian ban means they are now set to collapse, and FFA is adamant that hard working dairy farmers should NOT pay the price for this politically orientated market collapse.
High stock levels put into storage are a short term solution and inevitably get released back on the market when any crisis is over. This invariably delays price recovery. Perhaps for months or a year!
FFA says is now time for the UK Government to step forward and support dairy, so it has organised an online petition calling on DEFRA ministers and the Government to step forward and buy some of the surplus cheese and butter with a view to distributing it free via food banks, thus preventing stock-piling that will only affect you several months down the line, and short-term large-scale price falls.
It is believed that this along with a buy British Campaign is almost certain to receive widespread public support and backing.
The idea was put to FFA on Tuesday morning and its Chairman David Handley seized the opportunity with both hands realising the Government hold the keys to helping to solve two problems – food surpluses caused by Russia and food poverty. How Cameron’s popularity would rise before the election!
Questions will be asked by a few as to why the NFU’s, RABDF or Dairy Co etc did not think of the idea, or were not offered it. Answers on an email.
This is about a few people in this industry making things happen. Forget a 2020 strategy and vision, we need a 2014 and 2015 solution NOW! We don’t need a ‘leading the way’ (with no leader) document, nor a “compete to grow” document where dairy farmers are encouraged to churn out more milk (when we’ve no processing and now fewer markets), no “White paper”, no similar do-good strategy documents. Further details of other ideas under consideration will be posted on this website this week. Fingers crossed that grass roots farmers will persuade all their friends, neighbours, suppliers and contacts to sign up and there will be media support.
Other ideas are in the pipeline require some investment. There lies another problem in so far as those who take subscriptions and levies from Dairy Farmers tend to have a “can’t do” mentality, regularly placing obstacles in front of ideas as to why they can’t get involved because it is outside of their so called remit.
Remember: There are those who make things happen. Those who watch things happen and those who wonder what happened.
It’s your industry. Things need to happen now. Quickly. Let’s make things happen.
For details of the petition log on to http://www.farmersforaction.org/4.html
Email comments on the food bank idea to email@example.com and I’ll pass them on.
Fonterra to build 1.6 billion litre/year drier (29th August 2014)
Fonterra is set to invest around £208 million in its domestic processing capacity including a new high capacity drier in the North Island capable of processing 4.4 million litres/day or 1.6 billion litres a year and producing 30 tonnes of WMP per hour. The Co-ops investment includes a new drier at one of its South Island plants.
GDT results are mixed but still grim (22nd August 2014)
This Tuesday’s GDT auction results on the face of it looked encouraging; however, the devil is in the detail.
Overall, the average was down only 0.6% to the auction price recorded two weeks ago. Notable price moves were as follows:
Butter +4.9% to $2940 tonne or £1770 tonne
WMP +3.4% to $2804 tonne or £1688 tonne
Cheese -7.9% to $3453 tonne or £2079 tonne
Arla Westbury SMP -12.0% to $2995 tonne or £1800 tonne
Average -0.6% to $3000 tonne and the lowest for two years
If you take the GDT average auction butter price @ £1770 and the GDT Arla UK SMP average auction price @ £1800 and plug both into the 2014 AMPE calculation it gives you a tearful 21ppl AMPE.
If you take the current average Dutch butter price (€3200 tonne) and the average Dutch food grade SMP price (€2150) the AMPE comes out at just over 24ppl (24.1p).
It doesn’t matter whose figures you use the result is bleak.
Queen and “Under Pressure” as Russian ban bites (22nd August 2014)
The Russian ban on EU dairy products is starting to bite very hard, particularly, for cheese which is dropping in value almost daily.
Current EU quotes suggest values of only €2800 tonne (£2250 = to circa 22.5ppl). Latest figures to June 2014 confirm that Russian imported 110,000 tonnes (28.7%) of cheese directly from the EU in the first six months of 2014 but this excludes cheese EU member states sold to countries like Belarus, Ukraine and Lithuania, which is exported to Russia.
One trader and commentator believes finding alternative markets for this tonnage of cheese is close to mission impossible as opposed to a challenge. So anyone with unsold average to low quality cheese in stock maturing is in for a big does of medicine. Going forward it seems inevitable that milk will be switched out of cheese into powder, which will do nothing to stop the downward spiral in SMP, WMP and butter prices.
As the Queen group song goes it’s: “Under Pressure”
1.2ppl price reduction for Arla AMCO members – from September 1st (22nd August 2014)
This takes members www.milkprices.com standard litre price down to 30.38ppl, which excluding the butterfat adjustment/fat tax (0.6ppl) and the estimated 13th payment (0.81ppl) gives a standard litre paid out price of 28.97ppl. For Arla Milk Link members it will be 30.38 with the 13th payment (0.81ppl) coming in March 2015 so the monthly money to bank for them for September milk will be 29.57ppl.
Milk protests are likely to start as soon as next week (22nd August 2014)
Farmers For Action (FFA) have posted a dairy crisis news item on their website warning of 25p or less milk prices.
The proposal is for peaceful protests to kick in presumably targeted mainly at those involved in the domestic market, particularly liquid milk processors and retail distribution outlets etc.
For the full press release click on http://www.farmersforaction.org/4.html
Roger Evans to leave First Milk – Why? (22nd August 2014)
The Scottish Farmer has this week released the secret known to many that Roger Evans, Shropshire dairy farmer, Dairy Farmer columnist, former First Milk Chairman and (at one time) anti anything Arla or Muller-Wiseman is to leave the co-op to supply Muller-Wiseman.
First Milk have commented they are disappointed to see any member leave, however, what’s surprising about this is zero comment from Roger by way of any explanation to The Scottish Farmer journalist who contacted him this week. This is the man, remember, who has written hundreds of thousands of words over the past 25 years plus in Dairy Farmer and other magazines, plus books, giving us his view on virtually everything to do with dairying. He has enlightened readers on all that happens on his farm, so it is strange that he could not even find a single sentence to explain his decision to leave, especially given that leaving First Milk must be one of the biggest decisions he has ever taken relating to his farm.
On that score we will no doubt have to wait for his next Dairy Farmer article, when all will presumably be revealed!
First Milk change milk cheque payment dates (22nd August 2014)
The co-op have given members three months notice that milk cheque payments will change from paying for all milk delivered in a month on the 17th of the month following to paying 50% on the 10th and the remaining 50% on the 24th.
The co-op state this is to help member clash flows.
The change will commence in November when the October deliveries will be made in two equal instalments.
UEFA Euro 2016 Qualifying Tickets (22nd August 2014)
Ian has access to early bird tickets for the following England football matches at Wembley with a discount of £5.00 per ticket of up to four tickets for each match with more available without the discount, if required.
England v San Marino 9th October 2014
England v Slovenia 15th November 2014
England v Lithuania 27th March 2015
If interested please email Lydia@ipaquotas.co.uk before Tuesday 26th to ensure the pick of the areas to sit.
0.55ppl milk price reduction for Paynes Dairies suppliers – from August 1st (18th August 2014)
This comes on the back of an un-reported 1.2ppl reduction in June. This takes producers standard litre price down to a level 30ppl (www.milkprices.com).
0.053ppl milk price reduction for Dairy Crest formula contracted producers – from September 1st (18th August 2014)
This is the third consecutive minor price change of less than 0.1ppl.
The new standard litre price will be 31.93ppl for the DC liquid core formula and 31.73ppl for the simplified liquid contract (www.milkprices.com). This means the differential between the standard DC liquid price (30.09ppl) and the formula is more than 1.6ppl.
Russian import ban crashes cream market (18th August 2014)
It was a certainty that the 12 month EU dairy product import ban from Russia would mean we all catch a cold.
This week commodity prices have crashed notably, cream prices have crashed back to £1100 tonne from £1380. To put this into ppl terms it’s a drop equivalent to 1.6ppl for a liquid processor to which they are all instantly exposed.
The Southern Irish milk price is down to 34 Euro Cents litre (27ppl). It looks like the EU dairy industry is heading down the drain as everyone gets sucked into the plug hole vortex. There is even talk that EU prices are heading towards intervention levels. Traders are allegedly cutting each others throats and prices to win orders and replace lost Russian business.
Tomorrow’s GDT auction must surely see another significant price drop. As one ingredients buyer commented:
“A mixture of fear and hope will be greeting next week’s GDT event.”
Unfortunate timing from one of First Milk’s Scottish Taliban (18th August 2014)
Willie Lamont, Area Representative for First Milk, must have cringed when he saw his letter appear in this weekend’s Scottish Farmer on the same day The Grocer headlined First Milk’s retailer de-listings.
Basically, Mr Lamont lambasted David Handley for his earlier call to sack the First Milk Board and its Chairman Jim Paice. To some extent he has a point in terms of only First Milk’s members have the right to demand any change of management. Unfortunately he then went on to extol the virtues of First Milk’s
“decision to invest in innovative new food products and to seek greater added value from existing products.”
Turn to Fridays edition of The Grocer and a headline, which included First Milk dairy drinks, loose listings, which explained how First Milk have revealed that its Lake District dairy brands Frumoo and Caffe Latte drinks have lost all their supermarket listings. Both are still in production and “sold through some retailers” and First Milk have stated that they have learned a lot from its first venture in dairy drinks and that it has used that experience when working on the launch of its Team Sky high protein breakfast smoothies, which are incidentally made in Austria.
Rob Newbery to leave his NFU Chief Dairy Advisor position (18th August 2014)
Rob Newbery is to leave his position as NFU Chief Dairy Advisor to take on the role as Director for the West Midlands NFU region. So in the space of six months the two NFU people who pushed the introduction of the Voluntary Code of Practice have both departed just ahead of the codes so called independent review. Will the new crew push it as hard post the review in the new world of cooling dairy prices?
The European Puzzle (8th August 2014)
In a week of bad news leading European milk processor Friesland Campina (FC) has stunned many with a price increase announcement to its suppliers. Given the fact Arla spend a lot of time watching what FC do it will be interesting to see whether Arla widen the gap further between the FC and Arla AMCO price at the end of August.
Russian ban of EU dairy products adds to the problem (8th August 2014)
The announcement that Russia has banned dairy product imports for one year, in response to sanctions imposed on Russia as a result of the Ukranian crisis, is a bitter blow to an industry heading south at speed. All of the EU powder, cheese and butter destined for Russia will have to find new homes and that will put further pressure on what is a weakening market. The ban came into force on the 7th August but does not include infant formulas. Other areas included in the Russian ban include the USA, Australia, Canada and Norway.
One milk processor described as “nothing short of a disaster given the EU exports 300,000 tonnes of cheese to Russia each year.”
0.65ppl milk price reduction for First Milk liquid contracted members – from 1st September (6th August 2014)
This takes producers standard litre price down to 28.1ppl. During the past four months the total price reduction amounts to 4.4ppl.
0.5ppl milk price reduction for First Milk cheese/manufacturing contracted members – from 1st September (6th August 2014)
This takes producers standard litre price down to 29.1ppl (www.milkprices.com) and is the 4th consecutive monthly price reduction, totalling 3.4ppl
1ppl milk price reduction for South Caernarfon Creameries suppliers – from 1st September (6th August 2014)
This takes producers standard litre price down to 30.01ppl.
Wyke Farms launch £1.2 million promotion (6th August 2014)
Wyke Farms have announced plans to invest £1.2 million to support and promote its branded cheese, in particular, its Provenance and Somerset countryside roots.
The campaign goes live on 1st September with national TV adverts, including a 30 second slot during the Coronation Street break as well as Breakfast TV.
GDT prices crash 8.4% again (5th August 2014)
That sinking feeling Ian had three weeks ago came again at 16:30 today with the outcome of today’s GDT auction results.
Basically, the average was back 8.4% on that recorded only three weeks ago, which in itself was down 8.9%.
So overall close to a 50% drop in only 6 months since February.
This is not volatility it’s extreme volatility and it comes less than 8 months before the European quota regime ends.
It’s time a batten down the hatches and buckle up for farmers and processors who are in for a very rocky ride.
Don’t shoot the messenger but for some a farm gate standard litre price of 25p or less now seems on the cards before Xmas, and the only question is how low world prices will drop before they level and more importantly when will the U-turn happen.
Main movers in today’s auction:
Cheddar down 10.2%
WMP down 11.5%
SMP down 6.5%
It’s simple world and EU milk production is up and Chinese demand has cooled down. This is a lethal combination for dairy farmers in the UK who will shortly have the cows on winter rations whilst they are on bread and water.
1.2ppl milk price reduction for direct suppliers to Arla – from 1st September (1st August 2014)
This takes producers standard litre price to 30.8ppl (www.milkprices.com)
1ppl milk price reduction for suppliers to Wyke Farms – from 1st September (1st August 2014)
This takes producers standard litre price to 30.05ppl (www.milkprices.com)
1ppl milk price reduction for suppliers to Crediton Dairy – from 1st September (1st August 2014)
This takes producers standard litre price to 32.36ppl (www.milkprices.com)
0.85ppl milk price reduction for suppliers to Belton Cheese – from 1st September (1st August 2014)
This takes producers standard litre price to 30.15ppl (www.milkprices.com)
Muller Wiseman hold firm on September milk prices (1st August 2014)
The suggestion that if Arla sneeze everyone catches a cold is true unless you are Ronald Kerrs and involved in price negotiations with Muller.
Full credit to Muller Wiseman and its farmer board for deciding to hold its September producer price at a time when Arla, Dairy Crest, First Milk and a heap of liquid milk and cheese processors have announced price drops. This is certainly not willy-waving and will silence critics of both MW and its farmer board. No doubt NFUS wish they had written their press release post this announcement.
Adams Foods buy Foodtech business from Dairy Crest (1st August 2014)
Adams Foods, based in Leek, have acquired the Crewe based Foodtech specialist ingredients business from Dairy Crest for £1.2 million.
Colston Basset Stilton Cheese wins Supreme Award (1st August 2014)
The Supreme Champion cheese out of 4,500 entries at this week’s Nantwich International Cheese Show was awarded to a Stilton from Colston Basset.
Commonwealth games, sun, and supping something strong befuddles NFUS' brains! (30th July 2014)
Ian had a double take on the latest NFU Scotland dairy press release whose lead caption was:
“Milk price cuts must reflect market place reality – Union calls on processors to pay based on performance."
To put the markets into perspective, globally there has been a 40% drop in GDT auction prices in less than five months and yet, during the same period, UK prices are down 10%! That's the reality. Thus, on the basis of these figures the price cuts, to date, appear to be fully justifiable and do, in fact, “reflect market place reality.”
Further down the NFUS' press release Ian's eyes rolled to the back of his sockets and round again with the statement that “the Union believes paying a price that reflects company performance will pay dividends.”
It is wholly naive and frankly outrageous to suggest farm gate milk prices should be linked to milk purchaser/processor performance! Whilst co-ops like Arla and First Milk aim to pay out the most they can to members on a monthly basis NFUS simply cannot put forward a legitimate reason as to why any successful processor should pay its farmers more than competitors, some of whom are less competent! In addition, even if this theory had any merit at all, Ian suggests NFUS looks down the other end of the telescope, because the theory also means a poor performing company would be justified in dropping prices further!
Remember back in 2012, when UK processor's financial results were disastrous and deteriorated further when protesting farmers succeeded in lifting farm gate milk prices? Under the NFUS' idea of "performance payments" farm gate milk prices would have dropped in 2012, not gone up.
Markets simply do not work in the way NFUS suggests, and even if they did feed merchants should immediately demand more money for dairy cake from farmers whose financial performance is currently good!
Sorry NFUS but this idea is bonkers! Get out the sun, off the pop, and get back to the drawing board!
1.2ppl price reduction for suppliers to Glanbia Cheese – from 1st September (29th July 2014)
This takes producers www.milkprices.com standard litre price to 30.11ppl.
1.1ppl milk price reduction for Dairy Crest Suppliers- from 1st September (25th July 2014)
The resulting standard litre prices will be
Davidstow (cheese) 32.09ppl
This is the first Davidstow price change in 10 months
0.94ppl price reduction for Arla Ambo Co-op members – from 4th August (25th July 2014)
This takes producers headline standard litre price to 31.58ppl.
The 0.94ppl net reduction is basically 1.25 euro cents converted to sterling to give a decrease of 0.98ppl in the account price plus 0.04 increase in the 13th payment.
Tesco continue to hold firm on TSDG farmgate milk price (25th July 2014)
Tesco continue to hold firm on both their Muller Wiseman and Arla directs milk price for August and into September with no price change for September 1st.
This puts the TSDG Arla directs price at 34.2ppl and Muller Wiseman price at 34.3ppl (These figures include the base price plus 0.2ppl welfare code premium and 0.5ppl Promar costing’s).
This should put a smile on the faces of TSDG dairy farmers given the way all other prices are heading.
Spot Price is sliding big time (25th July 2014)
Having rapidly rocketed to 35ppl (June 20th) spot prices have crashed back to under 26ppl and the immediate outlook is not encouraging.
GDT Auction (25th July 2014)
Prices having crashed by almost 9% at the last auction 10 days ago mean all eyes will be on next Tuesdays auction results with most praying for prices to level.
Lurpak butter is top of two leagues (25th July 2014)
According to the latest figures from A.C. Nielsen, Lurpak is now the UK’s No1 butter brand both in volume and value.
The brand is worth around £300m outperforming its closest rival by 500 tonnes a year.
CLA Game Fair goes from strength to strength (25th July 2014)
he CLA game fair clocked up 143,500 visitors in 3 ay at Blenheim Palace in what was a fantastic celebration of all that is great about our countryside.
Politically one of the highlights was the head to head between UKIP leader Nigel Farage and CLA deputy president Ross Murray where a large crowd jostled for position outside a crammed Theatre to hear a debate as to whether the UK should remain in the EU.
Whether you agree with UKIPS plan to remove the UK from Europe and the CAP is a hotly debated point but for certain Farage pulls a crowd and puts on a good show and performance.
So 143,000 plus people attended the Game Fair within days of the RASE auctioning over £400,000 of its valuables to pay off some of its debts.
In days gone by the Royal Show eclipsed the Game Fair however since the first Game Fair in 1958 the Event has been well directed and gone from strength to strength.
Ian’s first Game Fair was as a boy in shorts at Raby Castle in 1972. Next year’s event will be Harewood House, Leeds.
1ppl milk price reduction for suppliers to Yew Tree Dairy – from 15th August (18th July 2014)
This takes their standard litre price to 30.75ppl
0.75ppl milk price reduction for suppliers to Grahams Dairies (Scotland) – from 1st August (18th July 2014)
This takes their standard litre price to 30.75ppl (www.milkprices.com)
0.044ppl milk price reduction for Dairy Crest’s Formula contracts – from 1st August (18th July 2014)
This results in the following standard litre prices (www.milkprices.com)
Core liquid formula 31.98ppl
Simplified liquid formula 31.79ppl
A tiny reduction of less than -0.1p/l, which is making the DC/DCD formula price look attractive compared to the current competitive set.
Meadow Foods have signed up 19 out of the 22 producers from Rock Farm – following the recent decision to close the plant by Cool Milk’s Jon Thornes and his associates. (18th July 2014)
Global Dairy Auction prices crash back a further 8.9% (16th July 2014)
Tuesday’s GDT auction was a disaster with the average price for all products dropping 8.9% in only two weeks to average $3309/tonne and an index price, which was last seen in late 2012.
Notable movers were:
Whole Milk Powder down 10.9% to average $3088/tonne
Skim Milk Powder down 7.1% to average £3516/tonne
1.2ppl milk price reduction for Muller Wiseman non aligned producers – from August 3rd (7th July 2014)
This will take producers www.milkprices.com standard litre price to 30.8ppl
1ppl milk price reduction for Meadow Foods suppliers – from August 1st (7th July 2014)
This will take producers www.milkprices.com standard litre price to a level 30ppl.
1ppl milk price reduction for Wyke Farm suppliers – from August 1st (7th July 2014)
This takes producers www.milkprices.com standard litre price down to 31.05ppl.
1.75ppl milk price drop for First Milk liquid contracted farmers - from August 1st (7th July 2014)
1.25ppl milk price drop for First Milk manufacturing/cheese contracted farmers - from August 1st (7th July 2014)
Initial emails to Ian which arrived within the first 15 minutes of the First Milk price announcements included:
“Jesus that is brutal”
“last to take the price above 30ppl first to take it under”
“That’s not a spoonful of medicine it’s a ladle”
With a manufacturing standard litre price of 29.1ppl and a so-called liquid contract price of 28.25ppl both after capital levy deductions it was a bit of a surprise to read that in the letter to members from First Milk’s Chairman Jim Paice notifying them of the price reduction, he concluded by stating:
“As you may have seen Arla have reduced their price from this week, almost a month earlier than us, citing the negative trend in global markets. Our analysis of their price and the deductions which they apply means that our actual price paid will still be more than Arla AMCo price for most of our producers.”
Ian has investigated this statement further with First Milk in order to establish what evidence they hold to substantiate the claim. Without going into detail the claim should have been better researched before it was communicated to members. In the detail there were some rogue figures and wild assumptions. If the facts had been better researched the statement would have been along the lines that the Arla AMCO headline price is not what is paid out to farmers and there are sizeable deductions, which significantly narrow the perceived gap between the First Milk and Arla AMCO headline prices. On that point we agree.
No doubt First Milk suicide bombers will beat their chests and complain loudly that Ian is once again having a pop at First Milk and bigging up Arla, but on this story as with others First Milk only have themselves to blame as they have once again had a dig at Arla, which is a fellow farmer-owned company and is one that really should be one of its major strategic partners.
So after First Milk’s suicide bomber members have read this story, and before they pen another angry email to Ian perhaps they should consider writing to First Milk alternatively put some mittens on so they can’t use the keys on their keyboards.
0.75ppl milk price reduction for suppliers to Barbers Farmhouse Cheese – from September 1st (7th July 2014)
This will result in a standard litre price of 31.39ppl (www.milkprices.com)
Global Dairy option prices down almost 5% (7th July 2014)
Just when everyone was starting to think there was a glimmer of light that the value of dairy commodities was beginning to stabilise comes the grim news that this week’s GDT auction has seen the average price drop by 4.9%.
Notable movers were as follows:
Butter down 13.6% to average $3,181 per tonne
Whole milk powder down 5.4% to average $3,459 per tonne
Cheddar down 2.9% to average $4,226 per tonne
Skimmed milk powder down 0.9% to average $3,810 per tonne
These prices, in many cases, have wiped out recent gains and more with the largest hit taken on butter prices.
Dairy Crest announce partnership with Fonterra to sell DWP (7th July 2014)
Dairy Crest have confirmed that it’s demineralised whey powder (DWP), which will be produced from its new £45 million facility at Davidstow, will be sold on a commission basis by Fonterra. The DWP will be used by Fonterra as a base ingredient for infant formula powders and the agreement will run for a minimum of 5 years with production expected to commence in the spring of next year.
In addition, Dairy Crest have announced a further £20 million investment at Davidstow to manufacture GOS, which is a lactose based pre-biotic used in infant formulas. Dairy Crest will partner Fayrefield Foods Limited of Chester in a joint venture in the GOS project. Fonterra will be responsible for all marketing and selling of the GOS, which is likely to be produced in 2015.
Tesco Young Farmer Scheme opens its doors (7th July 2014)
Earlier this year Tesco launched the Future Farmer Foundation to help get young farmers off to a great start in their farming careers. The programme is open to both new entrants and next generation farmers aged 20 to 35 years old from all sectors, offering business planning workshops, supply chain experience, mentoring and training. Already 50 Future Farmers are currently experiencing the programme, and Tesco have opened applications for the next intake, who will join the programme in September. If you know of any bright ambitious young farmers or farming entrepreneurs they can find out more and apply by visiting - www.tescofuturefarmerfoundation.com or calling 0800 977 4639.
Dairy Crest milk prices held for August (26th June 2014)
Dairy Crest Direct (DCD) and Dairy Crest (DC) have agreed to stand on with both the (DC) liquid and cheese (Davidstow) farm gate milk prices for August.
This is good news and once again demonstrates that DC do not simply catch a cold when Arla sneeze.
Dairy Crest’s market leading Cathedral City branded cheese is undoubtedly the corner stone of the Davidstow cheese price and as stated in the latest DCD newsletter “This pence per litre return built upon the less volatile and successful branded cheddar.”
The current DC standard litre prices are therefore as follows:
Core & simplified formula 31.829ppl
Standard liquid 31.19ppl
Manufacturing/Davidstow cheese 33.19ppl
All eyes are now firmly fixed on what Muller Wiseman and First Milk do on Monday/Tuesday of next week ahead of the NEC Livestock Event.
Muller Wiseman are a GB liquid milk business.
First Milk have towards half of their milk going into cheese with almost all of the cheese sold by Adams/IDB on a basket formula, leaving the remaining member milk to go into other ventures it has invested in, including Westbury. Many of these should be delivering a boost to members milk price, including milk brokering whose future looks good with spot prices at 35ppl in June as well as the fact that commodity prices have bottomed.
1.23ppl (1.5 Euro Cents) milk price reduction for Arla (AMCO) members - from July 7th (25th June 2014)
This should take member standard litre to 32.52ppl before deductions. In addition, the anticipated 13th payment has been increased by 0.04ppl.
Whilst this is unwelcome news for Arla members it has to be remembered it is a European price and just because the mighty Arla sneeze does not mean every GB dairy farmer has to catch a cold.
With GB milk suddenly in very short supply and spot prices continuing to raise almost daily, now trading at 35p, there are some processors questioning whether they will need to follow Arla’s lead.
For those who believe they have a good case to follow Arla with further price reductions from 1st August (under the Voluntary Code) they will have to be mindful to at least maintain their standard litre price at a minimum of 30ppl or risk serious cross examination as to how competent their sales people are.
0.028ppl milk price rise for Dairy Crest formula contracts – from July 1st (20th June 2014)
It’s a small but positive increase which takes producers standard litre price to 32.02ppl for the liquid core formula and 31.83ppl for the simplified liquid contract. (www.milkprices.com)
Auction prices up 1% (20th June 2014)
This weeks GDT auction saw average prices increase by 1%.
Notable movers were:
Butter + 1% to average $3699
Cheddar + 2.4% to average $4381
WMP + 2.4% to average $3658
SMP – 0.2% to average $3855
Note later SMP contracts for September/October delivery showed price increase.
Spot milk continues to head North at 35ppl (20th June 2014)
Spot milk is desperately short and this week trading at 34 to 35ppl.
The strong prices have seen cheese processors exit the market as buyers with some on the brink of turning to spot milk sellers as a more profitable outlet than turning their milk into cheese.
Friesland Campina (FC) price increase is very significant (corrected story from last weeks) (20th June 2014)
The news that FC has increased their June milk price by 1.75 Euro Cents to 42 Euro Cents/kg is significant. This converts to a UK standard litre price equivalent of 39.43euro cents (31.45ppl). The move significantly narrowed the price differential between Arla and FC. The FC move could be the first sign that continental Europe farm gate milk prices will only drop by a tiny amount if at all in the coming months. It’s a very positive market indicator.
West Country Milk anticipate milk prices falling all year (20th June 2014) - text temporarily removed
Muller Wiseman- Grocer Brand of the Year Gold Award winners (20th June 2014)
Muller took the Grocers Gold Award beating stiff blue chip competition from brands like Pepsi, Heineken, Cadbury and even Arla.
Rocky Rock Farm Close its Dairy (20th June 2014)
Durham based Rock Farm Dairy has had a chequered history and has now closed with the loss of at least 80 jobs.
Rock packed its last milk last Thursday 12th and deliveries to customers stopped on Friday 13th- unlucky for some. Rock recently lost some key liquid customers who have indicated they experienced problems, with consistency of quality product and service resulting in a estimated 60% of Rocks business migrating to Paynes Daires with the remaining business to be packed or taken on by Lancaster Dairies as part of a deal with Rock.
On the positive side it appears Rocks small band of 24 farmer suppliers have been given a reasonable deal in so far as most if not all have been given three months notice to find a new milk buyer.
During this period the bulk of their milk will be traded on the spot market/short term contracts with two traders where fortunately prices are firming almost daily. (see above)
Finding a new milk buyer will not be easy for some of these farmers who are very much out on a limb. Several have previously blotted their copy book with either Arla or Meadow both of whom are now cautious they don’t get another whipping as the 4th emergency service. Note Meadow came to the rescue when some of the Rock farmers were left high and dry by the collapse of Fresh Pastures only to find Meadow were dumped after a couple of weeks supply.
With some of the Rock Farm farmers on a tasty 1 year fixed price milk contract at 34.5ppl they look like having to take a bath with any new milk buyer.
Rock Farm was taken on from the Administrators by Cool Milks John Thornes two years ago on what at the time was reported to be a 20 year lease of the processing site with a 10 year break clause.
£5 million nose award (20th June 2014)
Nigel Pooley received a Long Service Award at the Bath & West Show from the Duchess of Cornwall after more than 50 years in the dairy industry. Nigel is Wyke Farms master cheese grader and has graded in excess of 1.4 million tonnes of cheddar whilst working for Wyke Farms and his nose is valued at £5 million by Wyke.
Have the European and GB markets turned north? (11th June 2014)
One swallow does not make a summer but with Friesland Campina’s price up for June (see above) and spot prices increasing across the piste it could be a case of the only way is up for baby.
GB spot prices now 28/29ppl.
Italian spot prices up to 40 Euro Cents (32.4ppl)
Dutch spot prices up to 36 Euro Cents (29ppl)
Lactalis give notice to outlying Cumbria producers (11th June 2014)
Lactalis are the latest milk purchaser to give notice to producers who are not within their core catchment area having given 12 months notice to farmers in Cumbria, who are now on the hunt for a new milk buyer.
May production (11th June 2014)
Provisional May production was up 98.7 million litres on May 2013 (+8%) with peak daily production coming almost 3 weeks earlier than is normal around the 3rd May (43.7m litres/day). Cumulative production for the first 2 months stands at + 266 million litres or + 11.33%. Cumulative butterfat is down 5 points to 3.95%.
Ippl milk price reduction for Wensleydale Creamery suppliers – from 1st July (9th June 2014)
This produces a standard litre price of 31.35ppl (www.milkprices.com)
0.5ppl milk price reduction for Glanbia Cheese suppliers – from 1st July (9th June 2014)
This produces a standard litre price of 31.30 (consistent contract) and 31.40ppl (base schedule contract) (www.milkprices.com)
GDT auction prices drop on average by a further 4.2% (5th June 2014)
Another mixed bag of results at Tuesdays Auction which saw the average all products index fall by 4.2% to average $3,756 tonne which is the 8th consecutive fall in the average products auction price.
Notable movers to the auction prices achieved only two weeks ago were:
WMP down 8.5% to average $3594 tonne
SMP up 2.1% to average $3863 tonne
Cheddar up 8% to average $4236 tonne
Arla Westbury SMP up 1.5% to average $3830 tonne
SMP increase were for contracts delivered during the next three months.
1ppl milk price reduction for suppliers to Belton Cheese - from July 1st (5th June 2014)
This takes producers standard litre price down to 31ppl
0.13ppl price reduction for Sainsbury’s contracted producers (5th June 2014)
This produces the following standard litre prices:
Muller Wiseman 33.03ppl
Dairy Crest 32.97ppl
1.59ppl reduction in the Muller Wiseman formula price - from July 1st (5th June 2014)
This produces a standard litre price of 31.41ppl which will be reviewed again in three months time
1.15ppl milk price reduction for First Milk Cheese contracted members - from July 1st (5th June 2014)
This will take producers standard litre price for cheese down to 30.85ppl. No change to its Liquid price which reduced by 2ppl a month earlier from June 1st to produce a standard litre price of 30.5ppl
1.5ppl milk price reduction for South Caernarfon Creameries suppliers/members - from July 1st (3rd June 2014)
This takes producers standard litre price down to 31.01ppl
1ppl milk price reduction for Grahams Dairies - from June 1st (3rd June 2014)
This takes producers standard litre price down to 31.5ppl
Tesco hold firm again on Arla TSDG price for July (3rd June 2014)
The 1st July Arla directs price reduction should have instantly triggered an adjustment in the Arla Tesco price paid to Arla directs who are contracted to supply Tesco.
Tesco have decided to hold the price for July at 34.2ppl which is a base price of 33.5ppl plus 0.2ppl premium to cover the welfare code plus 0.5ppl for Promar costings. The situation is under review monthly
Correction to last weeks posting under Dairy Crest Price reduction (3rd June 2014)
We incorrectly quoted the Muller Wiseman standard litre price on Friday when comparing the big 3.
Here are the correct numbers:
Dairy Crest 31.19ppl from July 1st
Muller Wiseman 32ppl from June 1st
Arla members 33.74ppl from May 1st - before the various deductions
First Milk Liquid 30.5ppl from June 1st
1.5ppl milk price reduction for Arla directs – from July 1st (30th May 2014)
This reduces producer’s standard litres price to 32ppl.
1.25ppl milk price drop for Dairy Crest liquid contracts - from July 1st (30th May 2014)
Dairy Crest (DC) have dropped their liquid milk price by 1.25ppl to give a 31.19ppl standard litre price from July 1st.
In view of the fact DC have stood on with their Davidstow (Cheese) contracted milk price at 33.19ppl the July 1st gap between the two will be the largest recorded at 2ppl.
Today’s position is that the July Muller Wiseman standard litre price stands at 33.6ppl and Arla members at 33.74ppl. On that basis it’s clear DC continue to be off the pace. No surprises there given their annual results, which showed a very unsatisfactory underlying profit from its liquid division (excluding £18.2 million derived from property sales) of just £600,000.
FFA are back protesting (30th May 2014)
Today’s price drops plus strong rumours of more to follow on Monday has resulted in calls for FFA to help man the barricades as members and non members feel the need to protest.
A hit list was been drawn up as we went to print and the indication is that protests could come thick and fast and the push is so great they will take place even is FFA decline to be involved. The gloves are off and the targets fairly obvious.
Dairy Crest’s price drop triggers supplier health concerns (30th May 2014)
DC are certain to attract a number of its liquid contracted producers to its stand at next week’s Royal Cornwall Show where DC are keen to check farmers blood pressure following today’s price cut announcement.
In today’s newsletter it DCD comment:
"Whilst on the stand, in addition to finding out the latest news on pricing, contracts and progress with the new exciting whey investment at Davidstow, why not also avail yourself of the free Dairy Crest funded opportunity to have your cholesterol and blood pressure tested?
In our busy lives we seldom make time to ‘take stock’ of our own health, so this provides an excellent opportunity to do just that."
Perhaps DC/DCD should run a blood pressure league showing its liquid and cheese contracted producers.
Former Dairy Crest Head of Milk Procurement to be new CEO of Lactalis (27th May 2014)
The Lactalis head hunters have been stamping around the dairy industry for months seeking a CEO, the result is that former Dairy Crest Head of Procurement Mark Taylor will replace Andy Smith.
Taylor left Dairy Crest late 2011 having achieved a great deal, in particular, Taylor cemented a good relationship between Dairy Crest’s farmers and the company during his term.
It’s unlikely he will receive many good luck in your new job wishes from the head honchos at Dairy Crest, especially given the multitude of special deals with farmers they took to on his departure, which mushroomed out of control.
One of the Lactalis head hunters alleged “nice to have requirements” was involvement with the Dairy Crest board on which Taylor ticked more boxes than most. It’s a very big job for Taylor and all eyes will be on him as to whether he can catapult Lactalis GB out of what’s perceived to be a plodding along mode to run alongside DC, Arla and MW.
Arla stand on for June member milk price (27th May 2014)
The news that Arla’s member milk price will remain unchanged for June milk will be a relief to some and the cause of head scratching for others. The position re the July Arla Directs milk price will be confirmed this week.
GDT auction prices continue to head south (23rd May 2014)
This week’s Fonterra GDT auction saw the average price index down 1.8% despite a 12% drop in the volume of product on offer.
Within the numbers:
Butter was down 3.8% (average $3667)
SMP was down 3.5% (average $3733)
Cheddar was down 2.1% (average $4108)
WMP was down 1.1% (average $3877)
During the past year the auction has seen more than 1 million tonnes of dairy products sold to buyers in 90 countries.
Spot prices show signs of improving (23rd May 2014)
In the UK spot prices appear to have improved from around 17ppl to anywhere between 18 to 22ppl with cheese makers in the market.
In Holland there are also signs spot prices have levelled at just a shade under 24ppl.
European Milk Market Observatory figures (23rd May 2014)
Latest figures from the observatory indicate milk production across the EU28 is up 5.8% in the first 3 months of the year.
Leading the pack of countries churning out more milk is Romania +12.5% and in no. 2 slot is the UK + 12.3%.
Also worthy of note is the observatory’s figure stating UK cheese production is up an eye watering 12.2% (11,100 tonnes) in just 3 months.
Arla offer investment bonds (23rd May 2014)
Arla is offering professional investors the chance to acquire five year investment bonds to an initial maximum of £135 million equivalent. Bonds with fixed and variable interest rates are on offer and will be listed on the Irish Stock Exchange.
The bonds will not change the fact Arla is 100% farmer owned.
Dairy Crest release its 31st March 2014 results (23rd May 2014)
Dairy Crest’s financial highlights were a mixed bag the result of which saw its share value fall from £4.60 to £4.27 before a slight recovery to £4.36 today.
Key points were:
Year end debt up from £60 million last year to £142m.
Profits from its cheese business +19% to £39.3 million.
Profits from is liquid milk business +92%, which sounds great but it’s only to £18.8 million.
Cathedral City sales +12%.
Adjusted profit before tax £65.3 million (+31%), however, within this figure is included £18.2 million profits from one of property sales.
The next three years pension contributions have reduced from £20 million per annum to £13 million for the next two years followed by a £16 million contribution.
Paynes profits take a haircut (23rd May 2014)
Paynes Dairies’ profits for the year end 31st March 2013 amounted to only £11,000, which is 1% of the £1.1m declared a year earlier.
There is no doubt that Paynes results mirror those of others in the middle ground for the same financial period where competition is tough. At least no producers can claim Paynes didn’t pay as much as they could for the milk in this period.
Paynes have confirmed that the provisional figures for the year ended March 2014 are a lot healthier, very much in line with budget and without doubt back on track.
0.324ppl price cut to the Dairy Crest formula price – 1st June (16th May 2014)
A further fall in cream values is the main culprit, which takes the standard litre price down to 31.99 (core formula) and 31.80ppl (simplified contract) www.milkprices.com. In comparison, the Dairy Crest standard liquid contract standard litre price is 32.56ppl.
Arla agree merger with 795 Walhorn co-operative farmers (16th May 2014)
This will take the Arla family to 13,500 members and adds another country to the list of seven European supplying farmer members. The list is GB, Denmark, Sweden, Germany, Belgium, Luxembourg and Holland. The merger is subject to competition authority approval.
Milk production heads north in New Zealand and USA (16th May 2014)
Fonterra report production in New Zealand up 8% in the past 11 months.
Production in the USA is up 2.4% and forecast to be up a further 2.9% in 2015.
April production figures up a whopping 14.85% (9th May 2014)
Provisional figures from the RPA have resulted in incredibly strong April production figures, which are up 14.85% on those of April 2013. Total production for the month amounted to 1,277.1 m litres compared to production a year earlier of 1,111.9 m litres, a difference of 165.2 m litres of milk.
This is an incredible start to the first month of the new and final quota year. Whether it will continue at this rate is debateable and realistically highly unlikely but there is no doubt that with the country needing to achieve around a 12% month on month increase to what was produced a year ago in order to fill quota this is a start which will be of concern.
In terms of the quota market 2014-2015 is said to be volatile and unlikely to settle down for several weeks. In terms of milk production there are some signs that production may have peaked and plateaued early and certainly spot milk prices, whilst disappointingly low at around 17/18ppl, do appear to have stabilised and are no longer heading south on a daily basis.
The 4 day milk price reduction league table (2nd May 2014)
2ppl top trumps reduction for First Milk liquid members – from June 1st (2nd May 2014)
1.6ppl milk price reduction for Muller Wiseman (MW) suppliers – from June 1st (2nd May 2014)
In a press statement MW simply refer to two forces in terms of significant supply increases and weaker demand for commodities both of which pull in the same direction – down.
1.6ppl milk price reduction for Lanchester Dairies suppliers – from May 1st (2nd May 2014)
1.55ppl price reduction fro Meadow Foods suppliers – from June 1st (2nd May 2014)
1.5ppl milk price reduction for Jacksons Dairies suppliers – from May 1st (2nd May 2014)
1.25ppl milk price reduction for Barbers suppliers – from June 1st (2nd May 2014)
1ppl milk price reduction for Yew Tree Dairy (Woodcocks) suppliers – from June 1st (2nd May 2014)
1.0ppl milk price reduction for Glanbia Cheese suppliers – from June 1st (2nd May 2014)
1ppl milk price reduction for Belton Cheese suppliers – from June 1st (2nd May 2014)
0.8ppl milk price reduction for Payne’s Dairies suppliers - from May 1st (2nd May 2014)
0.5ppl milk price reduction for Wyke Farms suppliers - from June 1st (2nd May 2014)
0.5ppl price reduction for First Milk cheese/manufacturing members – from June 1st (2nd May 2014)
Tesco hold its May and June price for Muller Wiseman suppliers to TSDG (2nd May 2014)
The Muller Wiseman (MW) 1.6ppl reduction (see above) should have automatically resulted in the MW TSDG milk price reducing by the same amount, which would have taken the standard litre price down to 32ppl, which would have been a fraction above the latest TSDG cost of production at 31.93ppl. Note, in addition to the 32ppl there are the 0.7ppl Tesco additions.
However, Tesco have written to all MW TSDG suppliers to say the price will be held at 34.3ppl (33.6ppl plus 0.7ppl additions) for May and June following which the position will be reviewed monthly.
The Arla TSDG price remains at 34.2ppl as a result of Arla’s decision to hold the milk price paid to its directs. Note, the Tesco milk price is not aligned to the AMCO/Arla members price.
Parkham Farms will hold their milk price until end of June (2nd May 2014)
The fact that 28 out of 28 of Parkham Farms long term contracted producers have signed up to the Tesco cheese trial means that their milk price will also remain unchanged for at least May & June. In addition, all 28 receive the 0.7ppl TSDG premium to cover Promar costings (+0.5ppl) plus compliance with the welfare code (+0.2ppl). The move to Tesco looks to be a smart move.
Crediton Dairy will hold their milk price for May and June (2nd May 2014)
Dairy Crest to hold its milk prices for May & June (2nd May 2014)
This is the case for its Davidstow, liquid and organic suppliers, following an agreement reached with DCD, which celebrates its 10th birthday.
Production shows no signs of backing off (2nd May 2014)
The latest DairyCo figures for the two weeks ending 19th April show daily production at 41.5 million litres a day.
This represents a whopping 13.0% plus increase (+4.8 million) on the same period in 2013. All processors must now be praying production peaks ahead of its traditional mid May spike. Let’s hope the peak is with us now. Until then it’s a fact that some of this week’s price reductions could have been harsher.
French production is +10%, Germany +6% and Britain is not exactly flavour of the month in Southern Ireland where our distress milk is crashing their market at 17ppl or less delivered with Irish factories now bursting at the seams with Irish production up an eye watering 15%. The Irish Dairy Boards CEO Aaron Forde commented that the importation of milk from Britain was “the result of long term under investment in the (dairy) business in the UK”.
Should farmers picket Holyhead to stop Irish milk coming into GB (2nd May 2014)
That was the idea from one joker who was under the impression it was Irish imported milk, which is at the heart of this week’s milk price reductions.
Well, if any farmers do decide to picket Holyhead or Stranraer please do not stop the loaded lorries getting on the ferry or the empty ones getting off. Better still stay at home where you can do less damage.
Farmers and processors are paying the cost of 4 pints for £1 (2nd May 2014)
The middle ground liquid market is in total turmoil and any suggestion that convenience stores, corner shops, garages, processors and farmers are not footing the bill is frankly niave.
Sales to the stores and shops are down, in many cases by 10% or more, which means more milk for middle ground processors to find a home for and delivery lorries covering the same distance but delivering less milk. So far as BMB’s are concerned they have been hit even harder and need to find new ways to bridge the gap from lost customers in order to stay in business.
Arla target Chinese cheese market (2nd May 2014)
Arla are targeting the Chinese cheese market with the opening of a new laboratory in Beijing with a view to ensuring Chinese cheese preferences are refined and explored. The idea is for Arla to launch new cheese products targeted at Chinese consumers and their specific tastes.
On the flip side UK cheese exports to China have been suspended due to our failure to satisfy Chinese food safety regulations introduced on May 1st. It is hoped the ban will be lifted once the re-inspections are completed.
Top table change at Arla (2nd May 2014)
Peter Lauritzen will be replaced by Peter Gioertz-Carlsen in August when Lauritzen steps down as the head of the UK arm of Arla when he will take on a new global Arla Denmark role for a year until he retires.
Lauritzen will be a hard act to follow having steered Arla UK into a postion where most of its competitors wondered how it came to be and now simply watch and follow. It has indeed been a very successful 44 years for him with Arla.
1.6ppl milk price reduction for Muller Wiseman (MW) suppliers – from June 1st (30th April 2014)
The price reduction has been communicated to producers with 30 days notice as permitted under The Voluntary Code of Practice.
In a press statement MW simply refer to two forces in terms of significant supply increases and weaker demand for commodities both of which pull in the same direction – down.
This takes its www.milkprices.com standard litre price from 33.6ppl to 32ppl.
Tesco hold its May and June price for Muller Wiseman suppliers to TSDG (30th April 2014)
The Muller Wiseman (MW) 1.6ppl reduction (see above) should have automatically resulted in the MW TSDG milk price reducing by the same amount, which would have taken the MW TSDG standard litre price down to 32ppl plus 0.7ppl additions, which would have been a fraction above the latest TSDG cost of production at 31.93ppl.
However, Tesco have today written to all MW TSDG suppliers to say the price will be held at 34.3ppl (33.6ppl plus 0.7ppl additions) for May and June following which the position will be reviewed monthly.
Note the Arla TSDG price remains at 34.2ppl as a result of Arla’s decision to hold the milk price paid to its directs. Note, the Tesco milk price is not aligned to the AMCO/Arla members price.
0.5ppl milk price reduction for Wyke Farms suppliers - from 1st June (30th April 2014)
This takes its www.milkprices.com standard litre price down to 32.05ppl.
0.8ppl milk price reduction for Payne’s Dairies suppliers - from May 1st (29th April 2014)
1.27ppl milk price reduction for Arla members – from 28th April (25th April 2014)
It was always the case that all major GB milk purchasers would wait for Arla to be the Dam Busters and it’s happened with a 1.5 Euro Cents reduction, which converts to 1.27ppl taking producers standard litre to 33.74ppl.
No surprises other than perhaps it didn’t come a month earlier. Lots of similar announcements expected next week as other milk purchasers fall into line and form an orderly queue with price corrections. Despite this unwelcome news there is still a very strong case for claiming that Arla are holding milk prices up.
What about The Voluntary Code? (25th April 2014)
Arla’s announcement of a producer price drop with less than 3 days notice must surely be the final nail in the coffin for some milk purchasers who have signed up to the Code and its 30 day milk price notice period. The likes of Muller Wiseman and Dairy Crest may decide to follow Arla with a price drop but under the Code they can’t implement any cut until June 1st at the earliest by which time Arla will have had the opportunity to implement a further price adjustment.
There is no chance Arla will change the way it operates its milk pricing across 5 plus countries so the only option for those signed up to it who are under the 3 month rule is to live with it or bin that rule.
0.435ppl milk price reduction for Dairy Crest formula producers – from 1st May (25th April 2014)
This takes producers standard litre prices to 32.125ppl for the DC simplified formula and 32.315ppl for the core formula. Cream value and retail milk price reductions are the reasons for the reduction.
Spot prices in free fall as distress milk is hawked (25th April 2014)
Spot prices are simply crashing with one major milk processor claiming to have been offered one load of distress milk for this weekend at 12ppl. This is the lowest Ian has head of, however, others are certainly trading at under 20ppl typically between 17 to 19ppl.
It’s a disaster. We don’t have the processing capacity to handle all this milk or the European outlets for the concentrate and those with insufficient or no processing (especially, the brokers) with extra milk are bleeding.
Milk purchasers are under pressure and some farmers appear to be oblivious to what’s happening at the processors coal face. I recently heard of one farmer who was selling liquid milk on a 3 month contract who refused to accept a 1st May 1ppl price drop believing it should be a price increase. He decided to change milk buyer convinced his new buyer is immune from the market place. He believes this new milk buyer will hold his price at the current level until the autumn when prices will increase again. He and I guess many others who are thinking along the same lines are in for a reality check.
As intimated by Ian in December this year is heading towards a financial disaster for one or more processors and when the proverbial hits the fan its to be hoped that the supplying farmers don’t cop for around 7 weeks of unpaid milk.
Arla to sell more Westbury product on GDT auction (25th April 2014)
The next GDT auction on May 6th will see Arla increase its product offering putting Westbury butter milk powder up for auction.
The lunatics have indeed taken over the asylum (25th April 2014)
Please click on this incredible story from The Daily Mail. The story headline is “YEW must be joking? Staff blast BBC chiefs who changed milk supplier to Yew Tree Dairy because it sounds like Jimmy Saville police probe name.”
Yes, staff at BBC’s Manchester media centre have complained to their managers that stocking milk from Yew Tree Dairy shows “a lack of sensitivity” because Operation Yew Tree is the name used by the police for the Jimmy Saville investigation.
The online comments clearly show readers believe the BBC is “staffed by idiots”. The rumour is that anyone called Jimmy who works for the BBC has had to change their name by deed poll.
Click on http://www.dailymail.co.uk/news/article-2608782/Yew-joking-Staff-blast-BBC-chiefs-changed-milk-supplier-Yew-Tree-Dairy-sounds-like-Jimmy-Savile-police-probe-name.html?ITO=1490&ns_mchannel=rss&ns_campaign=1490
Promars comments in The Grocer have rattled some dairy farmers (25th April 2014)
The weekly Grocer magazine is indeed in a league of its own and from a dairy farming point was where the first famous interview (rant) with the then new chairman of First Milk Jim Paice appeared.
It might not be as well read by dairy farmers as this bulletin but nevertheless three dairy farmers certainly received it and contacted Ian. Please click on this article: http://www.thegrocer.co.uk/fmcg/fresh/uk-to-produce-an-extra-14bn-litres-of-milk-a-year/356398.article
The headline is “UK to produce an extra 1.4billion litres of milk a year”. The farmers gripe was that Promar are effectively telling retailers via The Grocer that there will be heaps of milk around for the next 4 or 5 years and by default why should they pay more or even the same price as they do today.
March milk production weighs in at a hefty + 12.1% excluding butterfat adjustment (11th April 2014)
Oh dear, Oh dear March milk production has been provisionally calculated by the RPA to be 1.246 billion litres representing an increase of 135 million litres (+12.1%) on that recorded in March 2013.
If that wasn’t enough Dairy Co’s weekly UK production figures for the two weeks ending 29th March 2014 averaged 14.8% more or 5.3m litres a day above the same period in 2013. Note, to put this into perspective production was hit by the late dump of snow in late March 2013.
Taking GB on its own the daily increase recorded is an eye watering + 15.6% and these figures are calculated to a date 7 to 8 weeks before we hit the GB peak daily production.
The provisional 2013/14 end of year UK production stands at 13.67 billion litres up 5.4% on 2012/13.
With total UK wholesale quota for 2014/15 standing at 15.293 billion it means to hit quota and trigger a super levy we have to produce on average 11.87% more milk this year to fill the 1.62 billion litre shortfall.
The only certainty is that April production will make a hole in that 11.87% trigger with production for the month well above the March 12.1% uplift and could even be 15% plus up on April 2013 production.
Note, all of these figures completely ignore butterfat adjustment which has gone off the radar, however, given at 31st March 2014 the UK was 5 points over its national butterfat of 3.97% a trigger has to be factored in. For 5 points this would take a further 137.6 million litres of the National Quota of 15,293 billion litres.
Time to get the calculators out and carefully follow the numbers but no need to get the prayer mats out just yet.
Understandably, producers who have little or no quota are in the market fearing their milk producer will withhold their milk cheque once they exceed any quota. Others believe it’s too close to call and intend to take quota as insurance.
The super levy for 2014/2015 quota year is 27.83 Euro cents per 100kg (approx. 23ppl).
0.49ppl milk price increase for Tesco/Parkham Farms cheese suppliers – from 1st May (11th April 2014)
At a time when production is rocketing the news that Tesco is to pay an extra 0.49ppl to its cheese supplying farmers is be very welcome news and should put a sunny smile on all Parkham Farms Tesco suppliers’ faces.
This takes their www.milkprices.com standard price to a healthy 34.25ppl and includes the additional 0.2ppl for the Tesco Welfare Code cost plus 0.5ppl for involvement in the Promar costing’s. If you factor the price into www.milkprices.com’s manufacturing standard litre it comes out at 35.74ppl.
Correction to last week’s Tesco TSDG price adjustment (11th April 2014)
Last week we reported that the new Tesco TSDG Cost of Production had reduced by 0.88ppl to a 31.93ppl plus 0.5ppl for the Promar costing’s. Having examined the 1st November 2013 Tesco TSDG COP it is clear it was 33.29ppl plus the Promar 0.5ppl so the reduction is actually 1.36ppl not 0.88ppl.
Prices continue to weaken (11th April 2014)
Figures from Holland confirm that Dutch WMP and SMP powder prices have fallen for the past seven consecutive weeks.
During this period WMP prices have dropped by 8.5% and SMP prices by 11.6%, however, butter prices have more or less been a stand on for the past three consecutive weeks.
All eyes will be on the results of next Tuesday’s GDT auction where more SMP tonnage will be on offer than two weeks earlier.
Meanwhile, spot prices for milk with no home has weakened to between 22-24ppl.
Dairy Crest formula contracts uptake (11th April 2014)
Dairy Crest has two liquid formula contracts on offer this year and 160 producers with 110 million litres of milk have signed up part or all of their production. This compares to 175 producers with 120 million litres that were attracted to the original DC contract a year ago.
Of the 160 who have signed up, 35 are new to formula contracts. The new simplified contract attracted 30 producers with the rest going for the improved core formula contract.
One interesting change introduced by DC this year is from one April formula contract start date to four during the year in April, July, October or January.
The core formula liquid contract standard litre price is 32.75ppl (www.milkprices.com)
The simplified formula liquid contract standard litre price is 32.56ppl (www.milkprices.com)
DC suppliers have the opportunity to sign up to one of these contracts during 2014/15 as indeed do any new recruits. The next window runs until 1st July commencement date.
50% increase in the Fat Tax (11th April 2014)
Arla Foods have announced a 50% increase in its butterfat reconciliation for its GB AMCO co-operative members from 1st May increasing from its current 0.5ppl to 0.75ppl.
The reconciliation (AKA the Arla Fat Tax) is an across the board deduction as Arla progress down the route to one common Arla EU payment model.
The estimated value of the 0.75ppl reconciliation based on 3 billion litres is £22.5 million, which farmers are losing until butterfats are improved.
No more gardening or full time farming for Peter Kendall (11th April 2014)
It was possibly one of the worst kept secrets in agriculture but now it is official that Peter Kendall is the new Chairman of the AHDB from 1st April for a three year term.
So it took him less than 5 weeks from leaving his successful NFU Presidency role to the new appointment. Not very long to be at home in Cambridge farming or gardening.
All eyes will now be on who will be appointed to succeed Tim Bennett as DairyCo Chairman with short odds on Englishman taking the position this time around.
Lots of unanswered questions as cow fixing issue is closed (11th April 2014)
The Great Yorkshire show issued a statement this week, as follows:
“The outstanding issue relating to allegations of tampering with dairy cattle at the 2013 Great Yorkshire Show has been resolved. The Exhibitors concerned have withdrawn their Appeals. By mutual consent, they will not be exhibiting at any future Great Yorkshire Shows.”
The statement ends a nine month investigation involving the Great Yorkshire Show, two exhibitors, lawyers, a Holstein cow and a Jersey cow following allegations of fixing at last year’s show, which were exposed by vets attending the show.
Ian emailed the show requesting answers to the following questions:
“I have received and studied your brief statement in relation to what happened at last years show.
I have a few questions I hope you will be able to respond to fully.
When you state the exhibitors will not be exhibiting at future GY Shows do you mean the cattle owners and/or the handlers?
I would just like to be sure who will not be exhibiting and given the fact one of the cows involved was allegedly in multiple ownership its looks complicated.
Having said that it was the owners who took legal opinion and embarked on a lengthy legal exchange of correspondence with the GYS so I guess it could be them who will not be showing in future.
Whilst the press release does state Exhibitors can you confirm the incident’s at the 2013 GY Show were confined to two dairy cow Exhibitors one of whom showed Jerseys the other showed Holsteins.
Finally what has happened to the prizes and prize money these animals won in the ring at the show. Have they been stripped of both or allowed to retain them.
Hope to hear from you and I am pleased to see the GYS did not back down
Unfortunately the Yorkshire Show refused to answer any of the questions, which one presumes is a term of the deal and the legal truce.
So the show and its gritty show Director Bill Cowling have done a deal whereby the litigious exhibitors accused of fixing have withdrawn their actions and effectively conceded. In addition it looks like the exhibitors involved have been banned from future Great Yorkshire Shows. No names mentioned but given how talked about the issue has been they may as well have hung all the washing on the line.
I guess the policing for the 2014 show season and beyond falls entirely to the breed societies to mark the pitch and referee the games.
Global Dairy Auction crashes 8.9% in 2 weeks (4th April 2014)
Tuesdays Global Dairy Auction (GDT) saw prices continue to head south with the average all products realisation price down to US$4,124, equivalent to an 8.9% fall. As the Irish Farmers Association commented “The GDT auction is undoubtedly a very important indicator of global market developments, watched by all in the sector.”
In the past eight weeks the average auction price has fallen by $918/tonne or 18.2% from a top of $5,042/tonne on the 4th February.
Key movers of interest were:
Butter milk powder down 15% to average $4,211 tonne
Butter down 11% to average $4,040 tonne
SMP down 9.6% to average $4,126 tonne
WMP down 8.4% to average $4,033 tonne
Cheddar down 3.5% to average $4,438 tonne
The only glimmer of light appears to be the fact that the tonnage on offer at today’s auction was a peak at 41,902 tonnes and from here on will decline along with milk production in the Southern Hemisphere. In addition the fact the Arla Westbury SMP is only down on average a shade over 10% in the same eight week period is better that it could have been.
Arla Westbury low heat SMP down $345 (7.8%) to average $4060 tonne.
Arla Westbury medium heat SMP down $255 (5.7%) to average $4150 tonne.
Farm gate milk prices – the vortex is coming fast (4th April 2014)
The latest GDT auction results, coupled with phenomenal UK daily production, in Ian’s opinion completely kills off any thoughts that the milk price will hold. (The first price cuts are already happening in fact - see Rock Dairies story later).
It will be close to a miracle if 13,000 Arla non-organic members don’t experience a price correction from early May of towards 1ppl if not more and if things continue to slide a further price correction could easily follow in early June. This will trigger a vortex and few, if any, will avoid being sucked into it.
UK milk production is disastrously good. We are still between 5 to 6 weeks away from peak daily production and already you can’t hire or buy a milk tanker for love nor money and spot price is 25ppl and falling, with 20ppl or less looming, bar another miracle. We simply don’t have the processing capacity and those with insufficient processing and brokers are squealing and so are some bankers who it’s likely will, in some instances, step forward and insist on a price cut from some buyers.
It’s fine for DairyCo in this week’s Datum publication to talk about Easter demand for cream supporting prices and Mexico, Brazil, Russia, India and China set to freshen up EU dairy exports but the elephant in the room is current production, that for May and beyond, and how we can haul and process the extra milk.
Quota surge as producers fear withheld milk cheques (4th April 2014)
Suddenly there is serious talk that at least two UK milk processors are suggesting they intend to withhold milk cheques once a producer’s quota is filled until the levy position is crystal clear.
This week quota has flipped through the 1ppl barrier with ease and Monday’s national production figures for March are almost certain to fuel more enquiries. The UK paying super levy in 2014/15 is, in Ian’s opinion, a big call but milk buyers unwilling to take any risk is logical and quickly coming to the surface.
TSDG prices tip over 34ppl but it’s an each way bet (4th April 2014)
Tesco and Promar have completed their six monthly cost of production (COP) cost tracker analysis and the result is that the COP has reduced by 0.88ppl to standard litre price of 31.93ppl, plus 0.5ppl for the Promar costing’s.
The 0.88ppl is predominantly as a result of significant increases in on farm production, which spreads some of the costs across more litres as well as a decline in feed costs.
The result is the TSDG contract clause is triggered, which means TSDG producers will receive the higher milk price paid to non-aligned Muller Wiseman producers or Arla directs plus 0.5ppl if they are involved in the Promar costing’s and 0.2ppl to cover Tesco’s Health & Welfare requirements – total additions 0.7ppl. It’s effectively an each way bet for Tesco farmers in so far as they receive the higher of the two prices.
The TSDG producer prices are as follows:
Muller Wiseman +0.51ppl from 1st April to 34.3ppl (33.6ppl non aligned + 0.7ppl additions)
Arla +0.50ppl from 1st March to 34.2ppl (33.5ppl non aligned directs + 0.7ppl additions)
Whilst the TSDG/COP cost tracker will not be reviewed and analysed for a further six months these milk prices are live and will simply track the two non aligned prices on a monthly basis, unless during the next six months the two processors’ non aligned prices drop to the 31.93ppl COP level.
So, if Arla and/or Muller Wiseman make a price correction to their directs/non aligned producer price Tesco will immediately make a corresponding reduction on a like for like basis having regard to the Voluntary Code of Practice and respecting a 30 day notice period.
2ppl price drop from Rock Farm Dairy warrants answers to questions (4th April 2014)
Rock Farm and its liquid dairy processing has had its fair share of troubles in recent years and has once again hit the radar today with news it will drop producer prices by a whopping 2ppl from 1st May. This will take producers standard litre price down from 33ppl to only 31ppl. Note they have confirmed that they do have seasonality payments
Rock Farm claim to be “Pride of the North” but this unwelcome news will dilute that pride amongst its direct suppliers as they digest the grim news.
The news and the background to the cut will be of huge concern to its producers.
At one time only one direct supplier stuck with Rock but now it is believed they have recruited 26 direct suppliers across Durham, Cumbria and Northumberland. Someone was always going to be the dam buster but at 2ppl it smacks of 2012 if others follow the Rock farm lead
First Milk Welsh Tesco farmers have their contracts re-instated (4th April 2014)
Back in September 70 First Milk Welsh members, who supply Tesco via Muller Wiseman (MW) with liquid milk, were served 12 months notice on their contract to end 1st October 2014 by Muller Wiseman.
At the time First Milk commented “We would hope at some point in the future to be able to withdraw this notice.” It has happened and the contract has been re-instated for an estimated 50 million litres.
A spokesman for
Müller Wiseman Dairies said:
“We are pleased to confirm that agreement has been reached with First Milk to supply us with milk from Welsh farms for our customer, Tesco.
“Under the agreement, First Milk dairy farmers who currently supply this contract and are part of the Tesco Sustainable Dairy Group (TSDG) can continue with their current supply arrangements.”
Arla to merge with EGM Walhorn Co-operative (4th April 2014)
Arla and EGM Walhorn have announced their plans to merge, which, if approved, will add a further 800 Belgian, German, and Dutch dairy farmers to the Arla family plus in excess of 500 million litres of milk. A decision will be reached on the 14th May.
Arla secure half of its 2014 recruitment target in a month (4th April 2014)
Arla have exceeded 150 million litres of signed up milk in a month, which is half of its 2014 target of 300 million litres.
It could well be a case of line up lads and form an orderly queue for the rest, but we’ll have to wait and see what happens to its milk price from now on.
TSDG prices tip over 34ppl but it’s an each way bet (3rd April 2014)
Tesco and Promar have completed their six monthly cost of production (COP) cost tracker analysis and the result is that the COP has reduced by 0.88ppl to standard litre price of 31.93ppl plus 0.5ppl for the Promar costings.
The 0.88ppl is predominantly as a result of significant increases in on farm production, which spreads some of the costs across more litres as well as a decline in feed costs.
The result is the TSDG contract clause is triggered, which means TSDG producers will receive the higher milk price paid to non-aligned Muller Wiseman producers or Arla directs plus 0.5ppl if they are involved in the Promar costings and 0.2ppl to cover Tesco’s Health & Welfare requirements – total additions 0.7ppl. It’s effectively an each way bet for Tesco farmers in so far as they receive the higher of the two prices.
The TSDG producer prices are as follows:
Muller Wiseman +0.51ppl from 1st April to 34.3ppl (33.6ppl non aligned + 0.7ppl additions)
Arla +0.50ppl from 1st March to 34.2ppl (33.5ppl non aligned directs + 0.7ppl additions)
Whilst the TSDG/COP cost tracker will not be reviewed and analysed for a further six months these milk prices are live and will simply track the two non aligned prices, on a monthly basis, unless during the next 6 months the two processors non aligned prices drop to the 31.93ppl COP level.
So, if Arla and/or Muller Wiseman make a price correction to their directs/non aligned producer price Tesco will immediately make a corresponding reduction on a like for like basis having regard to the Voluntary Code of Practice and respecting a 30 day notice period.
Iceland offer 8 pints for £1.80 (28th March 2014)
Only hours before The One Show debate comes the news that Iceland are selling 8 pints for £1.80. That’s less than 40p a litre. Congratulations Iceland for going to the top of the league as the retailer who has devalued milk the most. Fortunately, Mrs Potter never shops at Iceland and never will.
Dairy Crest hold suppliers April milk price (28th March 2014)
The headline appears to be identical to the Arla one but the reality is that Dairy Crest are unable to move any closer to its major rivals non-aligned milk price viz Arla members (35.01ppl), Arla directs (33.5ppl) or Muller (33.6ppl).
In Dairy Crest Direct’s latest newsletter they state Dairy Crest is “unable to meet this competitor milk price challenge at present”. Is this because Dairy Crest cannot afford to pay producers more money or is the fact they signed up to the Voluntary Code Best Practice? The likely answer is that it’s a combination of the two.
The last time Dairy Crest moved on milk price was from 1st November. The Dairy Crest producer standard litre prices from 1st April are as follows:
DC Davidstow 33.31ppl
DC’s standard liquid and its simplified contract both at 32.56ppl.
Meanwhile, Dairy Crest share value had been dented trading at £4.80 today down 80p in 11 weeks from £5.60 (7th January).
Spot milk prices head south at 26ppl (28th March 2014)
During the week traders have been trading numerous loads of spot milk at 26ppl and the signs are that this will weaken further between now and the middle of May, when the country reaches peak daily production.
The good news is that Westbury’s second drier is now up and running but given the amount of milk that’s been produced there is a limit to how much impact this will have, but for sure First Milk and Arla will have it sweating and running flat out easily into June and possibly beyond.
Wyke Farms Cheese secures international listing (28th March 2014)
Wyke Farms has secured shelf space in 1200 Carrefour Hypermarkets and supermarkets for four of its branded farmhouse cheddars throughout France as well as its stores in the rest of Europe, Asian and The Middle East. Carrefour is recognized as one of the world’s largest hypermarket chains.
Richard Clothier commented “Carrefour is our biggest export listing to date and we are enormously proud of our export business.” This is indeed a fantastic achievement by Wyke.
Wyke produce around 14,000 tonnes of cheddar annually and is the third largest UK cheddar brand.
Crediton Dairy take on 25 Torridge Vale supply contracts (28th March 2014)
Twenty five farmers supplying around 35 million litres of milk have had their milk supply contracts assigned from Devon based co-op Torridge Vale to Crediton Dairy from Tuesday 1st April.
Torridge Vale will continue to facilitate the milk collection and testing.
On further investigation it has been revealed that the 35 million litres of milk was on contract to First Milk until 31st March. First Milk informed Torridge Vale last Friday that they would not be requiring the milk going forward, which left Torridge Vale having to place the milk in less than 10 days. On this occasion the perfect fit was with Crediton Dairy who want milk from Devon farms and came to a recent agreement with Arla whereby 35 million litres less milk will be sourced from Arla, which suits both Arla and Crediton Dairy.
Positive outlook from the worlds largest processor (28th March 2014)
In announcing its record forecast farm gate milk price Fonterra’s CEO Theo Spierings commented “Looking ahead, the outlook for dairy remains strong, and the business has plans in place to profit from the continued rise in global demand.”
Redundancies at First Milk’s Headquarters (28th March 2014)
It was inevitable that following the deal between Adams and First Milk there would be redundancies. First Milk have entered statutory consultation with at least 29 members of staff based at its Headquarters in Glasgow with a view to redundancy. Whether all of the redundancies are as a direct result of the fact that First Milk now has one buyer for the vast majority of its cheese as opposed to numerous buyers is questionable but certainly First Milk has to cut cost and slim down.
No BSE cases to date (28th March 2014)
To date the UK has been BSE free in 2014 and there were only two suspected cases in 2013 both of which were negative on slaughter. The last confirmed case of BSE was five years ago in 2009. (Source: DIN).
Arla hold members milk price for April (26th March 2014)
Arla have confirmed that its milk price for its 13,500 European member owners will be held for April. For GB members that means a www.milkprices.com standard litre price of 35.01ppl for the third consecutive month.
Muller Wiseman (MW) increases its non aligned milk price from April (21st March 2014)
The news that MW is to increase its non aligned milk price from 1st April will surprise many including Ian. Supplying farmers who already receive the 1ppl increase in production payment will receive an additional 0.1ppl, which may only be a tiddly bit but it’s an upward movement and one which is against the general flow of dairy prices. In addition cash flow wise the 1ppl incentive was paid at the year end in one lump and will now be spread across the entire year’s milk payments.
For suppliers who have not succeeded in hitting the 1ppl incentive the increase will be 1.1ppl because today’s announcement confirms MW will close the 1ppl increase incentive scheme to replace it with an extra 1ppl across the board for all its non aligned suppliers.
The incorporation of the 1ppl bonus takes the MW non aligned standard litre price to 33.6ppl, which is 0.1ppl above the Arla direct standard litre price announced a few weeks ago.
The move by MW should lay to rest the theory that the company had only introduced the 1ppl incentive to dodge around the Voluntary Code of Practice. Having said that this move is not strictly code compliant with only 10 days notice but I doubt anyone will raise an eyebrow at that technicality.
GDT auction prices ease again (21st March 2014)
Prices at this week’s GDT auction fell again this time by an average 5.2% to record an all products average of $4439 US compared to the $4794 average recorded two weeks earlier.
Notable movers so far as farmers are concerned were:
WMP down 5.8% to average $4439/tonne
SMP faired better than most down only 1.7% in two weeks to average $4584/tonne this is a reduction of 4% ($196/tonne) in the past 4 weeks from $4780.
In the same category Arla Westbury SMP averaged $4405/tonne, which is a 6% ($280/tonne) reduction in four weeks from a top of £4685/tonne.
On cheddar the position is more brutal where the price has dropped by $492/tonne (9.5%) to average $4684, however, this is over the past 8 weeks and was on the back of a chart topping $5133 tonne.
First Milk pay 3% return on member capital (21st March 2014)
First Milk have declared a further 3% will be paid as a capital return to members to be added to the 5% paid last autumn. In addition the co-op will pay 5% on members’ preference shares. These three payments total an equivalent of 0.25ppl for a 1 million litre producer.
New NFU Chairman and Vice Chairman (18th March 2014)
The NFU (E&W) held their Dairy Board elections this morning and there was a healthy battle for the top two positions, which saw a new team in place. Time will tell whether it’s a dream team. Rob Harrison came out top for the position of Chairman with Michael Oakes taking Rob’s previous position as Vice Chairman.
New butter powder plant in the North West (18th March 2014)
J B Woodcock & Sons T/A Yew Tree Dairy have started on the groundworks for its new butter powder plant, which has the capacity to process half of the quantity Westbury is capable of processing. This will mean Woodcock’s plant can process upto 1 million litres of milk a day.
A unique feature of this plant will be its flexibility in terms of it can be switched off for periods and made to “sweat every Christmans and Spring” when milk is plentiful.
Carl Woodcock couldn’t keep the Dutch designed plant a secret for any longer, mainly because tanker drivers can see the excavation works and are asking questions. Steel work will be erected soon and the butter churn is on its way with a 5 tonnes per hour capacity (50% of the Muller Wiseman Market Drayton one).
It’s great news and we certainly wish the Woodcock family the very best in its continued development of what is a very exciting site.
Record February Milk Production up 11.5% (14th March 2014)
February production was a 20 year plus record at 1.090 billion litres, which represents an eye-watering increase of 112 million litres (+11.45%) on February 2013 production.
Standard litre prices are transparent and simple (14th March 2014)
It would appear one milk buyer who pays farmers on either a basket price or simply tracks competitor prices is trying to create a lot of smoke and mirrors behind how competitor prices are calculated. Yes, in particular, Arla’s price and the suggestion that their 33.5p standard litre price for its direct suppliers is based on 4.3% butterfat.
The figures we quote are www.milkprices.com who’s standard litre is:
1 million litre producer on EODC collection
It excludes any capital retentions or AHDB levy.
Simple & transparent.
Cheapest retailer milk – Morrisons at 42ppl (14th March 2014)
Morrisons are selling Meadow Park semi-skimmed milk for 42ppl, which is cheaper than competitors 4 pints for £1 deal (44ppl).
The fear is that Morrisons attack to be the cheapest will simply be followed by its competitors.
Certainly Tesco have stated this week that they (Tesco) “hope our competitors will follow our lead” (reference milk price selling and procurement).
Buckle up its heading for a rough ride for all as retailers do battle.
Top Marks to Reaseheath (14th March 2014)
Full marks to Reaseheath College's Toni-Anne Harrison for her quality comments on peak time Chris Evans’ Radio 2 Breakfast Show this week talking about training in the dairy industry.
Massive publicity for the UK dairy industry – well done
Morrisons ditch 100% British meat commitment (14th March 2014)
Following a chance conversation with a man in the know (AKA as a big mole), Ian contacted Morrisons to establish whether the rumor that their weekly kill of British lambs by Woodheads was scheduled to reduce by 6,000 lambs a week, starting on Monday with British lamb to be substituted by New Zealand lamb. Morrisons eventually confirmed that from now until June, Morrisons will be selling New Zealand lamb which
“is currently in season, and therefore at its best. From the beginning of June, we’ll switch back to 100% British lamb.”
This is the first time Morrisons have mad such a switch.
As a result Morrisons will presumably have to amend their website and marketing. No longer can they feature a picture of ewes and lambs with the claim “100% from British farmers” and they may have to amend their claim that they sell 700,000 British lambs a year.
No doubt some farmers, their wives, sons and daughters will be able to give Morrisons Market Street butchers some useful tips as to how or where they can stuff their New Zealand lamb.
Morrisons issued a statement to Ian, which reads:
“In-season New Zealand lamb offers customers a great quality and affordable alternative to our British lamb which will continue to be available in all stores. Both our British and New Zealand lamb is clearly labelled with country of origin information and customers will be able to decide which they want to buy. We’ll switch back to 100 per cent British lamb at the beginning of June as it comes back into season. We can be very clear though that our commitment to British farmers remains more significant than any other retailer. Morrisons will still sell a higher percentage of British meat than any other major British supermarket and all Morrisons-branded fresh meat along with all of the meat sold from our in-store butchers’ counters will continue to be British.”
This story appeared today on www.rforster.com. You can tell its quiet in the dairy world hence we have taken a passing interest in other newsworthy stories connected to beef, lamb and retailers
Young people being urged to eat no meat and drink no milk during in May (14th March 2014)
Friends of the Earth (FOE) has launched a Meat Free May campaign targeted at young people – and false claims that cattle universally damage the environment through their greenhouse gas emissions (GHGs) are offered as justification for persuading them not to eat any meat, or drink any milk, for a month.
Visitors to the FOE website are told that meat and milk production are responsible for 14.5% of all global greenhouse gas emission –and it would be better the planet if they moved to a more plant-based diet.
This is further proof, if it were needed, that misinformed environmentalists are determined to pursue the false claim that meat eating, specifically beef eating, accelerates climate change
Young Friends of the Earth has challenged young visitors to its website to take meat and milk out of their diet for a full month.
But what it has not said is that there is a counter view that grass, on which ruminants graze, absorbs (sequesters) more greenhouse gas (GHG) than the cattle themselves produce – and so cattle make a positive contribution to climate change resistance and more beef eating and milk drinking, would encourage this. Of course no one mentions this.
Vegetarian Society excited by Tesco’s support for National Vegetarian Week (14th March 2014)
This is another headline in the same Robert Forsters new Beef Industry Newsletter, which is self explanatory.
The text in Robert’s Beef Industry newsletter reads:
“Tesco has stunned the red meat industry by agreeing to be the headline sponsor for National Vegetarian Week – which is the focus of a national campaign to promote a meat free diet.
It takes place on 19th-25th of May and is organised by the National Vegetarian Society whose Chief Executive says she is excited that Tesco have taken up the veggie challenge because more people are moving towards a meat free diet - and it’s never been easier to persuade them.
John Scouler, Tesco’s commercial director has said the company is delighted because its job is to give customers the best possible range of food whenever and however they want to shop - and it is no different for vegetarian clientele.
First to query the move is the British Meat Processors Association (BMPA) – although its response is hardly red blooded.
It has said that while it is perfectly appropriate for Tesco to offer vegetarian products as part of their overall consumer offer it does seem strange it has chosen to sponsor National Vegetarian Week.
So it is appropriate to remind both Tesco and the public in general of the many proven positive nutritional benefits of including red meat in a balanced diet.” (see story above from Robert’s site for the counterpoint.)
Tesco appear to be skating on thin ice in terms of PR with livestock farmers. If the 4 pints for £1 promotion, together with Tesco’s support for National Vegetarian Week had come out of the woodwork on or before the NFU Annual Conference they could have instantly gauged whether they were winning farming friends with their ideas. Perhaps these ideas were planned to come out afterward the NFU conference. Time for Tesco Tom (Hind) to get a grip unless by chance he is at the centre of these innovations.
2.3ppl price increase for Dairy Crest Formula contracted producers plus a second option (10th March 2014)
Dairy Crest and DCD have reviewed and rebased their formula following its first birthday the result is both an improved offer and contact terms.
The new formula will deliver an April milk price of 32.56ppl plus a 0.19ppl signing on premium for those who sign up before April 1st. This takes the total price to 32.75ppl (www.milkprices.com) and is an increase of 2.3ppl on the current formula price.
This contract gives producers the option to contract either 25%, 50% or 75% or 100% of their annual production.
Producers should note if they sign up before April 1st the 0.19ppl sign on premium lasts for the duration of the contract and can only be varied if DC give a minimum 12 months notice to change it and it’s the same notice if they wish to rebase the contract in future. This makes the contract evergreen.
In addition the two have launched an alternative “simplified formula liquid contract,” which features a reduced butterfat requirement of 3.75%, no profile and includes volume bonuses.
However, it is an all in all out with 100% volume commitment required by each producer. The April price for this will kick off at 32.56ppl.
Dairy Crest and DCD were pioneers in offering producers the option of a formula contract and given the general tone of the industry these two offers are considered to be a positive result for all parties
0.56ppl milk price cut for Sainsbury’s suppliers-from 1st April (7th March 2014)
The Sainsbury’s cost of production model has produced a 0.56ppl reduction for the three months of milk delivered in April, May and June.
This should take producers standard litre price down to 33.16ppl (from the current 33.72ppl). Note the Sainsbury’s model looks backwards to what has already happened to costs. The next review will take effect from 1st July.
Tesco raise price to its Arla suppliers from March 1st (7th March 2014)
Arla Tesco direct produces will receive 34.2ppl from March 1st following a meeting and review this week. This new improved price affects around 50 Arla producers who are not members/owners of the Arla Co-operative.
Basically it is the 33.5ppl non aligned Arla direct standard litre price plus 0.5ppl towards the Promar costing’s plus 0.2ppl towards compliance with the livestock code of practice.
1.62ppl price cut for Muller Wiseman formula contracted producers (7th March 2014)
The current MW non aligned formula price is 34.62ppl (Jan-March) and will be reduced to 33p from April 1st.(www.milkprices.com)
The formula calculates an ex farmgate milk price via global commodity prices and a basket of competitor milk prices.
Muller Wiseman producers can commit and sign up to a ceiling of 150 million litres under the formula. Subject to committing a minimum of 10% of their production by 21st March.
GDT auction prices fall 4% (7th March 2014)
This weeks GDT dairy auction saw the average price fall 4% to average $4794 tonne which is a price not recorded since November.
SMP prices down 3.9% to average $4,658 tonne.
WMP prices down 5.7% to average $4,703 tonne.
Arla SMP down 3.4% to average $4525 tonne.
Morrison’s cheese contract goes to Lactalis (7th March 2014)
Last week we reported that Lactalis had secured a major cheese contract and it has now been confirmed that they have won the Morrison’s contract from First Milk and its Haverfordwest Creamery.
In addition it is confirmed that another of First Milks cheese contracts with the Co-op is currently out to tender.
Having said that there is Anecdotal evidence that some deals on cheese have been done by processors in anticipation of ex farmgate milk prices dropping significantly and they haven’t and hopefully they won’t if the Arla factor remains as it is today. Ouch!
Tesco drop in store milk price by 28% to £1 for 4 pints (7th March 2014)
From Monday (3rd) Tesco dropped the price it charges customers for 4 pints of milk from £1.39 to £1.00 to join ASDA’s, Aldi & Lidl’s prices. The price drop is part of a long term commitment by Tesco to reduce prices on milk, tomatoes, onions, peppers and cucumbers and is not a short term promotion.
In addition, the price of a 6 pint bottle drops by 26% from £1.99 to £1.48. Tesco were keen to point out that the lower prices will have no impact on its 650 TSDG Mueller Wiseman and Arla farmers milk price.
However, it will put pressure on the liquid market, especially the middle ground where the word is that some processors intend to almost dump surplus milk effectively crashing the price.
Under the old world of 2012 milk cuts followed by protests would undoubtedly be the order of the day but Arla’s underpinning is preventing ex-farm gate milk prices falling.
For some processors it’s a new world in which they have to get out there and sell their milk and milk products whereas previously prices they received fell and they simply passed the shortfall down the chain to the last domino – the farmer to absorb the shortfall.
Tesco sneeze and the whole retail industry catches a cold (7th March 2014)
Tesco dropped its milk price on Monday only to be quickly followed by Sainsbury’s and Morrison’s and to a lesser extent The Co-op.
Yes Sainsbury’s and Tesco can claim that their aligned dairy farmers will not contribute to the price cuts. However Morrison’s cannot claim to be as transparent and are claiming to be “still looking after our farmers”.
The truth is neither farmers nor the public will ever know who is paying for the Morrison’s price drop and the likes of FFA are sure to be on Morrison’s case as they stir from a period of winter hibernation.
FFA are on the case for the sudden devaluation of milk and it will be interesting to see how they plan to highlight the problems and more importantly how much grass roots support they receive.
Tesco advert is a disgrace (7th March 2014)
Tesco have rattled many dairy farmers with their commitment to offer 4 pints of milk for £1 earlier in the week but today’s revelation in terms of their advert takes the biscuit.
You would have thought that Britain’s biggest retailer could employ an advertising agency who could at least tell the difference between Dairy cows and beef cows.
Yes the Tesco bill board advert promoting 4 pints for £1 shows beef cattle grazing in a field. No doubt Tesco Tom (Hind) will be kicking some backsides.
Dairy Expo will be the first big Dairy show under surveillance (7th March 2014)
Tomorrow (Saturday 8th) The 2014 Dairy Expo event with judges from the US, Canada and Holland will be held. This marks the start of the 2014 dairy show season. The indications are there will be increased covert surveillance at this years shows from farmers, judges, organisations and vets who are all keen to protect the image of British dairying and who will blow the whistle on any cheats. See Ian’s Dairy Farmer article, uncut version for more on this topic.
First Milk & Adams partnership starts 12th March (7th March 2014)
The OFT issued its 27 page investigation report into the proposed partnership and have given it the green light. At the same time the Irish OFT equivalent also gave their approval to the deal.
No details have been released as to the price paid by Adams for the deal however this will become public in First Milks accounts if not sooner. The marriage ceremony is over and from 12th March the two will start to get accustomed to working together.
0.56ppl milk price cut for Sainsbury’s suppliers-from 1st April (5th March 2014)
The Sainsbury’s cost of production model has produced a 0.56ppl reduction for the three months of milk delivered in April, May and June.
This should take producers standard litre price down to 33.16ppl (to be confirmed). Note the Sainsbury’s model looks backwards to what has already happened to costs. The next review will take effect from 1st July.
Tesco drop in store milk price by 28% to £1 for 4 pints (3rd March 2014)
From today Tesco have dropped the price it charges customers for 4 pints of milk from £1.39 to £1.00 to match ASDA’s price. The price drop is part of a long term commitment to reduce prices on milk, tomatoes, onions, peppers and cucumbers and is not a short term promotion.
In addition, the price of a 6 pint bottle drops by 26% from £1.99 to £1.48. Tesco are keen to point out that the lower prices will have no impact on its 650 TSDG Mueller Wiseman and Arla farmers milk price.
However, it will put pressure on the liquid market, especially the middle ground where the word is that some processors intend to almost dump surplus milk effectively crashing the price.
Under the old world of 2012 protests would undoubtedly be the order of the day but Arla’s underpinning is preventing ex-farm gate milk prices falling.
For some processors it’s a new world in which they have to get out there and sell their milk and milk products whereas previously prices they received fell and they simply passed the shortfall down the chain to the last domino – the farmer to absorb the shortfall.
Arla hold March milk price at 35.01ppl (28th February 2014)
Arla have announced that their member milk price for March will be held at the February level of 35.01ppl for their standard litre as calculated by www.milkprices.com.
This was undoubtedly the number one topic of conversation at both the NFU Dairy Breakout and last night’s PTF Dinner in London where over 600 of the great and the good in the industry wined and dined.
Fur and feathers are flying with one or two milk processors privately confessing they believe, (in some cases had prayed) the ex-farm gate milk price in the current market should drop by between 2 to 3ppl. The reality is they are having to battle with what is called The Arla Factor. Some were spitting feathers over Arla’s latest price moves but none are brave enough to move prices down. From what Ian gathered several processors appear to have almost promised retailers that their last 2013 price increase would be followed by an early 2014 price drop. Clearly they are not going out to customers for more money and a prudent man with big ears believes some have done forward business banking on the price dropping. Once again, we have processors caught with no trunks on now the Arla-fuelled tide has gone out.
1.23ppl milk price increase for Arla Directs from 1st March (28th February 2014)
This will be a welcome increase and takes producers standard litre price to 33.5ppl based on www.milkprices.com .
It immediately triggers a very interesting dilemma for Muller Wiseman and its producer representatives in terms of what happens with their Tesco direct price from May 1st.
Given the fact Tesco are committed to pay at least the price both Arla and Muller Wiseman pay their non aligned producers it means either Muller Wiseman have to lift their price or we end up with two Tesco prices with the Arla one topping the table.
Tesco have made the commitment so it’s a case of whatever the individual processors standard litre price is at the time they will honour. Ian spoke to Tesco following the NFU Dairy Breakout session at the Conference and they confirmed this to be the position. Note we are talking about the price paid to Arla Directs which is a clean price with no deductions.
For the producer representatives and non Arla suppliers who appear to have an insatiable appetite to find fault with what Arla do Ian suggests you spend your time and energy persuading your own milk buyer to increase the ex farmgate milk price and to get out there and obtain the increase from the market place. Evidence is that few if any are pushing for increases believing that a price drop is imminent so there is no need to do anything other than sit and wait.
It won’t be long before FFA is motivated to use its powers of persuasion initially with direct negotiation. Watch this space for further news and farmer reaction. The pressure is mounting for other milk buyers to follow Arla’s lead but can they? The clock is ticking and the 1st March is looming by which time price moves for 1st April have to be announced under the voluntary code.
31.61ppl was the UK’s average 2013 milk price (28th February 2014)
Within the figures released by DEFRA it shows GB averaged 31.67ppl and Northern Ireland 31.30ppl.
Lactalis secure major retail cheese contract (28th February 2014)
Another talking point at last night’s PTF dinner was the news that Lactalis have secured a major retailer cheese contract to supply around 12,000 tonnes of unbranded cheddar.
This leaves the company that has lost it with around 120million litres of extra milk to broker unless replacement business can be found. The name of the retail customer and who had lost the business is yet to be officially confirmed but by process of elimination it’s not Tesco or Asda.
Change of policy by Chairman of the Voluntary Code Review (28th February 2014)
Mansel Raymond announced to the audience at the NFU Conferences Dairy Breakout Session that submissions on the code do not have to go via Dairy UK, NFU or NFUS and can be sent, by email, direct to the review Chairman Alex Fergusson MP.
The email address is firstname.lastname@example.org and in response to a question raised by Ian at the Breakout Session, Mansel confirmed that this email address goes direct to the Chairman and is not accessible by others.
The deadline for producers, processors and anyone interested in putting forward any points is the 21st March.
Talk at the PTF dinner was that unless there was a level playing field across all companies on notice periods the code would not get signed off.
Badger cull report blow is first test for the new NFU team (28th February 2014)
Bright red faces and “who the hell has leaked the information” are the order of the day in DEFRA as The Guardian and TV reported the fact that last year’s badger cull failed the humaneness test according to the independent panel’s report.
For details of the article click on www.theguardian.com/environment/2014/feb/28/badger-cull-humaneness-test-tb-cattle?CMP=twt_gu
Unless this is a very selective leak of information, and the bulk of the report is OK, then the NFU will struggle to turn this into a positive story, which is sure to be a huge blow to the cull plans.
Arla to source sustainable soya for members feed (28th February 2014)
Arla has committed to purchase only RTRS (Round Table Responsible Soya) for inclusion in dairy feed for its 13,000 European owners/suppliers.
Basically Arla have invested around £1.2million a year to acquire the certificates which bridge the difference between RTR Soya and non RTR Soya, so the move is at zero cost to its 13,000 members and will be a useful selling point of difference for the co-op it says.
Quinney is battered (28th February 2014)
NFU Deputy President, Adam Quinney was literally battered by Minette Batters in Wednesday’s NFU elections. Minette took 52% of the votes on the first round and it was game over for Adam as she becomes the NFU’s first female top table national office holder. There is even the expectation from many that she will become the first female NFU President in the not too distant future. A lady in charge of the NFU might be a good thing, too, given that behind most good farmers there’s a woman kicking him up the arse.
Meurig Raymond takes over from Peter Kendall as President with Guy Smith taking the position of Vice President.
Apologies for not producing a bulletin last week (21st February 2014)
To be honest there was no news to report with the exception of the Dairy Crest formula price drop announcement, which was too late to go to print arriving with farmers by email at 16.57 hours on Friday evening from “The Dairy Crest Milk Procurement Team”. Great timing if you want a trouble free weekend and don’t want to appear on Potter’s weekly bulletin (see below for further detail).
0.314ppl further price drop for the Dairy Crest formula contract price – from 1st March (21st February 2014)
This is the fifth consecutive monthly price cut and takes the standard litre price to under 31ppl at 30.947ppl. This is 1.443p below Dairy Crest’s standard litre price of 32.39ppl, which has been static for several months. The fall is predominantly due to the continued weakening of cream prices, which have seen £250/tonne wiped off in two months to £1,500 tonne and still falling.
As Ian commented when the contract was launched a year ago “locking into a commodity driven formula price is not for the faint hearted! In whose interest are these pricing mechanisms designed to protect?”
Global Dairy Trade auction results were a mixed bag with Arla SMP +1.8% (21st February 2014)
Tuesday’s 110th auction saw the average price index fall 1.2%.
Notable prices were:
Butter down 3.8% to average $4586 tonne
Cheddar down 1.7% to average $4845 tonne
SMP almost stand on to average $4780 tonne
WMP down slightly at 0.3% to average US $4999 tonne
Arla continue to put forward Westbury SMP for auction, which averaged $4685 tonne on Tuesday up $85/tonne compared to the price achieved two weeks ago.
NFU Conference – Kendalls (21st February 2014)
Next Tuesday & Wednesday the NFU (E&W) will hold their annual conference in Birmingham when president Peter Kendall will step down after a very successful 8 year term. During his previous 7 opening addresses and press conferences Peter has regrettably had to feature the GB dairy industry almost exclusively for negative reasons. Indeed, during this term of office dairy has had more than its quota of Kendall’s time and commitment. Well as he stands up to deliver his parting message at least his dairy slot should be positive and upbeat. It’s all change in dairy and no one really wants to return to the old days.
Arla 2013 results (21st February 2014)
No real surprises in the fact 2013 saw Arla pay its highest recorded price. Its 2013 performance price (the amount Arla generated from each kg of members milk) was up 12.5% to 3.05DKK per kg (33.91ppl) on 9.5 billion litres of owner members milk. In 2012 the figure was 2.71DKK (30.21ppl) on 7.5 billion.
Growth outside Europe was a key factor and three priority targets for Arla going forward are Russia, China and the Middle East/Africa where Arla are building a long term permanent presence.
Total revenue up 10 billion DKK (£1.1 billion) to 73.6DKK (8.4 billion) and Arla hit their target profit of 3% (2.2 billionDKK/£250 million).
And for 2014 (21st February 2014)
Arla’s target is to increase revenue to 79 billion DKK with a 3% net profit target equal to 2.4 billion DKK targets on which Peter Tuborgh comments “We are off to a good start in 2014”.
Arla UK (21st February 2014)
The UK is easily Arla’s biggest market by value and last year Arla’s UK revenue rose by 22% to £2.2 billion.
Just to put this amount of money into perspective in 2012 the total value of UK dairy product imports totalled almost the same at £2.3 billion. So to eliminate all UK dairy imports we need to wipe out the equivalent of Arla’s record UK 2013 output every year. Food for thought.
England v Peru – Wembley Stadium – Friday 30 May 2014 (21st February 2014)
Upto five discounted tickets available in the pick of all areas to sit in. The 5 tickets can be split. If interested email Lydia@ipaquotas.co.uk for a seating plan and prices.
1ppl milk price rise for suppliers to Barber’s – from 1st February (10th February 2014)
The take producers standard litre price to 33.37ppl (www.milkprices.com)
Firm trade at GDT auction (10th February 2014)
Tuesday’s fortnightly GDT auction saw the overall price index increase by 0.5% despite the fact the quantity of product on offer was up on that put up for auction two weeks ago.
The average all products price was US $5,042 tonne up 0.33% mainly driven by higher prices for WMP (+1.4%) and butter (+2.6%). Arla’s Westbury SMP averaged $4,600/tonne identical to that achieved two weeks earlier.
WMP averaged $5,005/tonne
SMP averaged $4,746/tonne
Butter averaged $4,745/tonne
Cheddar averaged $4,935/tonne
Milk production continues to aggressively head north (10th February 2014)
January milk production weighed in at 1.170 billion litres, which is 110.6 million litres or 10.5% up on a year ago.
Cumulative milk production for the first 10 months of the quota year now stands at 11.32 billion litres, which is 438 million litres or 4% more than the same period a year ago.
Adams Foods (Irish Dairy Board) deal with First Milk gets the green light (10th February 2014)
The OFT have given the green light to Adams Foods to acquire the sale and marketing of First Milk’s UK hard cheese business.
Westbury to process German concentrated skim (10th February 2014)
The late December fire at Arla’s Pronsfield processing plant in Germany, which could easily have resulted in multiple fatalities, means the plant will not be back to full capacity for several months.
Arla will be bringing concentrated skim from Germany to Westbury for up to three months to relieve the pressure and have stated that the SMP will be sold outside the UK to other export markets so as not to affect our domestic market. Arla would not disclose anticipated quantities expected to be imported from Germany, however, they have stated that the importation will not result in Arla or First Milk farmers milk being replaced with German milk. The Pronsfield factory and Arla still have to fulfil powder contracts to Asia and Africa, which is where the skim is destined.
It’s unfortunate that this move comes just as our peak production is about to kick into gear but in declaring the importation before it happens it should at least scotch the rumour mill when German transports are spotted in Westbury and stories rattle around along the lines of Eastern block milk coming to Westbury and blocking the filters up etc. We have heard it all several times before.
Dale Farm expansion continues with acquisition of Ash Manor Cheese business (10th February 2014)
The Dale Farm processing subsidiary of successful Northern Irish co-op United Dairy Farmers has progressed south into Wales with the acquisition of Ash Manor Cheese and their grating, slicing and cheese packing plant in Wrexham.
The deal gives Dale Farm instant access to established outlets for its cheese.
Scot to chair Dairy Industry Code Review but he won’t accept direct contributions (10th February 2014)
The overdue review of the Code of Practice will be chaired by the Rt Hon Alex Fergusson MSP. However, in a surprise move any submissions will first be channelled through either Dairy UK, NFUS or the NFU E&W, all of whom were key to the establishment of the Code.
Rumours of vetting and doctoring of submissions are already doing the rounds, which was only to be expected. The review is expected to be concluded quickly by spring.
Arthur Reeves goes part time