Dairy Industry news and features

This page was last updated at 12th February 2016 (Press your refresh/reload button for the latest information)

Note all standard litre prices quoted are before seasonality, balancing charges, capital retentions or production incentive payments/bonus.

 

  

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0.75ppl milk price reduction for suppliers to Wensleydale Creamery (Hawes) - backdated to 1st February.     (12th February 2016)

This takes producers manufacturing standard litre down to 23.07ppl (www.milkprices.com)

 

UK Production continues to head North   (12th February 2016)

December’s production weighed in at 1.215 million litres +5.1% compared to December 2014 (+ 59 million litres)

 

“Payne’s dairies edges back into profit after cutting farmer prices”    (12th February 2016)

That’s a headline from an article in the Grocer which goes onto report that Payne’s 30th April 2015 profit of £69,000 reverses two years of losses and is some way off the 1.6 million profit in 2010. From the outside it looks like Payne’s, fell into the same trap as others in 2012 to  2014 trying to keep up with the likes of Arla in the price it paid producers for milk.

 

PTF scoops the Top Industry Award for a 2nd consecutive year   (12th February 2016)

The Provision Trade Federation (PTF) has been named Best Trade Organisation at the Food Management Today Industry Awards for the second consecutive year.

 

The PTF represents in excess of 90% of the UK trade in Dairy and pigment but it’s in dairy where those involved in the UK Dairy Industry regularly appreciate its forward thinking regular updates, alerts and market predictions.

Its dairy predictions and market outlook simply eclipse and dwarf the very basic outlooks produced by other organisations.

For example in its latest edition it calculates that 20% of the milk cheque money goes to 12% of the dairy farmers with the expectation those 12% (1500 farmers) will soon take 25% of the money, the 1500 farmers are those on   retailer aligned contracts (Tesco, Sainsbury’s, Co-op, Waitrose, M&S, Nestle etc).

 

In Scotland the figure is closer to 40% going to 23% of dairy farmers.

 

 On a more amusing but never the less serious note there is an opening article in the PTF’s latest dairy update headed

            “Our Father, who art in heaven…”

Reporting that 140 representatives of the European Milk Board (100,000 members) met his Holiness Pope Francis in late January at the Vatican where they were blessed and all prayed for divine intervention.

            “Hats off to them for doing something that doesn’t involve tipping milk in the streets or burning tyres. Given that The Almighty hasn’t got much on his plate these days the job should be sorted quite soon…” commented Walkland in the PTF bulletin.

 

The Author of the PTF’s Dairy report is Chris Walkland who will make a guest appearance at the NFU AGM Dairy Break out session at its conference in 10 days (23rd & 24th February) time where he will provide a Dairy Market Outlook & update. It’s sure to be hard hitting with no primary school basic analysis as to where the UK Dairy Industry is and what the outlook for the rest of 2016 and beyond is. 

 

First Milk pricing changes see the A litres increased from 80% to 90%   (12th February 2016)

First Milk has written to members confirming a schedule of pricing changes which take effect from April 1st

 

The key changes include the following:

 

A). The current A literage will increase from 80% to 90%.

 

b).  A new milk price index will be utilised to track First Milks price against its main competitors and will be independently audited by www..milkprices.com and reported to members on a quarterly basis.

 

c). The current complex matrix of milk price schedules will be cut and this will be simpler for First milk to manage and      easier for members to audit and monitor.

 

d). For members supplying First Milks Haverfordwest and Lake District Creameries there will be a transport charge ranging from zero to 1.5ppl according to the distance between the factory and the supplying farm.

 

e). Move money will be paid for quantity and less on hygiene.  There are more details on this to be circulated to members and whilst there will be winners and losers the nett overall effect to First Milk are basically cash neutral.  In other words it’s NOT a sneaky price cut but a re jig which is market related and visible.   

 

 

Snap to it on Snaptags!

Ian Potter Associates has, for the last 3 years, been actively marketing the Snaptag brand of cattle, sheep and pig ear tags. Repeat orders from every customer (OK, with the exception of one) speak for themselves in terms of their quality and durability. Basically they're the bull's/boars/rams nadgers when it comes to tags.

 

And this, of course, is the bull's nadgers when it comes to dairy bulletins, which we send to you FOC because we're nice people.

 

There is, though, no such things as getting summut for nowt, and we strive to sell something on the back of it - hence our plugs for these tags, Pinpointpal vehicle tracking devices, and the occasional request for information for our database cleansing so we know who's genuinely a dairy farmer and who's just pretending'.

 

So if you've got livestock and are in the market for tags (and even if you aren't - we're not fussy!) then give us a call! Our general tags & sample tags (BVD) are extremely competitive so why not ask us to quote! Go on...you know you want to...

 

For more information please contact Lydia on 01335 320016 or email her on lydia@ipaquotas.co.uk.

 

Thank you and we look forward to your custom and to continuing to be able to send this bulletin out FOC.

 

 

 

Another disastrous GDT auction  (Tuesday 2nd February 2016)

Today’s GDT auction results were nothing short of a disaster with the average price plunging 7.4% to US$2276.

 

All products dropped in value compared to the results achieved only two weeks ago, in particular, WMP which suffered the heaviest fall down 10.4% (US$236 tonne to average under US$2000 tonne).

 

Notable movers were:

 

WMP                down                 10.4%   to average US $1952/tonne

Butter               down                 8.3%     to average US $2905/tonne

Cheddar            down                 4.2%     to average US $2807/tonne

SMP                 down                 2.2%     to average US $1792/tonne

 

The WMP crash prompted an instant reaction from several New Zealand processors whose farm gate milk price is now at or close to $4 compared to an industry wide accepted breakeven figure of $5, which the majority of New Zealand’s diary famers need.

 

One significant contributor to the fall is credited to the lack of demand from countries heavily dependent on oil revenue.

 

1ppl milk price reduction for suppliers to Joseph Heler Cheese – from 1st March (PRODUCER NOTIFIED)  (5th February 2016)

 

ASDA confirm its commitment to Arla until at least 2019  (5th February 2016)

There were concerns that following the Tesco decision to switch around 40% (180 to 200 million litres) of their Arla supplied milk to Muller that other retailers would jump on the merry-go-round piling further pressure on non aligned milk prices.

 

Whilst such pressure from ASDA cannot be completely ruled out they have at least re-affirmed their commitment to source all its circa 600 million litres of  fresh liquid milk from Arla until 2019.

 

In addition Asda has confirmed it will continue to support and promote the Arla (quality) mark landed last year with a minimum price guarantee of 28ppl.

 

Given this commitment it must surely be fair to assume that as part of the new 3 year deal a minimum price at a similar level of around 28ppl will be part of the package.

 

Meadow Foods to hold its March milk price (5th February 2016)

Meadow Foods have written to suppliers confirming that the March milk price will be stand on meaning a standard liquid litre price of 19ppl (www.milkprices.com)

 

New younger enthusiastic faces wanted on the NFU Dairy Board

The NFU Dairy Board is looking for up to four new appointees. Active dairy farmers with an interest or skills in the dairy supply chain, retail or processing, skills and training, large scale/intensive production, seasonal and extensive production, novel business structures, producer groups and succession are welcome to apply. More information can be found by pressing the link:   http://www.nfuonline.com/sectors/dairy/dairy-must-read/driving-the-dairy-agenda-join-the-dairy-board/.

 

If interested please contact Sian Davies, Chief Dairy Adviser c/o Nancy.Fuller@nfu.org.uk with a CV and covering letter by 9th March.

 

Private Storage Aid extended (5th February 2016)

The European Commission announced last Friday that it has extended Private Storage Aid (PSA) for butter and skimmed milk powder until September 30th, 2016.  PSA was scheduled to close at the end of February.  Regrettably, the announcement didn’t mention a an extension to the PSA scheme for cheese..

 

Under PSA processors retain ownership of the products and receive EU payments for leaving them in store off the market

 

 

Responses to AHDB Dairy’s 3 year business plan  (5th February 2016)

Following several requests Ian has decided to publish his response to the AHDB Business Plan.  Click on this link: Ian Potter response

 

In addition, Kite Consultancy have published their response. Click on

http://www.kiteconsulting.com/getattachment/856687c8-5511-4126-8a10-f18dc4d18665/Kite-comments-on-AHDB-Corporate-plan-13-1-16.aspx

 

A couple of Kite’s comments jump out at readers: “They (Kite’s clients) think it (AHDB Dairy) produces far too much information that is relatively basic, focused on average operators.”

 

Also “Many also believe that some of the intelligence work AHDB Dairy carries out is a waste of time and resources.”  “There is no need for Market Intelligence to report on general dairy news, which is more than adequately covered by the general farming media, industry websites and social media.”

 

In AHDB Dairy’s news article published 11th January the commentary read:

 

“A recovery in prices to more sustainable levels for the whole supply chain is needed but, when this will happen, and how quickly, relies on a combination of three key events: a reduction in milk production, the sale of excess stocks and a rise in demand.” This supports the view that it is, indeed, teaching Grannie to suck eggs. If a dairy farmer doesn’t understand those fundamentals there is no hope!

 

Another comment in a previous report from AHDB diary stated that one of the really important findings in the report was that there is a big gap between current farmgate prices for aligned and no aligned fresh milk.

 

As one farmer emailed – No shit Sherlock and we pay levy money for this sort of commentary which is about as much use as tits on a bull!

 

From emails Ian has received there appears to be a significant number of levy payers who want to see AHDB Dairy bin its 3 year plan and rewrite it, in particular with an emphasis to support domestic dairy promotion, assist with an export strategy, help farmers in these unprecedented times to make tough decisions and big changes as well as up their game on communication and what is currently below average market intelligence commentary.

 

AHDB states that  “AHDB’s dairy staff and Board have been out meeting and listening to levy payers in Scotland, England and Wales.”  Well they might be claiming to listen, but the jury is out as to whether its board will take any notice or change!

 

One things for certain they are going to have to overcome their genetic phobia of associating themselves as the messengers for bad news when attempting to inform farmers of what they term as news.

 

NFU Vs AHDB   (5th February 2016)

In Robert Forster’s excellent Beef Newsletter he recently referred to a disagreement between The NFU and AHDB, which appears to be spearheaded by the high heels of presidential candidate, Minette Batters. Her stance is evidently in contradiction to the position adopted by both the current and former NFU presidents Meurig Raymond and Peter Kendall. 

The snippet reads as follows:

 

 

If Meurig wants to calm the waters in the run up to the NFU presidential election by supporting his old mate Kendall it could be his ultimate downfall.  Farmers across all sectors want someone who will stand up for them and make a difference.

 

As a famous quote goes “Anyone can hold the helm when the sea is calm”

 

That sea is far from calm now so far as the UK dairy industry is concerned or AHDB and its three year plan.

 

Note, Minette Batters Semex Conference comments feature in Ian’s response to the AHDB Dairy Business plan. Click on the link: Ian Potter response

 

AHDB Dairy price reporting back on the radar   (5th February 2016)

DIN has highlighted the decision by AHDB Dairy’s Market Intelligence analysts to cease publishing an average wholesale cheese price whilst continuing to publish the MCVE price.

 

Given the fact anyone with any idea of how to add up can calculate the cheese price from MCVE it’s a puzzle as to why publication of a key price like wholesale cheese has ceased.

 

DIN commented that “It is believed that AHDB Dairy are not publishing a mild Cheddar quote because they don’t trust the market reports they are getting.”

 

Ian questioned the cheese price quoted by AHDB in his October Dairy Farmer article. He questioned AHDB over who they contacted for prices, tonnes traded and how the average was calculated.  Alas, the response was “It’s commercially sensitive information.”  It appears that since that article no cheese price has been published.

 

It’s likely that in obtaining their prices either AHDB analysts asked the questions in the wrong way, leading to questionable answers or simply took shortcuts.  Similar concerns have been voiced over AHDB’s bulk cream prices as to what questions are asked, and to whom, in arriving at the published prices.

 

Dairy UK publish its Export Strategy (5th February 2016)

Dairy UK have published “UK Exporting Dairy to the World”, where they highlight what’s required to allow the industry to unlock the potential in international markets.

 

In the report is a list of actions and recommendations that will boost our exports, including creating a one-stop shop for dairy exporters.

 

Farming Minister, George Eustice, commented “Exports are a crucial part of growing and strengthening the dairy industry and a key part of our plan is to see new markets opened, so that the sector can become more resilient, competitive and profitable.”

 

Now, how do the Minister’s words of encouragement fit with AHDB’s three year zero budget to help exports and this strategy? As it stands they don’t, and a revolt is brewing.

 

500 jobs axed at Arla  (5th February 2016)

Arla has announced its global restructuring including a 500 head count reduction.  Staff involved are expected to all be consulted and notified by mid March.

 

It’s a sad fact that across the world dairy processors of all sizes are cutting back on staff in order to remain lean and competitive.

 

In addition to announcing it’s plan current head of Arla UK Peter Giortz-Carlsen will take on the new position as Head of Europe and his UK role will be taken by Thomas Pietrangeli who is currently in charge of Arla Denmark

 

Another disasterous GDT auction   (3rd February 2016)

Today’s GDT auction results were nothing short of a disaster with the average price plunging 7.4% to US$2276.

 

All products dropped in value compared to the results achieved only two weeks ago, in particular, WMP which suffered the heaviest fall down 10.4% (US$236 tonne to average under US$2000 tonne).

 

Notable movers were:

 

WMP                down                 10.4%   to average US $1952/tonne

Butter               down                 8.3%     to average US $2905/tonne

Cheddar            down                 4.2%     to average US $2807/tonne

SMP                 down                 2.2%     to average US $1792/tonne

 

The WMP crash prompted an instant reaction from several New Zealand producers who’s farm gate milk price is now at or close to $4 compared to an industry wide breakeven figure of $5, which the majority of New Zealand’s diary famers need.

 

One significant contributor to the fall is credited to the lack of demand from countries heavily dependent on oil revenue.

 

3.25ppl milk price reduction for Arla Direct suppliers – from March 1st  (1st February 2016)

This takes their standard liquid price to 16ppl & manufacturing price to 16.78ppl (www.milkprices.com)

With the real possibility that all of them could soon be given 12 months notice to find a new milk purchaser (see Tesco story below)

 

2ppl milk price reduction to only 9ppl for suppliers to Payne’s Dairies Limited (PRODUCER NOTIFIED) – from February 1st  (1st February 2016)

This is a sudden drop communicated to farmers on the 27th January with the B litre price dropping from 11ppl to only 9ppl from today, February 1st and this from a liquid premium processor.

 

In addition, producers paid a 0.35ppl balancing charge deducted from the January milk statement against milk delivered over the Christmas and New Year period.

 

1.0ppl milk price reduction for suppliers to Payne’s Dairies Limited – from February 1st (PRODUCER NOTIFIED)   (1st February 2016)

This takes their standard liquid price to 20.20ppl.

 

1.6ppl milk price reduction for suppliers to Dairy Crest Davidstow – from March 1st      (1st February 2016)

This takes their standard liquid price to 21.64ppl & manufacturing price to 22.72ppl (www.milkprices.com)

 

1.5ppl milk price reduction for suppliers to County Milk – from February 1st (PRODUCER NOTIFIED)

 

1.5ppl milk price reduction for suppliers of Woodcock’s (Yew Tree Dairy) – from March 1st

This takes their standard liquid price to 22.25ppl.

 

1.3ppl milk price reduction for suppliers to Glanbia – from March 1st      (1st February 2016)

This takes their standard liquid price to 18.43ppl & manufacturing price to 19.04ppl (www.milkprices.com)

 

1ppl milk price reduction for suppliers to South Caernarfon Creameries Limited – from March 1st     (1st February 2016)

 

1ppl milk price reduction for suppliers to Belton Cheese – from March 1st     (1st February 2016)

This takes their standard litre liquid price to 21ppl & manufacturing standard litre price to 21.75ppl (www.milkprices.com)

 

1ppl milk price reduction for suppliers to Pattemores – from March 1st     (1st February 2016)

 

0.75ppl milk price reduction for suppliers to Pensworth Dairy – from 1st March   (1st February 2016)

This takes producers liquid standard litre price down to 20.65ppl (www.milkprices.com)

 

0.62ppl milk price reduction for suppliers to First Milk’s Midlands & East Wales balancing group – from February 1st     (1st February 2016)

This takes their standard liquid price to 17.28ppl.

 

0.19ppl milk price reduction for suppliers to First Milk’s Scotland balancing group – from February 1st     (1st February 2016)

This takes their standard liquid price to 17.93ppl.

 

Tesco drop industry bombshell moving circa 180 million litres of milk from Arla to Muller (1st February 2016)

Speculation on the shock surprise by Britain’s biggest retailer Tesco to switch up to 200 million litres of its Tesco aligned milk from Arla to Muller has now been confirmed and it’s piled on the negative PR, the Tesco Comms Team will have to wrestle with.

 

Ian has exchanged emails with Tesco and had several conversations with them as he attempted to obtain answers to basic questions for example:

 

  1. Is the litreage involved circa 200 million?
  2. When does the switch take effect?
  3. What’s the reason e.g.; money, quality, service.

 

All three questions are currently commercially sensitive and a secret, however the switch will not take place until after the spring flush.  So on the basis Tesco’s track record is not to do anything for free one has to assume that money is changing hands as usually happens when big milk volumes switch.     

 

 

For GB milk its neutral. For the chosen few in Muller its good news, for the rest it will further fuel the argument that the non aligned (the have nots) are subsidising the chosen few.

 

Many in the industry believed that Muller’s take over of Dairy Crest’s liquid division effectively making 3 liquid processors become one would be good news for the industry but following this move the jury is out.

 

What it means for Arla?   (1st February 2016)

Tesco have stated that the Arla Tesco direct farmers “will be protected and continue to be aligned directly to Tesco”.

Translating this must mean that if the 300 million or so litres Arla retain of the Tesco liquid business the Tesco Arla directs are protected.  This means the 200 million or so litres Arla has lost is a loss to Arla Co-op members at the Tesco price.  More evidence that the non aligned are paying for the chosen few.

 

This sounds very much like a deal has been struck to favour Arla (direct) Tesco producers which is certainly not one of the core foundation stones a Co-op is built on of working of working for its members.

 

In addition Tesco Arla directs look likely to be one of the last dominos with the announcement of a 3.25ppl price cut and the real possibility that in 12 months time their milk will need to find another home unless this market turns North before then.

 

 

Arla now need to find a home for an extra 200 million litres of milk. In addition with immediate effect no Arla member can switch to become an Arla Directs or vice versa.  This means whatever happens to the Tesco Arla Directs they will not be able to join Arla as members.

 

Let’s hope the Tesco move doesn’t energise the liquid merry go round where the only people who can’t afford the ride are dairy farmers.

 

John Beckett 1935 – 2016  (1st February 2016)

It is with great sadness we announce the passing of John Beckett after a long and distinguished career in the agricultural industry.

 

John was a highly respected Director of Belton Cheese and recently retired as Chairman of the family business.

 

Away from Belton Cheese, John has been a champion for the dairy industry.  He has been a past President of the Royal Association of British Dairy Farmers (RABDF), Chairman of Cheshire County Landowners Association and in 1977 he became the Chairman of NWF Group for 11 years.

 

In 2012 John was presented with the Royal Association of British Dairy Farmers’ Princess Royal Award.  The honour was made for his outstanding services to the industry. The following year John received the National Agricultural Award from the RASE.

 

The transformation of Genus is probably one of John’s greatest achievements. In 1994 John was appointed Chairman and 7 years later the Genus business became the biggest breeding company in the world, trading in 70 countries. 

Despite wearing many hats, John’s passion was to help young people acquire the business knowledge that he felt was lacking in some parts of the industry, believing that if farmers are to compete on more equal terms they need to fully embrace the science of management.

 

To this end John established the MBA Agrifarm Charitable Fund, administered by The Worshipful Company of Farmers, which would enable enterprising farmers to study for an MBA alongside executives from other sectors at the Cranfield School of Management.  This is an initiative that will pay dividends for generations to come. 

 

John was also past Chairman of The 300 Cow Club, Farmhouse Cheesemakers Ltd, Goodwin’s Cheese Ltd and M K Richmond Ltd John Deere dealership. He was a Liveryman of The Worshipful Company of Farmers and Honorary Fellow of Royal Agricultural Society of England.

 

A Service of Thanksgiving is to be held at St. Alkmunds’s Church, Whitchurch, and Shropshire at 12 noon on Friday 18th March 2016.

 

Tesco – guilty again     (25th January 2016)

The Groceries Code Adjudicator (GCA) Christine Tacon has today published her report into her investigation into Tesco PLC in terms of how Britain’s biggest retailer has failed to comply with the supply code of practice. Her conclusion is simple: Tesco have seriously breached paragraph 5 of the code.

In her report she states she found evidence that Tesco deducted or deferred payments owed to suppliers for goods with some payments taking up to two years to be paid by Tesco.

In addition, she saw instances where Tesco overcharged or underpaid supplies without rectifying the matters.

“It was clear from the evidence that a major focus of the Tesco Commercial Team during the investigation was on hitting budgeted margin targets”.

It’s a report full of examples about Tesco charging extra fees, delaying or failing to pay, and for its buyers leveraging (i.e. leaning on!) suppliers.

She concludes her report with five recommendations and I guess if she could add number six it would be for her to fine Tesco for its breaches (legally she can’t.)

Tesco could be fined £500m   (25th January 2016)

This comes on top of an ongoing Serious Fraud Office investigation into the £326 million Tesco accounting scandal. One city analyst has warned that Tesco could face a £500 million fine for the scandal. The big question will be who will Drastic Dave Lewis get to pay the Tesco’s fines?

Do leopards change their spots? We shall see, but they certainly don’t change into pussy cats. At the moment they look as if they have the morals of an alley cat     (25th January 2016)

Britain’s biggest retailer (but far from being its favourite) Tesco are having a PR kicking on a scale never seen before in the UK with any retailer.

Drastic Dave Lewis, CEO, will be scratching his head with his bean counters as to how he can prop up his margins and pay the fines whilst turning in a healthy profit. It’s a near certainty Tesco will find a way for suppliers to pay for its errors and mistakes because that how the track record reads. We had better hope, pray and be ready to ensure that Tesco’s dark forces don’t try and recoup their fines, lost margins, and lost routes to margins by pick-pocketing hard working dairy farmers in an already crippled dairy industry (that’s apart from its pampered directs whose bonus money indirectly comes from non-aligned farmers). If they do the industry will have to put differences to one side and stand shoulder to shoulder to take them head on, no matter how big they are.

Tesco V NFU   (25th January 2016)

The Tesco PR nightmare and how the NFU handle it is now favourite to be the deciding factor at next month’s NFU elections. Deputy president Minette Batters won over most of the audience with her measured, professional presentation at the Semex conference two weeks ago. President Meurig Raymond will get his main chance at the NFU conference at the end of February.

Who will have the nerve to go head to head with Tesco, because that is what is required and what will make or break the presidential bid. Career defining speeches beckon, and the reputation of Tesco and its allies in the supply chain are hanging in the balance.

Will the next NFU president wear black lace up shoes or high heels? Either the way, as the Nancy Sinatra song goes, the boots need to be made for walking…walking all over Tesco until it really does change its spots.

 

1.5ppl milk price reduction for Grahams Dairies (Scotland) producers from the 1st February   (22nd January 2016)

This takes producer’s standard liquid litre down to 22.25ppl.

 

0.8ppl milk price reduction for Arla members – from 1st February    (22nd January 2016)

This is 1 Euro Cent and takes producer’s standard litre price to 21.81ppl liquid & 22.68ppl manufacturing (www.milkprices.com).  The 0.8ppl comprises of a 0.75ppl price reduction plus a 0.05ppl forecast 13th payment increase.

 

GDT Auction down 1.4%   (22nd January 2016)

This weeks GDT Auction average continued to head South with the average price down 1.4% to US$2,405/tonne.

 

Notable movers were:

Butter down 5.9%          to average         US$3724/tonne

Cheddar down 3.4%       to average         US$2867/tonne

SMP down 3.2%            to average         US$1835/tonne

WMP down 0.5%           to average         US$2188/tonne

 

 

What’s coming down the line?    (22nd January 2016)

Between now and February 1st it is a near certainty that most, if not all, milk processors have already decided to announce price reductions for 1st February or 1st March.

 

There is simply no light at the end of this tunnel, in fact the tunnel is getting longer each day.  A group of farmers in Scotland are reporting a current brutal 14ppl milk price and post 1st April it could easily be lower when they are forced to change the destination of their milk.

 

Add to this rumours of one or two extremely aggressive liquid processors (one XL and one medium) raiding existing contracts by offering eye-wateringly cheap milk to attract new and existing customers and the end result is simply lower ex-farm gate milk prices.  It’s grim and it’s going to get a damn site worse.

 

AHDB Dairy Market Intelligence raises eyebrows  (22nd January 2016)

AHDB Dairy attracted the attention of two eagle eyed Potter bulletin readers with their news item produced by the Market Intelligence Department.

 

The top story was headed “DAIRY MARKET RECOVERY RESTS ON THREE KEY FACTS”

 

It went on to explain that “A recovery in prices to more sustainable levels for the whole supply chain is needed but, when this will happen, and how quickly, relies on a combination of three key events: a reduction in milk production, the sales of excess stocks and a rise in demand.

 

As one reader commented “Is this the sort of Peter & Jane market analysis our levy money pays for?  Heaven help the famers who hadn’t figured this out months ago”.

 

Llaeth Cymreig Accounts show £714,000 loss  (22nd January 2016)

The accounts for the milk processor to the 31st March 2015 show a £714,000 loss and declare that a much lower loss of £70,000 has been recorded in the period April 1st 2015 to October 2015.

 

Worryingly is the note on page 4 of the Independent Auditors Statement indicating the existence “of a material uncertainty which may cast doubt about the company’s ability to continue as a going concern”.  In the Directors report they, like others, incurred significant losses having to deal with surplus milk.  They refer to an extra 143 artic loads of milk amounting to 4 million litres and state the calculation summary as resulting in a 12 to 15ppl spot market sale loss.  12ppl x 4 million = £480,000.  They certainly are not alone with such problems.

 

1ppl milk price reduction for Muller Wiseman  -  from 15th February (15th January 2016)

The new standard litre prices will be:

 

21.35ppl Muller Wiseman non-aligned.

20.69ppl Muller Direct (ex-Dairy Crest liquid).

 

Increased volume payments boost Glanbia’s farm gate milk price by 0.25ppl (15th January 2016)

Whilst Glanbia decided to hold its February milk price its increased volume bonuses mean a standard 1 million litre producer will benefit from a 0.25ppl increase and for those producing more than 20,000 litres/day it is worth 1.5ppl.

 

The volume bonuses increase the www.milkprices.com liquid standard litre to 19.68ppl and its manufacturing standard litre increases to 20.34ppl.

 

First Milk exit Westbury (15th January 2016)

First Milk have wanted out of Westbury for some time to rid themselves of what has been a millstone and now they have concluded the deal to exit the facility for an undisclosed sum.  For First Milk relieving itself of the burden to pay half the cost of running the Westbury plant with a one off payment to Arla of a few million will be good business and further evidence that Mike Gallacher is determined to turn the business around. 

 

Westbury Dairies Limited is now 100% owned by Arla along with the site, which Arla acquired in December 2013.

 

Arla are now free to further develop the 750 million litre a year site where it currently produces Anchor butter, own label butter for retailers as well as powder.

 

It’s a certainty that First Milk do not require circa 350 million of balancing capacity with a maximum 1 billion litre member milk field only to lose money on every litre of milk processed through Westbury.  Actually some might claim in doing so First Milk were carrying a balancing charge and running half a plant to benefit the rest of the UK dairy industry.

 

Note going forward, First Milk have negotiated preferential access to the facility during the Spring flush and at other times.

 

The exit from the Westbury joint venture is another smart  move by Gallacher in connection with his  turnaround plan. The savings from the exit form Westbury should unlock milk price moves for members in the coming months.

 

Ian has also been reliably informed that First Milk are now on the front foot and actively looking for additional milk in Cumbria, West Wales and the West Midlands.

 

First Milk Sharpen’s its act again – by name and by nature (15th January 2016)

Experienced businessman Clive Sharpe has filled the position of First Milk’s Chairman from February 1st, following the departure of Sir Jim Paice.

 

Sharpe has been involved in food manufacturing for 35 years and comes with an impressive CV having been Chairman of Quorn Foods and Burton Biscuits, former CEO of WT Foods, Golden Wonder and Homepride Foods and former non-executive director of Duerr’s Jams and Tangerine Confectionery as well as his current role as Chairman of Peters Foods, which he retains.

 

Looking at his track record he certainly appears to know his way around the food industry and hasn’t previously shied away from challenges. He is badged as a self-made down to earth man, with experience and buckets of energy.  On paper it should be considered a coup for First Milk to get someone with Sharpe’s pedigree and experience.

 

 

Meadow Foods under attack (15th January 2016)

The NFU’s Dairy Board chairman has lambasted Meadow Foods in a press release following its 13.7m pre tax annual profit announcement.

 

In the release he highlights the fact that Meadow languish at the bottom of the milk price league table. According to AHDB Dairy they sit only second from bottom.

 

The NFU has hit out at the fact Meadow pay one of the lowest milk prices, do not participate in the Voluntary Code of Conduct have no formal producer representation and last week announced that only 80% of the A litres delivered from April will receive the headline A milk price.

 

Ian admits that until he posted his news item on Meadow’s decision to cut the A litres it pays for milk to 80% from April he hadn’t appreciated how much anger and unrest there is among Meadow producers. 

 

Intervention storage increases (15th January 2016)

During the past couple of weeks the quantity of SMP placed into EU intervention stores has escalated with EU wholesale SMP prices now trading below the Intervention level of €1698/tonne (approximately £1280/tonne), which is a 6 year low.

 

In the past four weeks to 4th January, 16,286 tonnes of SMP have gone into EU intervention representing a 54% increase in the tonnage placed into store.

 

Of the total 46,639 tonnes of SMP offered into intervention nearly 5% (2,183 tonnes) has originated from the UK.  In December a token 882 tonnes of SMP were removed from EU intervention stores.

 

Butter stocks offered into EU Intervention have also steadily increased with 166,914 tonnes by 4th January of which 4.2% (7,065 tonnes) originated from the UK.

 

Arla launches BOB brand (15th January 2016)

Arla has launched the Arla Best of Both (AKA Arla BOB) branded milk, which utilises the same filtration process used with Cravendale and they claim it tastes as good as semi-skimmed and has taken three years to develop.

 

It is on sale at RRP £1.50 for 2 litres and £1 for 1 litre packs and will be launched and supported by a £7 million advertising campaign, including TV campaign, which starts on 8th February.  It’s classed as a fat free containing no more than 0.5% fat. It’s more innovation, and hopefully more added value milk from GB processors.

 

 

Danish Dairy Farmers to receive EU cash (15th January 2016)

The Danish Government have decided to pay the lion’s share of the $12 million (£8.4 million) the country receives from the EU emergency agriculture aid fund to its hard pressed dairy farmers who are “having difficulty making ends meet”.

 

.

 

Tracking Quads, RTV’s, Tractors, Cars, Husbands & Wives  (15th January 2016)

Would you like to monitor the mileage your vehicle is doing over the year or make sure your trailer is where you left it? Then look no further, Pinpointpal tracking device is small, efficient and easy to use and has a huge variety of benefits.  Whether its  a farmer wanting to check his workmen are where they should be or have checked the livestock they should have, or a contractor wanting to make sure his loadall is where he left it. You can calculate mileage claims, set movement alerts and its even possible to monitor the hours a machine has been in use. The list is endless. Recommended retail price £250 however we have a special IPA offer of £150 + VAT this includes 2 years free monitoring and its only £25 a year thereafter. 

 

For more information on the device please contact Lydia on 01335 324594 or lydia@ipaquotas.co.uk

 

0.25ppl and 0.18ppl First Milk price reductions  -  from 1st January   (8th January 2016)

Those affected are as follows:

 

0.25ppl reduction for suppliers to Campbeltown, Arran, Lake District, Haverfordwest & North of England balancing.

 

0.18ppl reduction for the Scottish balancing pool.

 

The resulting www.milkprices.com 1st January standard litre prices are:

 

                                                                                                Liquid Standard              Manufacturing Standard

 

Haverfordwest

(includes the 2.24ppl Tesco winter cheese payment)         20.35ppl                                    20.84ppl

Lake District                                                                              18.14ppl                                    18.85ppl

North of England                                                                        18.12ppl

Scottish Balancing Pool                                                 18.12ppl

Midlands & East Wales                                                  17.90ppl

 

GDT auction prices down on average 1.6%    (8th January 2016)

There were no surprises in the first auction of the year, which continued to trend slightly down.

 

Notable price movements were:

 

Cheddar            up         3.5% to average US $2964/tonne

SMP                 down     0.8% to average US $1890/tonne

WMP                down     4.4% to average US $2210/tonne

 

UK milk production continues to rise   (8th January 2016)

November milk production totalling 1.163m litres shows a 3.8% (43m litre) increase on that recorded in November 2014.

 

In the first 8 months of the dairy year to the end of November the UK has produced an extra 303 million litres (+3.13%) compared to that produced in 2014 equivalent to an extra 1.26 million litres everyday.

 

Meadow Foods milk price calculation changes   (8th January 2016)

Meadow Foods will change how they pay suppliers from April 1st with the A price paid on 80% of producers 100% A (quota) allocation with any remaining production paid at the B litre price.

 

Is this a price cut, a price adjustment that will be more or less neutral or will producers never know the truth?

 

The reality is just like most, if not all, milk processors Meadow simply has too much milk on its hands and a limited number of resignations and/or farmers quitting.  With this move Meadow have decided to spread the risk across all producers making those who produce any B litres plus 20% off the A litres take the pain.

 

If Meadow are paying the A price on only 80% of the milk it should mean that the A price improves.  If that happens the adjustment will be neutral and if the B price is say 15p those who produce the extra litres bear the pain until prices turn the corner and head North.  At this point the B price will be the first move and will drag the A price up with it.

 

Only time will tell whether Meadow’s A price improves on April 1st.

 

MCVE and AMPE continue to head south   (8th January 2016)

AHDB’s dairy market indicators MCVE and AMPE next month are likely to both hit their all time record lows.  The December MCVE stands at 18.9ppl and AMPE at 16ppl (see the table at the top of this bulletin).

 

Dutch cull cow slaughtering rocket with 1.5ppl premium   (8th January 2016)

Within a matter of hours cull cow prices in Holland fell 15 cents per kg (11p/kg) as cow numbers sent to slaughter rocketed resulting in slaughter houses bursting at the seams and waiting lists forming.

 

One of the key factors has been the decision by Friesland Campina who are now paying a 2 Euro cents kg (1.5ppl) to members who supply the same or less milk between 1st January to 11th February compared to the base period of 13th to 27th December.  It does not apply to organic producers where extra milk is required.  The fact is Friesland Campina members are producing far more milk than the company requires or can handle.

 

US blizzard results in 40,000 cattle deaths   (8th January 2016)

Over the Christmas period between the 24th to 29th December, a blizzard called Goliath in Texas and New Mexico saw an estimated 30,000 to 40,000 cattle die and hundreds of tanker loads of milk fail to be collected.

 

Most of the animals perished in up to 14 foot snow drifts created by 80mph winds and that’s in what is geographically described as a desert area!  Crazy weather.

 

 

Snap to it on Snaptags!    (8th January 2016)

Ian Potter Associates has, for the last 3 years, been actively marketing the Snaptag brand of cattle, sheep and pig ear tags. Repeat orders from every customer (OK, with the exception of one) speak for themselves in terms of their quality and durability. Basically they're the bull's/boars/rams nadgers when it comes to tags.

 

And this, of course, is the bull's nadgers when it comes to dairy bulletins, which we send to you FOC because we're nice people.

 

There is, though, no such things as getting summut for nowt, and we strive to sell something on the back of it - hence our plugs for these tags, Pinpointpal vehicle tracking devices, and the occasional request for information for our database cleansing so we know who's genuinely a dairy farmer and who's just pretendin'.

 

So if you've got livestock and are in the market for tags (and even if you aren't - we're not fussy!) then give us a call! Our general tags & sample tags (BVD) are extremely competitive so why not ask us to quote! Go on...you know you want to...

                                                                                                 

For more information please contact Lydia on 01335 320016 or email her on lydia@ipaquotas.co.uk.

 

Thank you, and we look forward to your custom and to continuing to be able to send this bulletin out FOC.

 

Arla to hold its January member milk price but exchange rate takes 0.43ppl  (24th December 2015)

Arla members on account milk price for January deliveries will be a stand on.

 

However, the three month average exchange rate mechanism results in Arla GB member’s milk price reducing by 0.43ppl to give a standard litre price of 22.61ppl.

 

The exchange rate mechanism adjustment is an unwelcome Christmas present but it’s unavoidable and Arla farmers were aware and given fair warning that it was coming down the track to hit them.

 

Dairy Crest buy remaining share of GOS business for £6million   (24th December 2015)

Within days of the 27th of December sale completion of its liquid business to Muller, Dairy Crest (DC) has confirmed its purchase of the remaining 50% share of the GOS business Promovita from Fayrefield Foods Limited for £6 million.

 

The Promovita business was a joint venture between the two set up last year to develop GOS which is a prebiotic for use in baby powders.

 

The sale gives DC full control of the business alongside its £20 million GOS production investment at Davidstow, which is due to be in production in early 2016. The £20 million is part of a £65m investment in the plant with the remaining £45 million invested in the production facilities for demineralized whey powder at Davidstow.

 

The powder will be marketed and sold by Fonterra and the Chinese Governments decision to relax the one child per family rule to two children from March is perfect timing for DC and its new venture.

 

British (Welsh) Daioni Organic products into China    (24th December 2015)

Full marks to Lawrence Harris and his team from Daioni Pembrokeshire in becoming the first Organic Dairy Board to receive Chinese Quality Certification.

 

The Company recently took the bold move to exhibit at the Beijing Trade Exhibition and is all set to export its brand into China having a recently appointed a brand manager in China.

 

Daioni’s exports will be Organic flavoured milk and milk shakes produced on its family farm from milk from their own herd.

 

First Chinese baby powder plant in New Zealand completed  (24th December 2015)

Yashili’s £92 million baby powder factory in New Zealand is now completed and in production and will aim to produce 1,000 tonnes of baby powder each week aimed at the chinses market.

 

End of Year food for thought    (24th December 2015)

One end of year International dairy publication headline stated “Last year makes dairy farmer wiser and poorer”.  Next year’s could easily state survival of the fittest” which in reality means those who succeed in coming out the other end of this big trough should be stronger, fitter and wiser. For most Dairy Farmers 2016 at first glance looks Dark and Grim.  

 

 

This crossed Ian’s desk a couple of weeks ago and whilst it’s a serious matter it also makes you smile.

 

Suffolk man ‘had sex with 450 tractors’ – reproduced with the permission of the Suffolk Gazette   (24th December 2015)

 

 

 

 

 

A Suffolk man with a bizarre sexual attraction to tractors has been banned from the countryside and forced to sign the sex-offenders’ register.

Ralph Bishop, 53, was found by police with his trousers around his ankles “interfering” with a tractor parked in a field outside Saxmundham.

 

He was arrested on suspicion of outraging public decency, and admitted to having had sex with around 450 tractors all over the Suffolk countryside.

 

When officers searched his terraced home they found a collection of more than 5,000 tractor images on his laptop.

 

The photos showed Bishop had a special desire for John Deere and Massey Ferguson tractors, particularly green ones.

 

A police insider said: “We couldn’t believe it when we found him in the field. He was wearing a white t-shirt and Wellington boots and very little else. He was clearly in state of high excitement at the rear of the machine.

“Thankfully nobody else was around, but the field is close to a village primary school so we had to arrest him and educate him about the error of his ways.

“He told us he was particularly ‘in to’ axle grease and the presence of this around the back of tractors was all too much for him.”

Bishop, twice divorced, was released without charge on condition he sought psychological help. He was put on the sex-offenders’ register.

“He is also banned from the countryside and is now not allowed to go within one mile of a farm,” the police insider added. “So he has to live and remain in the middle of Ipswich to comply with that.

“However, we are watching him because we are worried about the safety of several street-cleaning machines.”

Another policeman added: “He’ll also need to keep away from the town’s gardens – if he takes a fancy to a lawn mower he might find he loses more than just his liberty.”

 

 


Real Complaints to Councils - You couldn’t make them up  (24th December 2015)

Extracts from letters written to local   councils:

1. Its the dog’s mess that I find hard to swallow.  
2. I want some repairs done to my cooker as it has backfired and burnt my knob off.  
3. I wish to complain that my father twisted his ankle very badly when he put his foot in the hole in his back passage.  
4. Their 18 year old son is continually banging his balls against my fence.  
5. I wish to report that tiles are missing from the outside toilet roof. I think it was bad wind the other day that blew them off.  
6. My lavatory seat is cracked, where do I stand?  
7. I am writing on behalf of my sink, which is coming away from the wall.  
8. Will you please send someone to mend the garden path? My wife tripped and fell on it yesterday and now she is pregnant.  
9. I request permission to remove my drawers in the kitchen.  
10. 50% of the walls are damp, 50% have crumbling plaster, and 50% are just plain filthy.  
11. I am still having problems with smoke in my new drawers.  
12. The toilet is blocked and we cannot bath the children until it is cleared.  
13. Will you please send a man to look at my water, it is a funny colour and not fit to drink.  
14. Our lavatory seat is broken in half and now is in three pieces.  
15. I want to complain about the farmer across the road. Every morning at 6am his cock wakes me up and it's now getting too much for me.  
16. The man next door has a large erection in the back garden, which is unsightly and dangerous.  
17. Our kitchen floor is damp. We have two children and would like a third, so please send someone round to do something about it.  
18. I am a single woman living in a downstairs flat and would you please do something about the noise made by the man on top of me every night.  
19. Please send a man with the right tool to finish the job and satisfy my wife.  
20. I have had the clerk of works down on the floor six times but I still have no satisfaction.  
21. This is to let you know that our lavatory seat is broke and we can't get BBC2.  
22. My bush is really overgrown round the front and my back passage has fungus growing in it.  
23. He's got this huge tool that vibrates the whole house and I just can't take it anymore.  

1.724ppl retail supplement addition for Muller Wiseman producers  (18th December 2015)

This is the November deliveries supplement paid to producers on the standard non retailer aligned contracts.

 

0.57ppl Muller Wiseman formula price reduction   (18th December 2015)

 

The reduction will apply for deliveries in January to March inclusive and takes the standard liquid litre price down to 17.67ppl. (www.milkprices.com) 

 

GDT    (18th December 2015)

The average price of this weeks auction crept up a little by 1.9%.  The anticipation from analysts was for WMP to see a double digit increase of 10% plus however the reality was only a 1.8% lift.

                                                          

Key prices were:

 

·         Butter average US $3136/tonne + 9%

·         WMP average US $2304/tonne + 1.8%

·         Cheddar average US $2856/tonne + 1.1%

·         SMP average US $1891/tonne + 0.2% 

 

First Milk successfully concludes its refinancing package   (18th December 2015)

Mike Gallacher and his commercial gurus have successfully agreed terms with Barclays and Lloyds to extend loans well ahead of the 1st February deadline.

 

This sends a very important signal to members that the same two banks have clearly decided the turnaround plan looks good consequently both have decided to support it.  I doubt in this environment either of the banks have been charitable or in the Christmas spirit so one assumes they have detected confidence is the plan.

 

First Milk Members vote for a Commercial Board   (18th December 2015)

At a special General meeting this week Members unanimously approved First Milk governance shake up which will see only two farmers on the board.

 

The day of enthusiastic amateurs believing they have the necessary skills to help run First Milk by sitting around the board room are finally over.

 

For continuity its likely one of the two farmer positions will be filled by one of the existing farmer board members and the hunt is on for the second who could come from the existing board or could be a new face.  Whoever it is he or she simply has to come with a proven track record in the commercial world and not just in milking cows.  Gallacher has to have a very commercially focussed board and he is almost there.

 

It is late for First Milk to realise the serious damage its governance and management team has done in the past 3 to 4 years but as they say its better late than never and its time to turnover a new page for 2016.      

 

What next for First Milk   (18th December 2015)

The announcement of a new commercially experienced chairman should come in January.

 

The goal for 2016 must surely be for Gallacher to significantly close the gap between First Milks lower member prices and its competitive set.  If signs of that appear in the First half of 2016 the talk will no longer be whether First Milk can survive but more that it will have turned the corner which some may claim has already happened in 2015.

 

There are signs of glimmers of hope for First Milk but sadly in this environment they will come too late for some members

 

 

1.425ppl milk price reduction for Dairy Crest formula contracted producers – from 1st January (11th December 2015)

This comprises of a 1.6ppl reduction as a result of the re-basing announced 12 months ago and a positive +0.175ppl increase in the 5 parameters used in the formula for November.

 

Note, the adjustment means there will still be a 3.6ppl advantage in favour of the formula liquid standard litre (25.37ppl) compared to the Dairy Crest standard liquid (21.81ppl).

 

1ppl milk price reduction for Booths Supermarkets suppliers – from January 1st  (11th December 2015)

This reduces producers’ www.milkprices.com standard litre price to 32ppl, still a chart topper.

 

1ppl milk price reduction for Wensleydale Creamery suppliers – from December 1st

This reduces producers’ www.milkprices.com price to 22.75ppl on the liquid standard litre and 23.82ppl for the manufacturing standard litre.

 

Southern Ireland’s November milk production +50%    (11th December 2015)

This was the headline in an Irish Farmers’ Journal article where estimates claim an additional 150 million litres of milk were processed in Southern Ireland in November compared to November 2014.  The range extremes used were +22% for the processor Aurivo to +76% for Dairygold.

 

Note, in November 2014 over production resulted in many dairy farmers cutting production and drying off cows early, which a factor is contributing to the seismic increase.

 

Milk price prospects do not look great between now and 2020 at 23 to 24ppl?  (11th December 2015)

The European Commission has published a report “Prospects for EU Agricultural Markets Income 2015-2025”

 

The report predicts the world will increase milk production by 16.1 million tonnes a year. Of more concern is the prediction that the EU is expected to be the area which will see the highest production increase and the highest world exports increase with around 50% of the extra milk produced in the EU going into powders for export whilst 30% will go into cheese. This all means that the EU will account for almost a third of all dairy product traded on the world market. So effectively, as if we didn’t realise it before, the extra dairy products will have to be exported.

 

Of more concern is the expectation that for the next four years plus to 2020 the average EU milk price will run between 32 to 33 Euro Cents kg or 23 to 24ppl at today’s exchange rate with very slow recovery  from the current lows

 

Arla’s Vision to 2020 (11th December 2015)

Arla has published its 2020 growth strategy in which it anticipates its 12,700 members will increase milk production by 2.5 billion kg by 2020.

 

Arla’s strategy with its member’s milk is to focus its marketing growth towards six markets, The Middle East, China, Russia, Nigeria, and USA & Europe.  The split in its additional sales values are expected to be 50% in Europe and 50% outside of the EU.

 

Consultation is open on AHDB Dairy Business Plan 2016 to 2019 – Ian urges Dairy farmers are urged to have your say (11th December 2015)

 

AHDB, including AHDB Dairy, has launched a consultation on its 4 year business plan and budget to 2019 in which they are particularly interested in answers to the following questions:

 

Do you agree with the proposed activities for the dairy sector? If not, which activities will make the biggest difference to improving the competitiveness of dairy, and why? 

 

What levy funded activity (ies) in your view could be stopped, and why?

 

Do you agree that levy rates should remain unchanged for 2016/17?

 

Any other comments you have on the Plan

 

Ian has studied the plan and was stunned to learn that if dairy farmers assume AHDB Dairy is facilitating exports of surplus dairy products they can think again. Their current budget to help dairy exports is a nice round jaw-dropping zero, nothing and nowt!

 

It is the only AHDB sector that fails to have a budget to assist exports. The other five AHDB sectors (EBLEX, Cereals/Oilseeds, Horticulture, Pork and Potatoes) all show an average £1.05m a year allocated to export development until 2019. Yes, that’s a total £5.24million a year compared to the black sheep of dairy which hasn’t allocated so much as £1.

 

In the 2014/15 year AHDB Dairy received total nett income of £8 million and spent £8.1 million. Levy payers are urged to send even a brief email with your thoughts as to whether you believe AHDB Dairy will invest the levy tax to deliver the maximum benefit to you, based on the plan and budget.

 

The Dairy Board and its chairman have to be challenged as to whether their plan is the best way of spending the money and, with increased milk production, they should surely be asked why they have decided not to allocate any funds to promote dairy consumption domestically or to exports. If invested professionally and correctly this is very likely to enhance the profitability of all British dairy farmers. There is no demand creation plan at home or abroad, but presumably the AHDB Dairy board have good reasons for this.

 

I am beginning to question whether the AHDB Dairy Board fully understand the implications of having a strategy to produce more milk (i.e., the current one) without having a strategy one to actually deal with it.  At least we all know they have a strategy to ensure they spend all of the extra levy money they collect.  Do they actually know which direction the UK dairy industry is heading?

 

Instead processors are having to explore exports in their own whilst farmers produce milk at 30 year record levels.

 

Back in 2010 Northumberland sheep farmer Graham Dixon took on EBLEX on behalf of group of sheep farmers when he stated “we want more say in how our levy money is spent.  We must direct more of the levy money towards a new marketing and promotion campaign!” The result was a joint attack by EBLEX to bolster both exports and promote consumption of lamb by our own domestic consumers.

 

Ian also believes Ministers should be looking at the budget and plan before they sign it off.  The Secretary of State claims she stands behind exports but there is no real substance to her claims. Both DEFRA and AHDB are keeping their hands firmly in their pockets.

 

It’s ironic that AHDB have declared that they are picking out the best bits from each sector and rolling them out across the piste, yet this doesn’t appear to have affected the dairy sector where they have ignored export development completely.

 

Alternatively, you might have a view on the necessity or not for AHDB Dairy to continue to spend significant amounts on genetic and genomic evaluations when a number of competent private operations are already at the cutting edge of this field. Is this a case of using levy money in areas which are already been adequately serviced by others?

 

As one person commented to Ian this week AHDB Dairy needs grabbing by the scruff of the neck on this issue and it needs some real leadership.

 

Ian will be making a submission to AHDB on its dairy business plan and hopes all of you will too, even if it’s only a few lines by email.  He has tried to contact both its Chairman Gwyn Jones and its Strategy Director on the export issue. Both opened the email a week ago, but neither has found the time to respond.

 

This consultation closes at 17.00 hours on Wednesday 13 January 2016 - Responses can be submitted by email to ruth.ashfield@ahdb.org.uk or via post to Ruth Ashfield, AHDB, Stoneleigh Park, Kenilworth, Warwickshire  CV8 2TL.

 

Allegedly, feedback from this consultation will be considered when the plans are finalised in January before submission to Ministers for approval.

 

A copy of the AHDB Dairy business plan is available at

http://www.ahdb.org.uk/publications/documents/BusinessPlanAHDBDairy1Dec-finalsign-off.pdf

 

Help Needed – Stolen Machinery   (11th December 2015)

Stolen Friday 4th December early hours in the morning from a farm in Chaigley, Nr Clitheroe

John Deere 6125R Tractor (PF15 XXV)

R M H - Blue Feeder Wagon

Cash reward for any information leading to the location (confidential)

 

01995 61108 or 07714 813063

 

Crime Reference Number: EG1506659 log 202 4/12

 

1ppl milk price reduction for suppliers to Barbers Farmhouse Cheese  -  from 1st January (4th December 2015)

 

1ppl milk price reduction for suppliers to Wyke Farms – from 1st January (4th December 2015)

This takes producers www.milkprices.com manufacturing standard litre price to 21.77ppl and the liquid standard litre price will be 21.05ppl.

 

1ppl milk price reduction for suppliers to Glanbia Cheese – from 1st January (4th December 2015)

This takes producer’s www.milkprices.com manufacturing standard litre price down to 20.09ppl and the liquid standard litre price will be 19.43ppl.

 

0.9ppl milk price reduction for Arla (non member) direct suppliers – from 1st January (4th December 2015)

This takes producer’s liquid standard litre price down to 19.25pp for the 40 million litres or so supplied direct.

 

0.51ppl milk price reduction for suppliers to The Fresh Milk Company (FMC) (AKA Lactalis) – from 1st January (PRODUCER NOTIFIED) (4th December 2015)

The reduction was accompanied by the declaration that no further milk price cuts will be applied in either February or March.

 

This takes producers www.milkprices.com manufacturing standard litre price (4.2% B/F & 3.4% protein) to 21.21ppl on the FMC GDT linked contract.  The standard litre liquid price is 20.5ppl.

 

0.45pp milk price reduction for Sainsburys aligned suppliers- from 1st January  (4th December 2015)

This takes producers www.milkprice.com liquid standard litre price to 30.37ppl (Muller) 30.31ppl (Arla) and 30.25ppl Dairy Crest.

The adjustment is due to a reduction in feed (-0.31ppl), Red Diesel (0.11ppl) and fertiliser (-0.03ppl) as calculated by Kite Consulting.

 

0.43ppl a milk price reduction for First Milk - Suppliers to its Haverfordwest, Aspatira and North of England pools – from 1st December. (4th December 2015)

 

0.3ppl milk price reduction for First Milk  – Mainland Scotland producers – from 1st December   (4th December 2015)

The reductions result in the following www.milkprices.com standard litre prices

 

·         Haverfordwest based on the liquid standard litre 18.36ppl

·         Haverfordwest plus the 2.24ppl Tesco winter supplement based on the manufacturing standard litres 18.85ppl

·         Plus the 2.24ppl Tesco winter supplement 21.09ppl

·         Aspartia based on the manufacturing standard litre 19.1ppl

·         Aspatria based on the liquid standard litre 18.39ppl

·         Mainland Scotland on the liquid standard litre 18.3ppl

·         Midlands & East Wales based on the liquid standard litre 17.9ppl

 

Note, all www.milkprices.com standard litres are before seasonality, monthly profile payments, balancing charges, capital deductions etc.

 

Dairy Crest to hold its standard liquid & organic milk prices until February 1st    (4th December 2015)

 

0.67ppl liquid retail supplement to be paid by Dairy Crest on November deliveries  (4th December 2015)

In addition, Dairy Crest estimate the December supplement is expected to be higher at 0.9ppl.  The supplementary payments relate to the additional money farm Lidl and Morrison’s.

 

GDT auction records an average 3.6% increase to US$2419  (4th December 2015)

The increase comes on the back of three consecutive auction falls.

 

Key price movements were:

 

Butter               US$3009           (+5.7%)

WMP                US$2260           (+5.3%)

SMP                 US$1918           (+3.2%)

Cheddar            US$2829           (-1.5%)

 

Intervention SMP stocks are increasing again   (4th December 2015)

Quantities of SMP put into intervention have kick started again and during the last two weeks in November just over 1800 tonnes a week were entered from Poland, Lithuania and Belgium.

The total Intervention stocks in store since July amount to 27,273 tonnes.

The nett quantities of SMP offered into private storage in the same two week period total 1519 tonnes and the total in private storage amounts to 4,147 tonnes and rising.

 

Muller announce its management team post the Dairy Crest completion   (4th December 2015)

From the 27th December when Muller take over Dairy Crests liquid business the fresh milk division will be headed up by Andrew McInnes who will be MD of the division handling 25% (3.5 billion litres) for Britain’s total milk production.  McInnes is the current acting MD of MWD.

 

Of the 13 people included in the Muller fresh milk top team four have transferred to the Muller camp from Dairy Crest under a Bosman ruling including Lyndsay Chapman who takes the role of Agriculture Director.

 

Muller (Wiseman) hold its farm gate milk price until at least February 2016   (27th November 2015)

Muller will hold its non-aligned farm gate milk price for January at 22.35ppl for circa 1200 farmers, which will be a small glimmer of stability to start the New Year.

 

In addition, it will continue to show retailer supplementary payments both transparently and separately each month.

 

The supplementary payment is calculated on actual sales after each month end and for October deliveries amounted to an extra 1.75ppl.

 

0.6ppl milk price reduction for Bowland Fresh Suppliers - from December 1st   (PRODUCER NOTIFIED)  (27th November 2015)

In both a short notice and very short on words letter, Bowland Fresh have given their producers less than 7 days notice of an early unwelcome Christmas present in the form of a 0.6ppl milk price reduction.

 

According to our records this is the first and only December 1st liquid milk price reduction to be announced.

 

First Milk’s half year finances show a  small profit   (27th November 2015)

In contrast to the First Milk’s recent end of year accounts where it stated that the business had continued to be loss making to the end of September 2015, the co-op has announced that it has made a small profit in the same period. It made an operating profit of £1.1million compared to a loss of £7.6million in the corresponding 6 month period in the previous year.  It has also declared that it anticipates its full year end results will return a profit at 31st March 2016. The reason for the difference in the two versions is that in the end of year accounts they included figures for the exceptionals, whereas this latest announcement is restricted to the day to day activities excluding the one off costs.

 

During the same six month period debt, excluding member capital contributions, has reduced from £60.7million at 31st March to £46.1million at the end of September.

 

AHDB appear to have grown some hairs and, dare I say balls, with a refreshing up front analysis of  First Milk financials.

 

They have pointed out in their news section that it’s effectively the farmer members who have taken the pain, which has resulted in the six month profit declaration. In other words it’s the significant farm gate milk price cuts which are the main reason for the turnaround.

 

AHDB estimate that in the six month period April to September 2015 the milk price paid to First Milk members was 4ppl plus “adrift from its competitive set”.  Note, the set does not include retailer aligned COP milk prices.

 

This 4ppl figure compares to the same period in 2014 when the gap was less than 1.5ppl. The difference to the half year financials of a milk price gap of 4ppl to that of 1.5ppl amounts to £15 million, so in effect, if First Milk had continued to maintain a 1.5ppl or less difference between its paid out milk price and that of the competitive set it would have shown a £15m loss but as it is that loss has been shouldered by the members in the form of a much lower milk price.

 

AHDB comment “It appears that from April to September 2015 a big part of FM’s turnaround in fortunes was achieved by passing lower prices onto its farmer members”

 

For the story click on this link

http://dairy.ahdb.org.uk/news/news-articles/november-2015/first-milk-turnaround-progress/#.VlcgYk0nyM8

 

First Milk sells Kingdom Foods/Glenfield Dairy business   (27th November 2015)

First Milk has agreed to sell its struggling Glenfield Dairy Business (AKA Kingdom Cheese) as a going concern to rapidly expanding Scottish family business Grahams for a yet to be disclosed sum.

 

The business was acquired by First Milk’s CEO Kate Allum in May 2011 for £5million, which included £1.4million towards an outstanding loan.

 

At the that time the employees numbered 140 and when the sale is completed in the next few days the staff head count transferred to Grahams will be 79, which is a big chunk of First Milk’s 400 head payroll when it reduces to 320 (-20%).

 

The business predominantly produces cottage cheese/soft cheese and Quark and has some key retail customers, for example M&S & ASDA.

 

The venture has archived next to nothing for First Milk during its ownership and is estimated to have lost in the region of £1million a year.

 

It’s no secret that the plant requires significant investment to remove some of the labour intensive operations. On that score either Grahams will attract some funding to make the improvements or alternatively they will surely be weighing up the costs of moving some of the useful kit to their new greenfield site project.

 

In terms of milk supply, from the day that Grahams take over they will utilise their own milk, leaving First Milk to find a new home for their extra milk, which is unlikely to be an exciting profitable prospect for the first half of 2016.

 

First Milk what next?    (27th November 2015)

The fact that the finances show a small profit is perhaps the first real evidence that after almost 8 months at the helm CEO Mike Gallacher is starting to visibly demonstrate that his mission is to turn the business around. This will undoubtedly be encouraging to First Milk members and the expectation is that further positive news will be forthcoming very soon and likely next month.  This includes an announcement on a new Chairman, who must surely be very commercial, a different board structure with less farmer involvement and more commercial experience, the outcome of the refinancing deal with the Barclays and Lloyds and further divesting of interests allowing Gallacher to focus on his core business of making quality cheese for Adams to sell. These are just some of the announcements members are  waiting for.

 

At the same time as all of this is going on he desperately needs to deliver a significantly improved member milk price.  For sure all of these deals take time to put in place and time isn’t a luxury Gallacher has on his side, however, for those who were circling like vultures believing there would be some First Milk easy pickings to be had they will now realise Gallacher may have come to the table late but he is setting his stall out to slim down and turnaround the business rather than let it sink during his watch.  He has a lot of work to do and a long way to go but the indications that he both has a plan and will execute it.

 

Only 30,000 lucky farmers are set to receive their BPS payment next week  (27th November 2015)

The RPA has announced that only 30,000 English farmers will receive their annual BPS payment next week.

 

Those who will not be paid by the end of January will receive a letter very soon informing them that they will be paid after February but with no current facility for an on account or partial payment.

 

 

Arla holds members milk price until the end of the year   (25th November 2015)

Arla will hold its member milk price at 23.04ppl until at least the end of December.

 

Crude oil down to $44 barrel   (20th November 2015)

 

1ppl milk price reduction for Blackmore Vale suppliers – backdated to 1st November (PRODUCER NOTIFIED)  (20th November 2015)

This takes producers’ standard litre to 24ppl (ww.milkprices.com)

 

0.086ppl milk price formula increase for Dairy Crest formula contracted producers – from December 1st   (20th November 2015)

This takes producers’ standard litre to 26.80ppl for those on simplified and core formula and 26.99ppl for those who signed with the extra premium in April 2014.  The upward movement is attached to the improvement in the cream price.

 

1.751ppl Muller Wiseman monthly retailer supplement   (20th November 2015)

Muller Wiseman’s non-aligned producers will receive an extra 1.751ppl on their October deliveries.

 

GDT auction prices fall for the third consecutive auction   (20th November 2015)

It’s certainly a roller coaster ride so far as GDT auction prices are concerned.

 

During four auctions in August, September and early October, the average auction price rose 56% but admittedly it came on the back of a disastrous run of 10 consecutive falls to all time records lows.  On the 6th October the average all products price was $2834.

 

Now GDT has experienced three consecutive falls pulling prices back 17.2% to this week’s average of $2345.

 

Notable price movements:

 

WMP                down     11% to average US $2148

SMP                 down     8.1% to average US $1851

Cheddar            down     5% to average US $2874

 

Note, the quantity of product on offer at this week’s auction was down 11.6% (3953 tonnes) to 30,044.

 

Glanbia Cheese boost volume bonuses   (20th November 2015)

Glanbia Cheese will introduce a welcome revised volume bonus schedule from 1st February and all deliveries will see a positive benefit other than anyone who produces less than 1,000 litres day where it’s no change to their bonus.

 

The bonus increases range from +0.05ppl for those delivering an average 1,000 to 2,499 litres day to +0.45ppl for deliveries averaging 20,000 litres plus each day making their new bonus +1.5ppl.

 

With friends like these who needs enemies?  (20th November 2015)

With Farmers For Action once again giving retailers a beating to try and get them to pay more money to farmers comes news this week that Morrisons has had a beating for (wait for it) paying more money to farmers via its successful Milk For Farmers brand.

 

And starting the beating was none other than the magazine which says it is “Working for Your Farming Future” i.e. – The Farmers Weekly. In an article on the 10th November Philip Case wrote that “A supermarket shopper has accused Morrisons of misleading the public over its premium milk brand.”  Note, only one complaint from a so called consumer!  He went on to write about something every Arla farmer has known all along, in that the additional money raised goes to all Arla farmers across Europe and not just to UK ones.

 

What he didn’t say was that all of Arla’s product revenues such as the brand giant Lurpak was also spread across UK farmers, and not just with Danish farmers where the product is made. He also printed (on line) the extensive exchange of emails from the shopper, who is Mr Brown from Derby, who has since confirmed he has lodged a complaint with the Advertising Standards Authority.

 

The story was then picked-up by The Sunday Telegraph on the 15th November, and subsequently by other news outlets, including the Farmers Guardian.

 

Thus, in one fell swoop through a wholly irresponsible piece of journalism that does nothing for any dairy farmer’s future, The Farmers Weekly has potentially compromised not only the Morrisons milk brand but other such schemes as well which could have put more money in farmers’ pockets.

 

With regards to the article in today’s Farmers Guardian it is more balanced than the very one sided view printed in Farmers Weekly.  However, I do take issue with their claim “The chain has received a barrage of criticism from farmers who said consumers had been ‘duped’ into thinking the extra money would benefit only UK producers”.  I don’t believe The Farmers Guardian hold sufficient evidence to back up the use of the words “a barrage of criticism” because one complaint is hardly a barrage.  Also, is the use of the word duped correct?

 

Morrisons have 11 million customers a week. One complaint = .0001% of its weekly shoppers. And the Farmers Weekly made a story out if it. Shameful.

 

No doubt all of this will give FFA’s protestors much to talk about as they wait on the picket lines in the cold until the early morning hours.  A sponsored coach trip and picket line outside FW’s HQ at Quadrant House, Surrey is now under consideration.

 

 

What’s good for the Goose is good for the Gander  (20th November 2015)

On the 19th October this bulletin reported on the onset of dirty tactics against Morrisons Milk for Farmers brand, and reported on the Twitter activity from the Midlands milk company Nemi Milk, made by the feed company Independent Feeds Ltd. It accused the Morrison’s brand of misleading consumers and posted tweets comparing the brand and Arla to FIFA, and even sending Liz Truss messages about “someone milking British public emotions and the UK dairy crisis”. The milk is “shameful”, the marketing “ill-informed” and Arla is “a co-op who deliberately misleads”. It is a “#scandal”.

 

Since then a Richard Brown from Derby who “has a lifetime’s experience of farming” has admitted on Facebook that he has submitted a complaint to the Advertising Standards Authority over the milk (see above story with friends like these who needs enemies). Although it has not been proven yet, there is a strong suspicion that there is a link between Richard Brown and Nemi Milk’s / Independent Feeds boss Andrew Henderson, who denied on Twitter that he contacted Trading Standards. Whether they know each other or not really doesn’t matter, however. Both clearly have a gripe that Milk for Farmers is misleading. The ASA will no doubt rule over time whether the brand or the marketing is, or isn’t.

 

Mis-representation or elaboration of any facts surrounding a product would, of course, be the last thing that anyone in the industry would want.

 

To that end, therefore, Ian is now questioning the credentials on which Nemi Milk is marketing its milk as “Britain’s First Natural Antioxidant Plus milk” and milk that is “naturally enriched with selenium”.

 

Under EU rules all health claims on food products have to be approved by the EU, of course. Currently claims for antioxidant properties are not-authorised, which makes Nemi’s claim somewhat, er, suspect. For selenium a claim may only be made where the increase is at least 30% compared to a similar product.

 

Needless to say the necessary investigations have been out in train to make sure that the claims Nemi Milk is making also do not mislead consumers. If they do then that will naturally also have to be a matter for… The Advertising Standards Authority or Trading Standards to investigate. After all, what’s good for the goose is good for the gander!

 

 

With friends like these who needs enemies?   (17th November 2015)

With Farmers For Action once again giving retailers a beating to try and get them to pay more money to farmers comes news this week that Morrisons has had a beating for (wait for it) paying more money to farmers via its successful Milk For Farmers brand.

 

And starting the beating was none other than the magazine which says it is “Working for Your Farming Future” i.e. – The Farmers Weekly.  In an article on the 10th November, Philip Case wrote that “A supermarket shopper has accused Morrisons of misleading the public over its premium milk brand.”

 

He went on to write about something every Arla farmer has known all along, in that the additional money raised goes to all Arla farmers across Europe and not just to UK ones. What he didn’t say was that all of Arla’s product revenues such as the brand giant Lurpak was also spread across UK farmers, and not just with Danish farmers where the product is made. He also printed (on line) the extensive exchange of emails from the shopper, who is actually believed by some to be a disgruntled farmer with a vendetta against Arla. The story was then picked-up by The Sunday Telegraph on the 15th November, and subsequently by other news outlets.

 

Thus, in one fell swoop through a wholly irresponsible piece of journalism that does nothing for any dairy farmer’s future, The Farmers Weekly has potentially compromised not only the Morrisons milk brand but other such schemes as well which could have put more money in farmer’s pockets. Note, the expectation is that the new brand will add £5million to farmers milk payments by the end of December.

 

Morrison’s has 11 million customers and just one complains and then goes to The Farmers Weekly and they make a story out of it.  Shameful. 

 

No doubt all of this will give FFA’s protestors much to talk about as they wait on the picket lines in the cold until the early morning hours.

 

1ppl milk price reduction for suppliers to Barbers Farmhouse Cheese – From 1st December   (6th November 2015)              

 

1ppl milk price reduction for suppliers to Wyke Farms – From 1st December  (6th November 2015)

This takes producers’ standard litre (www.milkprices.com) to 22.05ppl and on the manufacturing standard litre 22.81ppl.

 

1ppl milk price reduction for suppliers to Belton Cheese – from December 1st   (6th November 2015)

This takes producers’ standard litre (www.milkprices.com) to 22ppl and on the manufacturing standard litre 22.75ppl.

 

GDT results are a rollercoaster   (6th November 2015)

This week’s auction saw all prices pulling back significantly compared to those recorded only two weeks ago.  The average all products price fell on eye-watering 7.4% with all commodities falling between 5% to 11%.  It’s certainly a rollercoaster and further confirmation that this is going to be a long drawn out road to recovery.

Key price movers were:-

 

WMP                down 8% to average $2018 tonne

SMP                 down 8% to average $2453 tonne

Butter               down 5.6% to average $1844 tonne

Cheddar            down 4.6% to average $2987 tonne

 

Dairy Crest half year results are not rosy   (6th November 2015)

Dairy Crest has released its half year results to the 30th September and the city reaction was to mark its share price down by 13p from a previous close of £6.43 to £6.30.

 

Key numbers were:

 

                                                2015                             2014                 Change

Sales                                        £203.8m                        £215.3m            -5.3%

Adjusted Profit before Tax           £16.0m                         £25.7m             -38%

 

Nett Debt Increased                   £242.3m                        £209.6m            +16%

 

Liquids division (soon to be sold to MW) recorded a £16.7m pre tax loss compared to £2.5m loss in 2014

 

Tesco reviews will result in casualties and opportunities   (6th November 2015)

The Tesco Sustainable Dairy Group (TSDG) have completed their review of the milk purchasing scheme the result means opportunities for the best and casualties in terms of the loss of their TSDG contract for the poor performers.

 

One of the key outcomes is that in future all TSDG producers will be core producers with no seasonal producers and all will be measured and rated annually on a traffic light system.

 

Those who fall into the bottom 5% as the worst performing suppliers in terms of animal welfare standards, milk quality, environmental management, carbon foot printing and generally engaging with their customer Tesco will be given six month notice of contract termination.

 

Once notice is served there will be a three month period when Tesco will support these farmers in an attempt to improve their performance and score rating. If, after that period, they have not achieved the required standard they will be axed three months later.

 

Conversely the top performing 5% will received an extra 100,000 base litres of production allocation, which will be an annual award with the extra literage predominantly coming from suppliers who exit as Tesco suppliers either voluntarily or who are axed.

 

Tesco’s two key liquid suppliers Arla and Muller Wiseman will now compile a waiting list for the 150 new core producers who are required. The list will be evaluated on a combination of geographical location and a score card. Whilst current Tesco seasonal producers (estimated to be circa 300) have a slight advantage in getting onto the waiting list many will fail the geography test and the expectation is that completely new TSDG suppliers will be required to make the numbers up. In addition, a Tesco young/new entrant reserve pool will be created.

 

Participation in Promar costings could be considered optional in terms of, if you don’t want to participate in the costings you are free to supply another buyer but not Tesco.  So it’s compulsory for Tesco suppliers and whilst the 0.5ppl payment towards Promar will be stopped it will be replaced by a standardized payment/subsidy per farm.

 

COP budget prices will change from twice a year to four times/every quarter so far as the three F’s are concerned.

 

Tesco utilize a QVIS (Quality, Value, Innovation and Service) score card as a transparent measure to rate all its suppliers and now it will be tailored to dairy.

 

Finally, the processor price matching clause is to be removed from the contract in the event the non aligned price eclipses the TSDG price.

 

The idea is to bring the bottom up for those who want to engage. It won’t all kick off overnight but 2016 will be when the starting whistle is blown by Tesco and a league table of producers will be created. Those in the relegation zone after one year will drop off unlikely to be offered a second chance as will those who refuse to provide Promar with their costings. 

 

Overall most farmers will realise it’s time to put up or exit as Tesco suppliers if they can’t achieve the standards.

We have asked a handful of key questions about the new ideas to Tesco to which we await a response which we will report back on.

 

24 hours in the life of David Handley from Praise to Police  (6th November 2015)

Farmers for Action founder members David & Marilyn Handley have been threatened and intimidated by a 35 year old Staffordshire dairy farmer who also claims to be a spokesperson for breakaway group United Action for Real Farmers.

 

The threat came by text message and whilst it was a long text the relevant sentence read:

 

“……. I will be in your yard within hours to ram them where the sun does not shine” The threat was in relation to retired FFA Committee member Paul Rowbotom who it appears is central to the breakaway groups organisation.

 

During recent weeks the Handley’s have been the subject of a number of playground taunts on social media from the breakaway group but now at least one has turned to threatening behaviour.

 

It’s similar to the 1970’s when, in football, we had small groups called “firms” who were convinced they were the best supporters and anyone who got in their way got a good kicking.

 

Only 24 hours earlier the Handley’s were a topic of conversation around a table of dairy industry leaders where Marilyn Handley was once again referred to as the unsung hero of the  UK dairy industry and David was congratulated for what he and his FFA team & committee had achieved with retailers in recent months.

Let’s be honest if you were David Handley you would be asking do I really need this sort of aggro from a handful of Mavericks who by their own admission were not very long ago staunch supporters and admirers of his efforts. Many would say stuff this and walk away.

 

We have the contact details of the farmer whose mobile phone was used to send the text as do the Police and we are hoping it was sent without thinking. We contemplated exposing the details but at this stage it would only fire up more trouble for those involved.

 

 If you have any comments email us so we can gauge the responses because threats of violence we believe cross the line.  In addition we understand the farmer’s   milk purchaser is likely to be questioned as to whether it condones this behaviour and whether such threats are a breach of his milk contract.  If the farmer involved wants to communicate his thoughts   we are happy to listen to his version. Alternatively consideration of an apology wouldn’t be out of place if he feels one is appropriate.

Retailers will be laughing their heads of at the fact our most passionate dairy farmers who want to make a difference are squabbling and posting inappropriate messages on social media about the Handleys. Come on lads Handley surely can’t be the enemy. It’s a sad state of affairs.

 

Scottish dairy farmers to give their views on repatriation of AHDB dairy levy  (6th November 2015)

Following on from a lively well attended dairy meeting organised by Mole Valley and SNFU in Coylton this week, the suggestion to poll farmers views at the Agriscot event on 18th November regarding repatriation of Scotland’s producers AHDB dairy levy is on the card.

 

Northern Ireland’s dairy farmers do not pay the AHDB levy, however, they do pay a levy for milk promotion, which is topped up by milk processors.  Whilst AHDB would argue that repatriation of the levy money wouldn’t raise enough money the fact is in Northern Ireland they still succeed in raising and spending more money for milk promotion than AHDB do in the whole of Great Britain.

 

Speaking at the event, industry journalist Chris Walkland emphasised the great story there is behind the Scottish Dairy brand and believes Scotland should sell its brand by adopting the NI model, with money coming from either a new separate promotional levy or by having promotion money coming out of repatriated AHDB levies. "Where the money comes from is one for Scottish farmers to decide on," he said.

 

A straw poll by the meetings Chairman of the dairy farmers in the room showed that when asked “how many of you believe AHDB do a good job and are value for money?” Not one hand was raised.

 

Gaff of the week goes to Oliver McEntyre, Barclays Bank National Agricultural Specialist   (6th November 2015)

Thank you to the readers who were keen to alert Ian to a quote in the latest Holstein UK Journal/Newsletter.

 

The Barclays National Agricultural Specialist stated

 

 "From high input high output systems to low input low input milk from grass systems, large herds to smaller ones, from the uplands to the lowlands, the cost of production reaches towards 20p/litre in some cases."

 

So with the current Tesco COP over 30ppl, is this not simply and extremely unhelpful comment?  Was this 20ppl a typo or for real?

 

China’s ending of its one child policy is big news for world dairying  (6th November 2015)

China has announced its one child policy will end and with it comes the expectation that up to 2 million extra babies will be born every year leading to an estimated 10 to 20% boost in China’s demand for infant formula as produced by the likes of Dairy Crest and Arla.  The move from the one to two child policy will happen in March 2016.

 

 

0.75ppl milk price reduction for Glanbia suppliers – from December 1st   (30th October 2015)

This is likely to result in a standard litre price of 20.6ppl.

Glanbia have also announced a review of their volume bonus schedules to apply from April 1st. One or two emails to Ian have suggested that in the current environment a review means a negative adjustment. This is a bold and negative assumption and is by no means automatic.

 

0.6ppl milk price reduction for Dairy Crest Davidstow suppliers – from December 1st   (30th October 2015)

This takes producers standard litre price to 23.24ppl (www.milkprices.com).  Note, this reduction comes with a guaranteed price floor until 29th February so no reductions for at least three months.

 

0.58ppl milk price reduction for First Milk cheese contracted members – from November 1st   (30th October 2015)

 

SMP Intervention almost dried up    (30th October 2015)

SMP going into Intervention continues to decline.

 

A total of 3,116 tonnes entered Intervention in the two week period straddling August and early September and now it’s down to 417 tonnes from France and Lithuania.

 

The UK has placed 1048 tonnes of the total 23,371 tonnes put into Intervention with the last consignment from the UK in early August.  EU wholesale commodity prices are gradually trending north, which will be the key influencing factor.

 

Arla UK report losses of £88m    (30th October 2015)

First Milk certainly aren’t the only UK processor to report losses.  Arla Foods UK division clocked up £88million in losses in 2014.  Note, that is across a 12,700 farmer pool (of which 3,000 are in the UK) who supply 13.5 billion litres (UK share 3 billion litres).  So on a ppl basis it’s tiny.

 

New Zealand milk production   (30th October 2015)

New Zealand has now passed its peak production and nationally output is plummeting with September down 7.2% on September 2014.

 

Glanbia is unlikely to be good news   (30th October 2015)

Glanbia has announced the temporary closure of its state of the art Kilkenny powder plant, which was officially only opened in March.  The milk will now be diverted into one of its cheese plants.  The move is due to low returns on powder and anticipated better returns on cheese.  This means up to 3 million litres of milk/day is now going into Irish cheese although production is much lower and the plant can be used on a seasonal basis, which could be a factor in the shut down.

 

Let’s hope the move does not result in any more Irish cheese landing at our ports.

 

First Milk AGM  (30th October 2015)

Surprisingly the number of First Milk members who attended yesterday’s AGM was similar to numbers attending in previous years and certainly estimated to be under 40 actual member producing farms.

 

Another surprise to some was that none of the existing farmer board tendered their resignations or announced they will stand down when requested to do so.  However, some are almost certain to recognise they have to shoulder part of the responsibility for the mistakes made and follow Chairman Sir Jim Paice with dignity rather than believe they are candidates for re-election to the new board, which desperately needs commercial experience.

 

There will be an SGM in December to adopt the new governance proposals following which First Milk aim for a new slimmed down board to be in place for 1st February.

 

At yesterday’s AGM a new farmer board member, Robert Craig, was elected as a non-executive farmer director and farmer Jim Baird was re-elected to a similar position.

 

Sir Jim Paice stood down as Chairman to be replaced by Vice Chairman, Nigel Evans, who stands in as interim Chairman.  So for the next three months and during the re-negotiation of the banking facilities the First Milk board is more farmer orientated than before, which must be a concern.  As one person commented Gallacher desperately needs a board focussed on the business not the farms and farmers.

 

The Great British Game Fair is born   (30th October 2015)

Hot on the heels of the announcement that after 57 years the CLA Game Fair had admitted defeat and closed its doors comes the welcome news that a new 3-day event at Belvoir Castle, Leicestershire will take place on 22nd-24th July.

 

 

All of the articles below all relate to First Milk and were posted on our website earlier this week

 

First Milk’s Accounts and Annual Report are grim reading   (30th October 2015)

Ian takes little pleasure in writing about First Milk’s financial results. But its members will take no pleasure from seeing them.  On receipt of the accounts he faced two choices:

(1)   Take the easy route and skim the results saving a heap of time and money

or

(2)   Take a detailed look and report his observations and the facts as he sees them to his regular readers.  His conclusion was to go for option 2 mainly because he feels he owes that to readers, especially the FM members who find the delving challenging as well as depressing.  He won’t receive any Christmas cards from either the First Milk Board or Management but the details are there for members to study, and what is in the report needs to be aired.

 

Below are bullet points relating to the co-op’s accounts to 31st March 2015, which Ian has pulled together with limited commentary highlighted in blue.  Note, all comparison figures relate to the changes in the past 12 months. The detail is sobering, nay grim, and should stimulate significant discussion at the AGM this Thursday (29th). For those who want to check the facts Ian urges them to put these accounts before their accountants requesting their comments and questions. 

The facts are these

  • Turnover was £442m, down 28% from £610.5m

 

  • £8m loss due to cheese quality issues. This is huge, and unforgivable. But at least the new management team quickly accepted it, and have put in place strategies to improve.
  • Balance sheet reserves down from -£8m to -£45.1m. The numbers also confirm that FM held £50.9m of members’ capital retentions at 31st March 2015, with only £6m assets to set against this figure.There must surely be a case that the business should specify the capital repayment amount due from members who no longer supply them as a debt to the business. This should be separated from the capital held from members who still supply milk.  The way it is currently accounted for it is not transparent.
  • Capital repayments to leaving members delayed by one year to March 2016, following which they are to be spread out over 3 years.  This added £9.3m to the pot. 

The harsh reality, which most members already realise, is that the likelihood of members receiving any repayment of capital is slim. 

  • Member capital retentions were increased from 0.5 to 2ppl from December 2014 to August 2015.  This adds £15m to the financials if FM still handle 1 billion litres of members milk.  In addition, the member capital limit rose from 5ppl to 7ppl.
  • Barclays and Lloyds will provide a finance facility until 1st February 2016.  The facility is payable on demand so First Milk depend on the two banks’ continued support. The facility available at 31st March 2015 was £62.2m. The Directors/Board state the current facility may need to be supplemented with additional borrowing and funding during this year. The existing bank loans ideally need to be extended, renewed or replaced this year.  There is no time for Christmas to get in the way!. If they aren’t then the new year leading up until February will be a very tense and uncertain time.
  • Pre-tax loss of £24.9m compared to a loss of £4.3m, but excluding one off exceptional costs in the year it was a loss of £23.5m compared to a surplus of £3.5m the year before. During the year FM consistently paid one of the lowest farm gate milk prices to members, but it still paid more out than the business generated.  In other words, FM should have cut the price they paid for milk harder and sooner, to perhaps the tune of towards an extra 3ppl throughout the year.

 

  • Producers’ milk payments continue to be delayed by 2 weeks, which has given the business around a £5m cash flow benefit. These “delayed” payments continue to favour the bankers at the expense of the members.
  • A £600,000 write off for a loan with First Milk Energy Limited
  • Poor financial performance of the CNP business, acquired in 2012, resulting in a significant reduction in the businesses valuation and a £1.2m adjustment charge in the accounts. It’s a head scratcher to understand how come FM has ended up paying the farmer owners of the CNP business an extra £200,000 when the value of the business is impaired.  The CNP business has now cost FM £10.6m, and it recently lost its Team Sky contract (probably because it couldn’t afford to renew it). This purchase must rank as one of the worst acquisitions ever in the British dairy industry, even top trumping DFOB’s acquisition of the ACC business.
  • The Pensions Liability is a huge millstone around FM’s neck, and is something former CEO Kate Allum tried to reduce in negotiation with government in 2013/14.

Nett pension liability is up from £13.8m to £20.1m and growing at an alarming rate and needs to be funded. According to the accounts, FM are paying £2.3m a year but this simply has to increase or the deficit will continue to increase unless someone can wave a magic wand.

  • Kate Allum’s total pay in the year was £332,000 and Sir Jim Paice’s was £90,000. Nice work if you can get it!
  • Directors and former directors continue to resign to supply other processors.
  • FM own 59.3% of Westbury Dairies Limited with Arla owning the remaining shares. This now looks to be a liability as opposed to an asset to FM. However, the volume of milk travelling from Scotland to Westbury is a concern if FM were to exit Westbury.
  • Staff numbers down from 649 to 430

·         FM have spent £2.1m reviewing the financial position of the business along with its future prospects. That must be £2,000 plus per current supplying member or 0.2ppl plus.  Where was it spent and what real tangible value has it delivered?

 

In summary we refer to the auditors report on Page 14:  “The Group incurred a loss of £27.5 million during the year ended 31 March 2015 and continued to be loss making for the six month period to 30 September 2015. Additionally, the Group's and the Society's bank facilities are payable on demand and are available until 1 February 2016. As set out in the directors' report and Note 1 to the financial statements, the ability of the Group and the Society to realise their assets and discharge their liabilities in the normal course of business is dependent upon the adequacy of the bank facilities and the continued support of their lenders, achievement of forecast financial performance and securing financing for the period beyond the expiry of the current facility. These conditions, along with the other matters explained in Note 1 to the financial statements, indicate the existence of material uncertainties which may cast significant doubt upon the Group’s and the Society’s ability to continue as a going concern.” This requires no further commentary.

Both the auditors and the directors cast doubt over whether the business can continue as a going concern mainly due to the need to renew the banking facility and to meet its financial performance projections.

Note, Ian is NOT an accountant and no one should rely on this analysis as advice. It is Ian’s assessment based on recent FM publications. No representation or warranty is provided as to the accuracy of the information and it should not be used as a basis to make on farm decisions.  However, it could be used by members when questioning the board and management of FM, if they so wish.

Was First Milk’s claim - “Slightly better than break-even” the reality? (30th October 2015)

In its 3rd July members newsletter FM claimed the following:

 

April & May resulted in a slightly better than break-even position. June is expected to be similar.

P&L is being run at marginal break-even to ensure that milk price is max we can afford.

First quarter results is a critical milestone and demonstrate the impact of changes so far.

 

Was this the reality, though, and the truth? Or did it make a profit in April, May, and June only to lose more than it made in July, August and September? The report issued today clearly states that the business has continued to be loss making for the six-month period to 30th September 2015. In addition, at that time losses were stated to be around £22m but at the end of the day were 25% greater at £27.5m.

 

First Milk Board lambasted in Governance Report  (30th October 2015)

 

First Milk has also announced its action plan following its overdue independent review.  They key points are:

A 49 page independent review by Greenburn into the governance of First Milk has effectively lambasted its current board.  In short it is distressing reading, especially the time line on pages 12 to 15, for FM members but at least the grim facts are now out in the open.

 

The conclusion is unambiguous in that its Farmer Board is left wanting.  The report states “there have been severe short comings in governance both at Board and Senior Management level for a number of years. This includes failure to follow conventional business practice in a number of ways.”

 

It goes on to say:

 

“The Board of Directors lacked the collective knowledge and experience to successfully navigate the business forward …..” and it refers to a catalogue of inadequate accounting systems.

 

“The Board are ultimately responsible for ensuring the co-operative has a strong and sustainable business.”

 

The authors question whether the Board managed the CEO or was it the other way around?  They refer to “The perceived lack of competence at Board level, the Board’s inability to understand the financial information provided and the protracted decision making.”

 

The report refers to “a lack of leadership from the Board”

 

This report is set to go down in the UK dairy industry history books along the lines of the famous Myners Report for The Co-Operative.  It’s hard hitting and leaves nowhere for those involved to hide. Frankly few, if any, of the current farmers members of the First Milk Board should be up for re-election.

 

The key recommendations are:

 

·         The board will be reduced from 9 to 7 with an “independent commercial chairman”

·         Going forward an elected farmer council of 7 members will represent the farmer owners

·         Farmer board members will reduce from 5 to 2 with the aim of bringing in more commercial board members.  One of these farmers will be Vice Chairman.

 

·         Given the incompetence of the existing board few, if any, are likely to be required under the new structure as board members.

 

First Milk continues to fail despite the recommendations of the Governance Report  (30th October 2015)

The final insult for FM members is their continued failure to adopt good practices.

Members have been given less than a week to study the accounts and the report ahead of the AGM.  One Scottish member spoke to Ian today about this and he was extremely unhappy. Highlighted in the Governance Report it confirms that in May 2015 a review of FM’s financial governance stated that:

“The monthly reporting pack is often released for review too late in the month for there to be any effective analysis done prior to Board meetings.”  In some cases only 24 hours before a meeting.

To give farmer members less than a week must surely be inadequate given the state of the finances and the situation their co-op faces.

So where is the good news?  (30th October 2015)

The reality is that there is no good news in these reports, other than the fact that that the senior management have gone and a new team are in place. Have they got the skills to turn this business around? Have they got the time? We won’t know until January 2016 when we find out about the financing. There isn’t much time at all.

 

Snap to it on Snaptags! (30th October 2015)

Ian Potter Associates has, for the last three years, been actively marketing the Snaptag brand of Cattle, Sheep & Pig ear tags. Repeat orders from every customer (OK, with the exception of one) speak for themselves in terms of their quality and durability. Basically they're the bull's / boars / rams nadgers when it comes to tags.

 

And this, of course, is the bull's nadgers when it comes to dairy bulletins, which we send to you FOC because we're nice people.

 

There is, though, no such things as getting summut for nowt, and we strive to sell something on the back of it - hence our plugs for these tags, Pinpointpal vehicle tracking devices, and the occasional request for information for our database cleansing so we know who's genuinely a dairy farmer and who's just pretendin'.

 

So if you've got livestock and are in the market for tags (and even if you aren't - we're not fussy!) then give us a call! Our general tags & sample tags (BVD) are extremely competitive so why not ask us to quote! Go on...you know you want to...

 

For more information please contact Lydia on 01335 320016 or email her on lydia@ipaquotas.co.uk.

 

Thank you, and we look forward to your custom and to continuing to be able to send this bulletin out FOC.

 

Arla to hold its milk price  (23rd October 2015)

Arla is to hold its member milk price for November and the price it pays it direct suppliers and organic suppliers for December.

 

The member standard litre price remains at 23.04ppl for Arla AMCO and Arla Milk Link members.  The Arla AMCO Tesco price is 23.74ppl.

 

In its communication to members Arla states “The outlook for the coming months is mainly stable”, which in itself is a small welcome glimmer of light from one of the European milk processing giants, especially when you consider that UK and European milk supplies continue to increase.

 

GDT shows 3.1% downward blip  (23rd October 2015)

The road to recovery was always going to be a rocky one as demonstrated by this week’s auction results in which the auction average dropped 3.1% on the back of 4 significant consecutive auction rises.  The quantity of product on offer was down 1531 tonnes (4.2%) to 34,519 tonnes.

 

Key results were:

 

Average price           US$ 2735/tonne (-3.1%)

Butter                     US$ 2850/tonne (-11.1%)

WMP                      US$ 2694/tonne (-4.6%)

SMP                       US$ 2178/tonne             (-4.5%)

Cheddar      US$ 3163/tonne (-2.2%)

 

All in the global dairy industry expect prices to continue to increase, however, further downward corrections this side of Christmas are equally anticipated.

 

Muller get green light on Dairy Crest acquisition but ….!  (23rd October 2015)

UK Competition & Markets Authority (CMA) have given the green light for Muller Wiseman to acquire Dairy Crest’s liquid business having accepted the undertaking that Medina Dairies will have the facility to toll processes up to 100 million litres of milk a year at Dairy Crest’s Severnside factory in Gloucestershire.  The deal will be completed on or before 26th December 2015. 

 

In a statement whilst the £80 million price paid was re-confirmed it was accompanied with a £15 million allowance, which was attributed and dumped on the CMA’s modified undertakings.

 

This is a staggering figure and in simple terms if Medina were to process the full 100 million litres a year for five years the £15 million deduction equates to 3ppl.

 

The more likely reason for a sizeable part of the deduction is that in addition to the modified undertakings with Medina, Dairy Crest’s liquid business profits and performance has deteriorated and part of this deduction is due to this hidden factor.  However, Dairy Crest will still be delighted at the nett £65 million and to be out of the liquid business by the year end allowing them and others to focus on their cheese business, which is sure to be open to offers in 2016 from European hunters.

 

Dairy Crest’s shares were under £4 a year ago and on the announcement jumped to £6.55 yesterday.

 

Medina what next?  (23rd October 2015)

Medina will have the facility to use the toll processing for up to 100 million litres of milk but this does not mean they will utilise the full facility during the 5 to 8 year period. However, Medina are ambitious and intend to continue to grow their existing business. 

 

Medina stated to Ian its strategy is find customers 1st, milk sourcing 2nd .  Ian believes this is very sound business policy and one some dairy farmers should take note of. 

 

DairyCo/AHDB Dairy yesterday suggested in their commentary that the Medina involvement means Medina “will likely need milk close to the factory to achieve it ….. Farmers should be ready to compare any offers ….”

 

Medina have confirmed to Ian that this is pure speculation.  First job is for Medina’s commercial team to secure new long term sustainable business.  They then have the option to process their existing farmers’ milk at Severnside or take milk from Muller Wiseman or a hybrid of the two.  Recruitment of new milk suppliers whilst possible is not on their radar so please don’t form an orderly queue because it’s likely to be a long wait.

 

B price milk watch  (23rd October 2015)

Let us have your milk buyers’ current B price on a strictly private and confidential basis.  Here are the ones we have been informed about:

 

Paynes Dairies                    11ppl and could alter but not upwards according to Charlie Payne

First Milk                 13ppl (+1.5ppl) and trending up

Grahams Dairies      10ppl (September)

 

First Milk lose Sky contract  (23rd October 2015)

CNP which is the sports nutrition company acquired by First Milk has lost its contract to supply product to the British cycling, Team Sky (source:  DIN).

 

New Non-Executive Director at First Milk  (23rd October 2015)

Until recently Carl Ravenhall was MD at Muller Wiseman and prior to that MD of Milk Link’s cheese business until the Arla takeover.

 

He has now been appointed to the First Milk board.

 

First Milk will be in the news next week in the run up to their AGM next Friday (30th) ahead of which their financial accounts for the year will have to be released as will details of when Chairman Jim Paice will stand down and who will take his place.  In addition, the independent review of the co-op’s governance announced on the 1st May is overdue (due summer) and members will expect it on or before next Friday’s meeting and must surely recommend a re-shaping of its board.

 

1.54ppl extra to First Milk’s Haverfordwest supplier/members   (19th October 2015)

First Milk will pay an additional 1.54ppl on supplies of members A litres milk to its Haverfordwest factory representing the Tesco winter cheese supplement paid by Tesco to Adams Foods.

 

0.365ppl milk price reduction for Dairy Crest formula contracts  (19th October 2015)

A premium of 4.9ppl now exists between the formula price and Dairy Crest’s non-aligned milk price.

 

This results in a liquid standard litre price for formula contracted suppliers of 26.9ppl (www.milkprices.com)

 

Morrisons Milk for Farmers is flying off the shelves  (19th October 2015)

Firstly Ian has to eat a large slice of Morrisons own brand humble pie and apologise for the fact he initially doubted the wisdom of the Morrisons Milk for Farmers brand, and indeed referred to it as a gimmick.

 

The new milk was on the Morrisons shelves on time and sales are flying, so much so that they caught processor Arla and Morrisons out, who both underestimated its likely popularity. The office has had several emails reporting of empty shelves with store managers receiving complaints from customers that the milk was unavailable.

 

Initial sales are accounting for close to 10% of all Morrisons liquid sales with the 10ppl premium/23ppl extra for a 4 pint carton going to farmer members of Arla only.

 

Ian has made enquiries and Morrisons have not taken any money out of the farmers’ pot to cover marketing or design and have stumped up the money from their own coffers.

 

In addition, if the situation should arise whereby close to sell by date “Milk for Farmers” has to be discounted this cost is shouldered by Morrisons and not the farmers, so the farmers still receive the extra 23ppl.

 

So the early indications are that consumers ARE willing to pay an extra 10ppl, and if all of this carries on for the long term it’s a win-win for the Arla boys.

 

Next on the supermarket shelves should be Morrisons own label cheddar, which will sell for a 34ppl per pack premium equivalent to 10ppl.  If and when you spot it, please send us the details.

 

Dirty tactics on Morrisons milk  (19th October 2015)

The success of the Morrisons Milk for Farmers appears to have aggrieved a few people and brought the industry’s dark side into play. 

 

Welcome to the bulletin for the first time Andrew Henderson from Crewe, Cheshire, MD of a small liquid milk business Nemi milk, dairy nutritionist and owner of a feed firm called Independent Feeds Limited. He’s well known to some farmers on twitter as @Nemi Milk, and for his love of Arla-baiting, having posted charming tweets comparing the Morrisons brand and Arla to FIFA, and even sending Liz Truss messages about “someone milking British public emotions and the UK dairy crisis”. The milk is “shameful”, the marketing “ill-informed” and Arla is “a co-op who deliberately misleads”. It is a “#scandal”.

 

If that isn’t enough he has picked a fight with David Handley and told him that he has requested Trading Standards investigate the Morrisons brand. The claims are the initiative and its delivery are illegal, and the move could single handed stop the initiative. There is a possibility it could be withdrawn from sale pending an investigation. If this happens it will enrage Arla’s dairy farmers on an unimaginable scale.

 

 

But Henderson isn’t alone in his endeavours to stir the pot. Hail, incredibly, Tesco supplier Roddy Catto, who is a founder member of the Muller Wiseman Milk Group and until very recently its former chairman. And yes, you read it right. He’s a Tesco supplier supplying no milk whatsover to Morrisons.

 

He went on local television wearing his Scottish NFU hat commenting on the Morrisons offer: In the interview Catto states the scheme “is a shambles” and “How would I be able to calculate how much extra money I’m going to get from Morrisons?”  That is an easy calculation. It’s zero. Consequently he should not have been commenting on a Morrisons initiative.

 

For the full interview click on:            http://news.stv.tv/north/1330565-morrisons-more-expensive-milk-for-farmers-range-a-shambles/

 

Next, and not to be left out of the murk comes dairy farmer Stuart Heath from Staffordshire, who is one of Muller Wiseman’s farmers who sits on the Tesco Sustainable Dairy Group Committee and, again supplies Tesco, not Morrisons. He also was on national TV commenting on the Morrisons initiative and was also less than complimentary about it. For the full interview click on:      https://www.youtube.com/watch?v=W5sCEybRrqc&feature=youtu.be&a

 

Questions are flying around as to why, only a day or two before the CMA announce their decision on the takeover of Dairy Crest’s liquid business by Muller, that two high ranking Tesco-Muller Wiseman farmers end up on TV commenting in a hugely negative way on the Morrisons initiative. Quite what Tesco say about the ethics of two of their farmers commenting so publically and critically on a rival is one that Ian intends to find out.

 

In addition, since the announcement on the 6th November 2014 that Muller Wiseman intended to buy Dairy Crest’s liquid business (which has been ratified by the CMA today – google “CMA accepts remedy in dairy merger”) the deal has had a clean run. Journalists, media, industry organisations and competitor processors have been careful not to jump in with their size nine’s. And yet within hours of the deadline for the announcement by the CMA we have these antics. One of the videos could be put down to naivety; two of them are definitely questionable; two plus the Trading Standards referral certainly don’t look as if they are accidental.

 

It’s murky stuff, not befitting The White Stuff.

 

AHDB Dairy/DairyCo come under fire again from industry leaders

 

Shot No. 1 – AHDB Dairy is particularly impotent  (19th October 2015)

The Tenant Farmers’ Association (TFA) have issued a press release headed “Dairy Sector needs much improved levy board”, which challenges the performance of AHDB Dairy and how it delivers value for money with the £7 million it spends of farmers’ money each year.

 

The release follows a recent meeting in which the TFA commented “if this was a school inspection our findings would be that AHDB Dairy required improvement and in areas was inadequate.  We need to see a much improved board as soon as possible.”  The full press release makes for interesting ready, click on

http://www.tfa.org.uk/tfa-media-release-no-26-dairy-sector-needs-much-improved-levy-board/

 

Shot No. 2 – Farmers For Action news page slams AHDB Dairy Chairman  (19th October 2015)

FFA leader David Handley questions AHDB’s recent recruitments and suggest that as part of its consultation document farmers are given the choice to vote to opt in or out of paying the £7 million levy.

 

The full details can be found when you click on http://www.farmersforaction.org/news.php and scroll down to the paragraph, which starts with the words “South West Dairy Event”

 

First Milk executive has an eye-watering remit   (19th October 2015)

Brian Mackie has been appointed as First Milk’s Chief Operating Offices following the surprise departure of Gerry Sweeney, who was First Milk’s Finance Director.

 

Mackie has a very wide ranging and potentially eye-watering remit to cover, including leading First Milk’s finance, legal, HR and to drive its corporate development agenda.  It’s a big job and a significant commitment compared to his initial appointment as non-executive director in June 2015.  We wish him luck and the ability to create an 8-day working week.

 

Dairy Brand launch for Scotland   (19th October 2015)

A Scottish Dairy Brand/Marque was launched at last week’s German Anuga Food Fair in a bid to promote the quality and provenance of Scottish dairy products as well as a good place for processors to invest in processing and marketing.

 

15 November Calvers for Sale     (19th October 2015)

Pedigree cows (Holstein Friesian x British Friesian) from 8,000 litre herd.  Due around November 15th to beef bulls (mostly Belgian Blues) - £1000 ono – Location:  Newark

For further details call 07980 732330

 

Correction     (19th October 2015)

Our report on the prices achieved at the last GDT auction incorrectly stated that prices have risen by 100%.  The correct number was 10%.  Apologies.

 

Next auction is tomorrow, 20th October.  Results will be posted on our website late tomorrow or early Wednesday morning.

 

4th consecutive auction rise as average prices jump another 10%    (7th October 2015)

Yesterday’s Global Dairy Trade auction results continued to head north at speed.

 

The average price was up 9.9% to average $2834 tonne.

 

Notable movers were:

 

SMP up 13.4% to average $2267

WMP up 12.9% to average $2824

 

This is the fourth consecutive increase since the all time low result recorded in August.

 

1.469ppl milk price reduction for Dairy Crest M&S suppliers – from 1st November (PRODUCER NOTIFIED)   (7th October 2015)

This take producers standard litre price to 31.33ppl (www.milkprices.com)

 

0.31ppl milk price reduction for Muller Wiseman CDG suppliers – from 1st November  (PRODUCER NOTIFIED)    (7th October 2015)

This takes the standard litre price for those contracted to the co-operative dairy group to 28.01ppl (www.milkprices.com)

 

Tesco’s supplementary cheese payment is confirmed by SCC   (7th October 2015)

South Caernarfon Creameries will pay an additional 2.5ppl to all its co-op members for the three month period September, October & November.  This will be shown separately on milk payments and represents Tesco’s commitment to pay 29.93ppl on milk supplied into its own label British cheddar.

 

The three month commitment is due to the fact SCC’s three year contract to supply British cheese to Tesco via Adams Foods (Leek) ends in December.

 

1ppl milk price drop from SCC – from 1st November (PRODUCER NOTIFIED)   (7th October 2015)

So it’s plus 2.5ppl (see Tesco supplementary payment above) less 1ppl below.  The result is that after this 1ppl drop and excluding the Tesco additional payment the 1st November standard litre price is 21.89ppl and on the more appropriate manufacturing standard litre the price it is only 20.03ppl (www.milkprices.com)

 

Signs of international price improvements   (7th October 2015)

There are now signs of upward price movements some of which are already filtering down to farm level.

 

For example, Friesland Campina +0.5 Euro Cents for October (approximately 0.35ppl).

 

In addition, futures trading are trending upwards as are international and EU commodity prices.  Fingers crossed the trend continues.

 

Sainsburys agree a supplementary payment to Barbers cheese producers   (7th October 2015)

Sainsburys are understood to have agreed to pay an additional 2.5ppl on the milk equivalent, which goes into Sainsburys own label cheddar cheese supplied by Barbers.

 

Arla launches its own farm assurance scheme in the UK   (7th October 2015)

Arla’s own farm assurance scheme called Arlagarden has been launched in the UK.  The assurance scheme and mark already operates in Sweden, Denmark, Germany, Luxembourg and Belgium.

 

The assurance scheme focuses on animal welfare, milk quality and food safety.  Put another way care in every step from cow to consumer. The standards apply to both Arla co-operative members and direct suppliers.

 

Morrisons Milk For Farmers has been spotted   (7th October 2015)

In both Morrisons, Melton Mowbray and Corby at £1.12 for 4 pints.  Unfortunately, the price comparison stated that this equated to £493.40 a litre, which is sure to soon by amended to 49.34ppl.

 

 

 

1.5ppl milk price reduction for Dairy Crest Davidstow producers – from 1st November   (2nd October 2015)

This takes producers (www.milkprices.com) standard litre price to 23.84ppl.

 

Whilst the reduction is unwelcome and unpopular the 2015 history of the Davidstow’s ex-farm gate milk price is, under the current market conditions, impressive.

 

It is only the second reduction in 2015 and there was even a small 0.25ppl August milk price increase.  In addition, the new price still (we believe) leaves Davidstow at the top of the milk for cheese league table.

 

1.2ppl milk price reduction for The Fresh Milk Company (AKA Lactalis) producers – from 1st November (PRODUCER NOTIFIED)   (2nd October 2015)

The standard litre price is still to be confirmed but expected to be 21.01ppl.

 

0.35ppl milk price reduction for Tesco (TSDG) suppliers – from 1st November  (2nd October 2015)

This takes producers (www.milkprices.com) standard litre price to 30.58ppl, including the 0.5ppl Promar costing premium, or 30.08ppl, excluding this payment.  The price is fixed for the six month period 1st November to 30th April 2016 for the 600 or so producers involved.

 

Tesco producers should be pleased with this announcement confirming Tesco have maintained their promise to pay the cost of production (now 30.08p), however, the outcome of the ongoing review is still to be announced and implemented.  The announcement is expected next month.

 

Stand on for Dairy Crest liquid contracted producers plus estimated supplementary payments of 0.39ppl & 0.65ppl   (2nd October 2015)

This means producer’s standard litre price for November will be 21.69 (www.milkprices.com), excluding the additional payments.(see below)

 

The additional financial support payments from both Morrisons and Lidl will be shown separate on producers’ milk cheque payments starting in October.

 

The October supplementary payment is expected to be 0.39ppl and will be paid on November 15th. The first full month will be 0.65pp based on September milk sales and paid on 15th December.  The reason for the delay in DC paying out the first support payment is cash flow based and revolves around the payment terms Lidl and Morrisons work to.  In a nutshell DC have no reason to bank roll or bridge the gap.  The flip side is that the payments to producers will continue around two months after the deadline date.

 

Clearly once the sale of Dairy Crest’s liquid division is approved different arrangements concerning these payments by Muller may be adopted however they are sure to be honoured.

 

£15.5million of English aid to be distributed to all     (2nd October 2015)

DEFRA has decided to distribute the English share of the EU support package amounting to £15.5million based on deliveries in 2014/2015 year.  The same decision has been made in Wales where £3.2million is to be distributed.

 

Note, the payments are not connected to quota held at 31st March 2015.

 

The expected payment will be around £1700 to £1800 per 1 million litres of production and will be paid in December by the RPA.

 

Scotland (£2.3million) has yet to declare how they intend to distribute the pot.

 

Sharing it evenly is perhaps understandable, however, for those on premium contracts, for example the retailer aligned and organic, it’s a surprise unexpected windfall as opposed to those who are currently receiving under 18ppl where it could be a necessity and almost a lifeline.

 

Would be Tesco producers – form an orderly queue    (2nd October 2015)

Tesco have announced their intention to add a further 150 or so producers to its core pool during the first quarter of 2016.  Those interested should form an orderly queue whilst Arla and Muller decide who the chosen few will be and what each processors respective share is.

 

Competition Markets Authority announcement on Dairy Crest’s liquid sale is imminent  (2nd October 2015)

Whilst a decision from the CMA on the Muller Wiseman acquisition of Dairy Crest’s liquid business could come earlier than the 19th October 2015 it is expected that the announcement will not be publicised until the deadline date of the 19th.

 

The clear expectation on all sides is that the sale will be completed by the 31st December 2015.

 

READER CHALLENGE – SPOT THE MORRISONS MILK    (2nd October 2015)

If anyone spots the new Morrisons Milk for Farmers on the shelves, please can you take a photograph and email details to me with the location & price.

 

15 November Calvers For Sale    (2nd October 2015)

Pedigree cows (Holstein Fresian x British Friesian) from 8,000 litre herd.

Due around November 15th to beef bulls (mostly Belgian Blues)

£1000 ono

Location - Newark

For further details call 07980 732330

 

MP gets to grips with the dairy crisis    (2nd October 2015)

Rishi Sunak, the new MP for William Hague’s old seat in Yorkshire sits on the DEFRA select committee has been doing a lot of work on the milk price crisis, both in the select committee context but also doing his own research

 

He has come up with a ten-point plan for the industry – a series of practical proposals, some short term some mid- to long-term.

 

We thought his plan worthy of circulation: email any comments to malcolm@rishisunak.com

 

Ten steps to help save British dairying

 

LAST week I spoke to an 80-year-old farmer in my constituency who told me that in a lifetime of dairy farming he had never seen times as so bad. With farm gate milk prices falling 30 per cent in a year – in many cases below the cost of production - it’s far from an exaggeration.

 

I have spent the last few weeks speaking to dairy farmers, industry experts and government ministers about the terrible difficulties the industry is facing. It’s clear nobody can wave a magic wand and resolve a situation ultimately caused by a global glut of milk, but I believe there are ten key steps that can, and must, be taken if we are to protect this most valuable element of our rural community:

 

1. More retailers giving farmers a fair deal

Many supermarkets have worked hard through a time of rock-bottom global milk prices to ensure that British farmers receive a sustainable price. That said, more can be done and it is absolutely vital every major retailer pays a fair price for British dairy produce. You can see how your supermarket treats its famers by checking the National Farmers Union website – if you’re not happy, vote with your wallet.

 

2. An end to milk being used a permanent ‘loss leader’

All of us have seen the price of milk plummet in recent years, with many supermarkets now charging only £1 for four pints. This kind of pricing can have widely detrimental effects. That’s because low prices in supermarkets force down prices all across the market, forcing your corner shop to cut its milk price in order to compete, in turn putting pressure on milk producers. Milk is a quality product, and pricing should reflect that.

 

3. Better labelling of British produce

It might seem like there is little that could be more English than a slice of Cheddar, but what many consumers don’t know is that many of the major cheddar brands on the shelves are produced in Europe. We need to have clearer packaging that empowers consumers to buy British.

 

4.  More domestic production of dairy products

It’s a scandal that two thirds of our cheese and 30 per cent of our butter is imported from overseas. We need to invest more in processing technology to make sure we are adding value to British milk by turning more of it into British butter, yogurt and cheese rather than importing so much.

 

5. More supply chain transparency and enforcement

We know how much a farmer gets paid for a pint of milk, and we know how much we pay for it in the shops. What we don’t know is how big the margins are in-between. We need to work towards the kind of transparency that allows us to follow milk from farmer to shelf in order to ensure a fair price is being paid at every stage. Good supply chain practices then need to be enforced by a tough Grocery Code Adjudicator and strong code of practice.

 

6. More dairy Producer Organisations

Groups of farmers banding together to negotiate a better sale price for milk and a lower purchase price for feed and machinery are commonplace across Europe, particularly in the successful German market. In the UK we currently have only one such producer organisation. If farmers are going to balance out the power of big processors and retailers that needs to change.

 

7. Government must buy British

National government is working hard to purchase British dairy products, but more can be done at a regional level. We must push local government, hospitals, schools, and military establishments to do more. 

 

8. A working dairy futures market

Futures are a way for farmers to agree a pre-arranged price for milk they will produce in the future. The price stability this can give has the potential to be invaluable to the volatile dairy industry. We need the UK to follow in the footsteps of the USA and New Zealand in making a working dairy futures market available.

 

9. Review of levy board spending

Every dairy farmer in the UK currently pays a percentage of their income to a government- run levy board. Many farmers feel that more of that money needs to be spent promoting the benefits of milk and encouraging consumers to choose British. It is vital that farmers feel like their levy money is being spent in a way that actually helps them.

 

10. Immediate financial assistance

The EU has announced a €500m crisis fund to support vulnerable dairy farmers and we must get our fair share. Also, it is important that regular CAP payments to farmers should be made as quickly as possible to ease cash flow problems. Lastly, HMRC and banks must understand the inherent volatility in farming incomes and be flexible in how they treat farmers. 

 

COMMENT FROM RISHI    (2nd October 2015)

Without its dairy farmers, Yorkshire’s magical landscape would soon see its lush fields turn to scrub and its dry-stone-walls go unrepaired. Meanwhile, with Britain already only 60 per cent self-sufficient in food, our country’s ability to feed itself in a time of crisis would be diminished. Only by working together can we preserve our dairy industry, and with it our beautiful countryside, for generations to come.

 

Spotted on a London Underground Billboard   (2nd October 2015)

IMG-20150922-00017

 

IMG-20150922-00018 (2)

 

As was stated by the eagle-eyed reader it’s not exactly a positive image of our industry.

 

0.38ppl Arla Amba milk price increase netts down to 0.03ppl   (25th September 2015)

From 28th September the Arla Amba member milk price will increase by 0.38ppl (0.5 Euro Cents/litre), however, the strength of sterling means the currency smoothing mechanism eliminates 0.35ppl resulting in a nett 0.03ppl gain.

 

This results in the following www.milkprices.com standard litre prices:

 

Arla Amco members                        23.04ppl

Arla Amco Tesco suppliers   23.74ppl

 

First Milk Haverfordwest producers to receive an extra 1.5 to 2ppl courtesy of Tesco   (25th September 2015)

The 240 or so First Milk members who supply the co-ops Haverfordwest Creamery have been informed that the Tesco initiative on cheese, agreed earlier this month, will result in a price increase of between 1.5 to 2ppl.

 

The extra money will be paid by Tesco on all milk supplied for its own label British cheese (via Adams Foods).

 

The payment will be shown separately on each farmer’s milk statement with the first payment for September deliveries showing on producers’ October milk statement.

 

Some non-Haverfordwest First Milk suppliers are unhappy with the ring fencing of the money; however, it is consistent with the pricing model, which CEO Mike Gallacher introduced on his appointment in a bid to ensure they no longer paid out more money than they received as happened in 2014/15.

 

Russian EU dairy import ban could easily be permanent   (25th September 2015)

According to a report from this week’s IDF Conference in Lithuania, a speaker from the Russian dairy publication has stated that the ban on the importation of European dairy products will last until at least 2018.

 

Realistically the likelihood is that the ban will be permanent given Russia’s plans to expand domestic milk production on an industrial scale e.g.  The 100,000 cow unit (Source:  DIN)

 

European milk production up 3.4% comparing July 14 v July 15  (25th September 2015)

 

New chairman at Dairy UK   (25th September 2015)

David Dobbin CEO of the co-operative United Dairy Farmers has been appointed chairman of Dairy UK.

 

Dobbin is very popular and well respected in both the European and global dairy industry and will want to make his mark in his new role.

 

CLA Game Fair is in limbo   (25th September 2015)

The CLA has announced that it will not be running future game fairs including the 2016 event scheduled for Ragley Hall.

 

The surprise announcement has come on the back of three consecutive loss making years.

 

Whether another operation/organisation will step forward to run a replacement event remains to be seen.  The first CLA game fair was held in 1958 in Ellesmere and Ian’s first, in shorts, was in 1972 at Raby Castle he has attended most years since 1972.

 

Date:  Thursday 1st October 2015   (25th September 2015)

Time: 1000 - 1530

Venue: National Motorcycle Museum, Birmingham

Conference title: Positive Dairying: Winning in the global market place      

 

Dairy Crest to stand on with prices for October   (16th September 2015)

The move means the non aligned liquid suppliers standard litre price holds at 21.69ppl and the Davidstow price holds at 25.34ppl (www.milkprices.com).

 

0.36ppl milk price reduction for Dairy Crest/DCD Formula contracted producers – from October 1st   (16th September 2015)

This results in a new standard litre price of 27.08ppl (www.milkprices.com)

 

Another massive jump in GDT auction prices at + 16.5%  (16th September 2015)

This is certainly a roller coaster ride for GDT auction prices as this week’s prices saw the third consecutive double digit increase.

 

The average was up 16.5% to $2568 (US)

 

Key movers were:

 

WMP          +          20.6%   to average $2495

SMP           +          17%      to average $1992

Butter         +          13.3%   to average $3108

Cheese       +          10.7%   to average $3206

 

The lift comes on the back of 14.8% and 10.9% increases and is partly due to a further 15,200 tonnes cut in the volume Fonterra will offer for sale in the next three months and a total 12 month volume cut amounting to 78,000 tonnes. At this week’s auction the amount of WMP on offer was 5% less than two weeks ago and 43% less than the corresponding auction a year ago.

 

During the last three auctions the average all products sold price is up 42% with WMP up a staggering 57% and SMP up 42%. Farmers will no doubt be cautiously optimistic that prices have bottomed out but note these headline increases come from record low averages are we not out of the wood yet but analysts are now claiming we are past the bottom.

 

From the New Zealand farmers point the fact WMP prices have passed the $2,200 tonne mark is significant because this is the level required to maintain the current seasons farm gate milk price forecast.

 

AMPE hits its lowest point to date    (16th September 2015)

August AMPE has dropped to only 15.5p, which represents a 15 year low since it was invented by Barry Wilson/DIN. AMPE now weighs in at 1.3p above IMPE (14.2ppl). Note, the European Commission last week declined to raise the intervention price of SMP, which was viewed as a way The Commission could have helped stabilise the market. (Source DIN)

 

Intervention SMP continues to increase      (16th September 2015)

Close to 15,000 tonnes of SMP are now in intervention including 1048 tonnes from the UK and 261 tonnes from Southern Ireland.

 

Irish Cheese Advert says up yours to clear labelling      (16th September 2015)

Everyone in the UK dairy industry is aware that tensions are mounting over country of origin labelling on cheese with retailers displaying multi origin milk. 

 

The Irish Dairy Board appear to be waving two fingers to all involved having launched an advert with a Pilgrims Choice label stating ‘Improve the sales of your cheddar category in two easy steps’:

 

1.     Take the Pilgrims Choice label

2.     Stick it onto any other cheddar pack

 

This sort of promotion, seen in The Grocer, has to be challenged and remember the annual milk equivalent we import from Southern Ireland in cheese is a staggering 1 billion litres. Displace this and you make significant headway with the present demand problem. We must push for clean origin of milk labelling on cheese and back our own Red Tractor.

 

Commissions Dairy Support Package comes under attack and could involve milk quota  (16th September 2015)

Last week’s news that EU dairy farmers are to receive the most significant chunk of a €500 million support package was lambasted by the European Milk Board who are demanding politicians intervene to reduce the production of milk in the EU and described the package as “very disappointing”.  Stating that 5,000 dairy farmers did not take to the streets for this.

 

The fact is little of this money will filter down to UK farmers. In addition it’s yet to be decided how to distribute the money with milk quota held at 31st March 2015 an option under consideration because it would be simple to administrate.

 

So far as the UK is concerned the figure of £26.5 million is equivalent to 0.173ppl on all our production. So for a 1 million litre producer it will be worth £1,733. It’s not a lot but better than nothing.

 

Fonterra farmers rush for interest free support loans    (16th September 2015)

Over 1300 New Zealand dairy farmers signed up to Fonterra’s offer of interest free loans to help them through these difficult times in the first four days. The loans are interest free until at least 31st May 2017 after which Fonterra has the option to change interest.

 

No security is required over shares or other assets. Oh to be part of a co-operative who can make such an offer.

 

Muller is the official 2016 GB Olympic Partner    (16th September 2015)

The announcement was made by Lord Coe and gives Muller Wiseman fantastic marketing rights across all the Muller brands of yoghurts etc. and it is hoped that retailers will pay their part in the deal.

 

Conference Thursday 1st October – National Motorcycle Museum Birmingham Positive Dairying - Winning in the Global Market Place   (16th September 2015)

Starts         10:00 hours

Closes 15:30 hours

 

The conference is organised by OMSCO however it is not targeted at Organics.

 

It’s FREE to attend & comes with a free lunch, however, note places are limited.

 

For more information log onto www.omsco.co.uk

 

Yours truly will be making a guest appearance and chairing what promises to be a lively Q and A session!

 

1ppl milk price reduction for suppliers to Fresh Milk Company (AKA Lactalis) – from 1st October (PRODUCER NOTIFIED)   (7th September 2015)

This takes www.milkprices.com standard litre price down to 21.01ppl (liquid) and 21.74ppl (manufacturing)

 

0.5ppl milk price reduction for South Caernarfon Creameries suppliers – from 1st October (7th September 2015)

This takes producers standard litre price down to 20.35 (liquid) and 21.03ppl (manufacturing) www.milkprices.com

 

However, it is anticipated that following last week’s Tesco cheese milk price pledge that this decrease will be rescinded and replaced with a 1st September producer price increase. See story below.

 

0.5ppl milk price reduction for suppliers to Barbours Farmhouse Cheese- from 1st October (7th September 2015)

This takes producers standard litre price down to 23.3ppl

 

0.348ppl milk price reduction for Dairy Crest liquid formula contracted producers – from 1st September (7th September 2015)

This takes the www.milkprices.com standard litre price down to 27.63ppl.

 

0.2ppl milk price reduction for First Milk balancing pool – from 1st September (7th September 2015)

 

Plus 0.3ppl milk price reduction for First Milk balancing cheese pool members – from 1st September   (7th September 2015)

 

This takes producers www.milkprices.com standard litre price down to:

 

18.6ppl for Scotland

18.9ppl for North of England

17.9ppl for Midlands & East Wales

19.89ppl for Haverfordwest

 

2nd consecutive double digit bounce in GDT results    (7th September 2015)

GDT prices rose another 10.9% at last week’s auction to average $2226/tonne (US)

 

This follows hot on the heels of the 14.8% rise only two weeks earlier.

 

A contributory factor is the fact Fonterra have seriously reduced the volume of product on offer down 50% compared to that offered at the same auction a year ago. 

Milk production world wide is still ahead of demand and in New Zealand production is still rising due to the fact farmers are ramping up production in an attempt to receive the same value into their banks each month. Irish Milk production is still rocketing up with July output up 12.2% year on year. Until global milk production falls a full recovery seems impossible.

 

However, the latest auction results were as anticipated by a number of leading analysts following positive uplift signals in both futures and EU trading prices.  Dairy futures prices across the globe appear to be heading north e.g. $2000 (US) today/tonne with 2016 @ $2600 (US)

 

Key movers were:

 

Butter Milk Powder               +30%    to average         $1829

WMP                                              +12.1% to average         $2078

SMP                                               +11.7% to average         $1698

Butter                                             +8.1%   to average         $2746

Cheddar                              +4.7%   to average         $2913

 

Whilst this second consecutive bounce in prices is encouraging the fact is two swallows still don’t make a summer and the road to recovery is set to be a long haul with plenty of in store product still to be cleared.

 

FFA & NFU partnership works with Tesco    (7th September 2015)

David Handley & Michael Oakes are to be congratulated for their joint achievements in negotiations with Tesco in connection with Tesco’s latest cheese announcement.

 

Tesco have agreed to extend its pricing model to include milk, which goes into Tesco own label cheese sourced from both First Milk and South Caernarfon Creameries by paying 29.93ppl for the milk on the basis the additional money feeds back to the farmers.  This will run from 31st August 2015 to 28th February 2016. The money will be paid by Tesco to Adams Foods who will pay the respective Co-ops. Its still unclear whether all Co-op members will enjoy the benefit of the extra money or whether it will be divided up amongst a select group.

 

The move compliments the existing TSDG cheese model set up two years ago between Tesco and Parkham Farms.

 

So far as Tesco is concerned the next issue to tackle is multi-country of origin milk labelling in own brand cheese.

 

The promise from Tesco is to be more transparent from January 2016 with its cheese labelling. However this correction is required now and not only from Tesco.

By default this latest move points to the near certainty the TSDG liquid COP milk price will be at a similar level of 29.93ppl for next winter which will be a relief to some.

 

Muller Wiseman (MW) declare transparency in paying the extra money  (7th September 2015)

Muller Wiseman are separately identifying the additional money pledged and paid by retail customers following recent protests and negotiations.

 

The extra money will be ring fenced and shown as a supplementary payment and will be paid monthly based on actual sales commencing week 17th August 2015 when a string of deals and pledges were announced.

 

For August the supplementary payment will amount to 0.595ppl and had it been paid for the whole month with similar levels of sales the equivalent supplementary payment would have been circa 1.2ppl.

 

The money will be paid to Muller Wiseman 430 non-aligned who on average will produce around 1.4 to 1.5 million litres annually.

 

What does this mean for the piggy back milk purchasers?   (7th September 2015)

A number of milk purchasers and formulas utilise the Muller Wiseman non-aligned price in their basket of prices.  There will certainly be some moaning and wriggling from both processors and their producer representatives when they realise the extra money from retailers will not be added to the Muller Wiseman standard litre price.

 

Will some of their so-called representative negotiators seek to change the basket and/or the formulas?

 

That’s for them to sort out but for sure it will mean that for 430 or so Muller Wiseman non-aligned producers they have transparency.  In addition it will greatly assist Muller Wiseman in demonstrating an audit trial to confirm farmers have received ALL of the extra money paid by its retail customers.

 

Cheap Milk   (7th September 2015)

Co-op Chester 8 pints for £2!

 

Cheap Cheese   (7th September 2015)

The Co-op continued to promote Irish Cheese with Pilgrims choice Extra Mature Cheddar at half price selling for £2.25 for 350 grams or £6.43 per kg.

 

1ppl milk price reduction for suppliers to Fayrefield liquids – from 1st September   (21st August 2015)

This takes producers standard litre price to 18.5ppl (www.milkprices.com)

 

Arla to stand on with its September farmgate milk price   (21st August 2015)

Arla members milk price for September will be a stand on at 23.01ppl standard litre (www.milkprices.com) for its 13,500 member owners. This could be considered a positive result even if the resulting price is not one to sound the trumpets on.

 

3ppl Organic milk price increase to Arla Organic suppliers – from 31st August  (21st August 2015)

This is on the back of the continual strengthening for organic dairy products.

 

Aldi to pay at least 28ppl – from 17th August  (21st August 2015)

 

Lidl to pay at least 28ppl – from 17th August  (21st August 2015)

 

Morrisons to pay 26ppl minimum for all its liquid milk – from the end of August  (21st August 2015)

This is 2ppl less than Asda, Aldi & Lidl have agreed to pay.

Now we are starting to understand why several have commented that Morrisions are extremely difficult to deal with as customers or words to that effect. Their smart and skin flint moves are sure to put them back on FFA’s radar if indeed they were ever off it.

Note according to The Grocer the steepest retailer liquid milk price reductions have come from Morrisons who have wiped 36.5% off their retail price of milk in the past five years (source Kantar World Panel). In addition The Grocer reports that Tesco hold the record for the steepest price reduction in butter at 35.3%.

 

Morrisons Farmers Brand now extended to cheddar    (21st August 2015)

The Morrisons Milk for farmers brand will be extended to its own label cheddar with a 34p per pack premium equivalent to an extra 10ppl going to farmers. It might be what some of our organisations wanted but it’s a gimmick.

 

GDT Auction price + 15%   (21st August 2015)

This weeks average auction index price rise of almost 15% (+14.8%) was a shock and even more surprising was the 19% rise in the WMP average.

 

Prior to this weeks GDT result there were clear signs that prices had lifted with futures contract prices for September WMP lifting from US $1550 to US $1700 tonne with plenty of trading and market activity.

 

The auction results were helped by the fact Fonterra cut the amount on offer to only 18,000 tonnes of WMP at this weeks auction a 35% reduction on the scheduled 27,500 tonnes. In addition from September until the end of January the volume of WMP to be offered in the auction has been reduced by 15%.

 

Key prices were

WMP up 19.1% to average US $1856 tonne

Butter up 10.8% to average US $2541 tonne

SMP up 8.5% to average US $1521 tonne

Cheddar up 4.4% to average US £$2778 tonne

 

Next GDT auction will be September 1st

 

The fundamentals remain the same and it will take time before anyone starts to talk about a wholesale recovery. At best you can be cautiously optimistic but we certainly aren’t out of the wood yet but these results are a welcome sign for prices to perhaps hold for a while.

 

Asda is the first retailer to be authorised to use the Arla marque    (21st August 2015)

Asda has ticked all the boxes to enable the retail giant to use the new Arla marque on its own label milk together with its own label British Cheddar which uses 100% British Arla milk. The spotlight should now turn to others who are less British especially in their cheese sourcing. (See below)

 

Iceland are back on the radar  Part 1  (21st August 2015)

Icelands Farm Vale mild white cheddar states on the packet that’s its produced from milk originated from the UK & Ireland. Another pack of cheese with multi origin milk to confuse consumers!

 

Iceland Part 2     (21st August 2015)

The one retailer which has managed to keep off the radar during recent protests and activities is Iceland.

Back in late 2014 FFA were heavily involved in negotiations with Iceland and at the time a spokesman stated that with regards to FFA it would be happy “to open our books to any independent adjudicator that may be appointed by the government in the future.”

Iceland declared that the price it pays for milk would be “directly linked to the farmgate price received by dairy farmers in future.” Perhaps its time FFA and others revisited this declaration to see where Iceland currently sit which is hopefully somewhere between the 26ppl pledge of Morrisons and 32ppl paid by M & S and Waitrose.

 

UK SMP goes into Intervention   (21st August 2015)

A UK processor (rumoured to be Town of Monaghan from their leckpatrick plant in Northern Ireland) has placed 432 tonnes of SMP Intervention which represents 10% of the total intervention stocks of 4,246 tonnes. The milk price equivalent of this is around 16ppl.

 

Danish discount retailer REMA 100 increases the price it pays Arla for milk   (21st August 2015)

In a move which mirrors those made last week by retailers operating in the UK REMA has increased the price it pays Arla for its liquid milk by 50 Danish ore (approximately 5.3ppl) with a view to the additional money supporting circa 13,000 Arla members.

 

"It must be seen as a long-term initiative. I am well aware that price increases are not in the curriculum of the grocery book for discount chains, but Danish agriculture has been put under financial pressure from the declining prices. If we do not take this seriously, we risk squeezing dairy farmers out of business. If that happens, consumers will run the risk of not being able to buy Danish milk in the future. And we don't want that to happen. In REMA 1000 we have always only had Danish milk on the shelves, and we would like to continue having that, "says Anders Jensen, Purchasing Director of REMA 1000.

 

Surely its time for a Back British Dairy Products campaign   (21st August 2015)

From the very recent research we have done its clear there is groundswell support for a Back British Campaign particularly on cheese.

Current own label retailer cheese labelling is a disgrace and what’s needed is to highlight how several retailers are mixing Irish, New Zealand and UK milk to confuse consumers with multi origin cheese. 

The only way to persuade these retailers to source 100% British cheese using British milk is if consumers vote with their feet.

The opportunity is here today and what’s needed is transparent honest labelling in an attempt to displace more than 1 billion litres milk equivalent of Irish cheese we currently import. Oh and whilst we are having a Campaign lets get the government and food service to back British cheese. They are both huge users of cheese and both use Irish and/or multi origin cheese.

 

We don’t need the Clap Trap excuses as to why we cant address our own market failure as have recently been aired. We need people with a can do mentality because this momentum is gathering pace and its going to be a slow road to recovery and this must surely by self help.

There is still some work to do on liquid but the elephant in the room is now cheese and we need to look at a professional marketing Agency run Campaign funded by either the existing milk levy or new sources.

 

Snaptag   (21st August 2015)

Please contact Lydia on 01335 320016 or email her on lydia@ipaquotas.co.uk for more information on the Snaptag Cattle and Sheep ear tags, they have proven to be a fantastic tag, quick efficient printing at extremely competitive prices.

This bulletin is currently provided FOC and your support for our tag sales could ensure it continues to be provided free. It’s a back Potter Tags Campaign

 

 

1ppl milk price reduction for Meadow Foods – from 1st September (14th August 2015)

 

0.348ppl milk price reduction for Dairy Crest formula producers   (14th August 2015)

This takes effect from 1st September and widens the gap between the formula standard litre price @ 27.44ppl and Dairy Crest’s standard liquid price of 21.81ppl to 5.63ppl.

 

Arla launch the equivalent of the Arla Fair Trade Marque  (14th August 2015)

 

Arla have launched a farmer owned marque which from autumn will feature on all Arla branded UK products.

 

This is certainly not a silver bullet to solve the current dire situation in the industry but it will be heavily promoted with the aim of emphasising that the milk which goes into the products is responsibly sourced from its farmer owners who retain any profits. In addition the marque will confirm that the milk is produced to the highest expectations in terms of the environment and animal welfare.

 

Arla will include the logo/marque on all its branded products and should find it easy to win the support of major retail customers like Morrisons, Asda, Lidl and Aldi presumably allowing them to use the marque on own label dairy products processed by Arla subject to jumping through hoops one of which farmers will hope relates to fair pricing by the retailers involved. On reflection perhaps using the word easy in conjunction with British retailers is naïve! 

 

Morrisons could do with some positive PR and compliance with the marques terms of use and permission to utilise it would at least be a step in the right direction and signal that the retailer supports the Arla farmers.

 

Once one retailer supports the marque on own label others will be exposed. It won’t be universally popular and will have its critics but it’s a small smart positive step of encouragement and sends a clear message to consumers as to what they are buying & supporting.

 

In reality it’s similar to a Fair Trade mark and can only do good.

 

Morrisons 10ppl gimmick is possibly the best stunt Ian has seen   (14th August 2015)

Full marks to Morrisons who, in the space of hours, temporarily changed their position from the dairy industry’s villains and number 1 protesting target to become almost heroes.

 

On Tuesday Morrisons emerged from meetings with industry leaders to announce a new milk brand called “Morrisons Milk for Farmers” with a whopping 10ppl of the retail price going directly to its major supplier, Arla.

 

I guess leaders could hardly criticise Morrisons move having banged home to them that the majority of consumers are willing to pay more for milk if the extra money goes direct to farmers.  If that’s correct Morrisons have obliged and put the NFU’s theory to the test. 

 

Morrisons certainly pulled a rabbit out of the hat with this new brand.  In Ian’s opinion it’s a stunt, a gimmick and it will cost Morrisons nothing.

 

In reality it’s doubtful whether it will succeed following its autumn launch.  At the launch it is anticipated Morrisons may well oblige the NFU President Meurig Raymond’s request to

 

“make sure there is plenty of resources available to promote this product.  It must also be displayed prominently in store.”

 

So let’s assume it happens and retailers continue with their obsession to offer the cheapest milk as a loss leader and are still selling 4 pints for 89p.  The Morrisons Milk for Farmers will then sit along side the 89p milk at £1.12 for 4 pints.

 

The extra 10ppl will go to Arla as Morrisons dominant supplier but because Arla are a co-operative the money is not ring-fenced to GB but in the pot to benefit 13,000 members. See below for latest NFU gaff on this point.

 

Ian hopes it works and that all the farmers benefit but somehow history tells him it’s doomed to fail and could even experience a backlash before it is launched. If Morrisons are serious about helping they should cut the gimmicks and try to adopt the Arla Marque on all Dairy Products. See below reference cheese.

 

Once it’s on the shelves we will soon learn whether consumers are willing to pay an extra 10ppl but it’s a massive 26% uplift.

 

Only time will tell whether the Morrisons move will be sufficient to satisfy those who were protesting at Morrisons premises a week ago.

 

What Next?   (14th August 2015)

If I were Asda, Lidl & Aldi I would be banging on the NFU’s door offering my own variation on the farmers’ milk brand and agreeing to pay 10ppl or more direct to the farmers in the hope it buys more time and ensures protesting farmers stay away.  If that’s considered part of the solution all retailers should be pushed to do it.

 

Contrast Morrisons to the pledge retailer Booths have made   (14th August 2015)

Northwest retailer Booths have 32 stores and have pledged to pay the very best price for liquid milk to its farmers under their Fair Milk scheme.  Currently they pay their farmers 33ppl.  Now that’s worthy of real publicity and is certainly fair trade.

 

NFU Gaff in announcing Asda commit to pay 28ppl for 100% of its liquid milk   (14th August 2015)

According to an NFU press release Asda have delivered, what is undoubtedly, a significant improvement in the farmgate milk price it pays Arla for all of its liquid milk from next Monday 17th to 28ppl. However interestingly in the official Asda press release, which came out after the NFU’s there is no mention of the 28p and no mention of the money going to British Farmers.

In its press release the NFU state that the 28p “will then be expected to pass this onto its British Farmer suppliers.”

No way NFU because to do this would necessitate a complete re write of the Arla Co-op principles which 13,000 dairy farmers have signed up to. This would spark a Dairy War.

 

In addition it’s a dangerous road to even consider because it could be met with thankyou cards from the Danes & Swedes to the NFU. Think about it the Danes could say if that’s the game we will retain all the money from lurpack butter in Denmark.

 

Surely the NFU as a farmer organisation understand how a successful Co-op works and Arla are certainly not going to rewrite their constitution and rules to re nationalise its milk pricing.

 

NFU President Meurig Raymond commented “It is now important that Arla ensures this is delivered to British Farmers on the ground, with immediate effect.”

Oh dear perhaps more thought and less haste from NFU Communications department is required, because this is pants.

 

However, the move by Asda is seismic and on the issue of cheese it is already well ahead of Tesco and Morrisons for its Red Tractor support.

 

Milk is now 6ppl cheaper than bottled water   (14th August 2015)

That was the strap line in last week’s Grocer.  The research requires no further commentary.

 

Irish & New Zealand cheese & Milk – The facts on own label  (14th August 2015)

Here is a sample of cheeses found this week in two retail stores:

 

Morrisons Mature White Cheddar packaging confirms it is produced in the UK using British and Irish milk.

 

Morrisons Red Leicester packaging confirms it is produced in the UK using British and Irish milk.

 

Morrisons Milk White Cheddar packaging confirms it uses British and Irish Milk and is packed in the UK.

 

Tesco Everyday Value Grated Cheddar packaging confirms it’s produced in the UK, Ireland and New Zealand using milk from the UK, Ireland and New Zealand.

 

Tesco Everyday Value Mild Cheddar packaging confirms it’s produced in Ireland using milk from Ireland but packed in the UK.

 

Tesco Half Fat Mature Cheese packaging confirms it’s produced in Ireland but packed in the UK.

 

Those people at Adams, Leek (AKA Ornva Foods) are certainly busy bees packing all this own label cheese.

 

If you have further similar evidence please email us photographs of both sides of the packaging.

 

Cheese imports from Ireland equate to an estimate 100,000 tonnes annual equivalent which is a whopping 1 billion litres of milk. The Irish have virtually closed their market to British and Northern Irish produce and French farmer demonstrations are heading towards closing down their markets to foreign imports despite the EU market principles. If British consumers and food service back Red Tractor cheese 100% processors claim the farmgate price paid to farmers for milk for cheese would increase by between 3 to 5ppl.

That’s where the battle ground is with retailers and food service to keep the Irish cheese out.

If the French agriculture minister can state:

“In the current crisis, everyone is responsible, from the consumer to the local politician who must favour French products”

Why can’t all our leaders be nationalistic for once?

 

Medina and Freshways involved in Muller and Dairy Crest Deal  (14th August 2015)

The competition have announced that they are inclined to accept Muller Wisemans undertakings with a view to eliminating the need to progress to what would be costly multi million pound stage 2 in terms of fees etc.

 

The competition and Markets Authority have opened up a consultation period until October 19th with the proviso matters could be concluded earlier.

The proposed undertaking and remedy will see Muller Wiseman process around 100 million litres of milk a year for either Freshways or Medina for up to 8 years.

These two processors are considered by the CMA to be effective competitors to Muller. However it must be noted that Medina already trade large quantities of milk with Dairy Crest.

If the remedy is adopted and a deal struck it could be up and running by January 1st 2016.

 

24.5ppl milk for sale in Coventry   (14th August 2015)

Yes 2 litres of Country Life milk for only 49p at Kalma Foods, 629 Stoney Stanton Road, Coventry (Tel. No. 02476 272380).  Supplied by Johal Dairies.

 

Why wouldn’t you track your vehicles and equipment for £25 a year? (14th August 2015)

Pinpointpal can be used on all vehicles and machinery including quad bikes, tractors, trailers, and generators, the list is endless. It can also been used to track workers locations and mileage which in turn will increase productivity within the work place. For more information on the device contact Lydia on 01335 324594 or lydia@ipaquotas.co.uk.

 

 

 

2.35ppl (1.85 + 0.5) milk price reduction for suppliers to Bowland Fresh Milk with only 24 hours notice (PRODUCER NOTIFIED)   (7th August 2015)

The 1.85ppl reduction results in a producer base price of only 18.1ppl from August 1st.  In addition Bowland Fresh have raised the base price protein from 3.2% to 3.3%, which producers say is equivalent to a further 0.5ppl price cut on top of the 1.85ppl cut.  That equates to a milk price of only 17.6ppl.

 

0.8ppl milk price reduction for Muller Wiseman suppliers – from 7th September  (7th August 2015)

This takes producers standard litre price down to 22.35ppl.

 

1ppl milk price reduction for suppliers to Glanbia – from September 1st    (7th August 2015)  

This takes producers standard litre price down to 21.35ppl. 

 

In addition, from 1st January Glanbia’s standard litre will be based on 4.2% butterfat & 3.4% protein following the earlier decision by independent milk price analyst, Stephen Bradley of www.milkprices.com to change the manufacturing cheese milk price constituents in his standard litre comparison to these levels.

 

0.9ppl milk price reduction for suppliers to Heler’s Cheese (PRODUCER NOTIFIED) – from September 1st    (7th August 2015)

 

Fonterra slash its forecast milk price by 27% in only 10 weeks to only 12.2ppl    (7th August 2015)

On the 28th May Fonterra set its opening forecast farm gate milk price at $5.25 per kg of milk solids for the 2015/2016 year.  Today, only 10 weeks later, that forecast has been slashed by 27% to only $3.85 due to “a continued significant imbalance in the global dairy market between weak demand and surplus supply”.

 

New Zealand dairy farmers have an estimated break even cost of production of around $5.30/kg ms.

 

The equivalent UK standard litre price at today’s exchange rate is 12.19ppl with a total forecast payout including a co-op dividend of 13.78ppl.

 

GDT results (continued)   (7th August 2015)

Tuesday’s catastrophic auction results were partly due to a 78% increase in the volume of WMP offered.  In addition, it is clear that a significant volume of the product sold was at the opening bid equivalent to a reserve price.

 

The WMP average at $1590/tonne (US) is equivalent to half the average New Zealand cost of production.

 

The next auction will be on 18th August when prices are almost certain to fall further.

 

How big is the UK’s milk problem?   (7th August 2015)

Muller’s bean counters have been doing some interesting number crunching.  The extra 1.6 billion litres of milk we have produced in the last 12 months represents 80,000 ex-farm tanker loads equivalent to a whopping 220 extra loads a day or 40 pints of extra milk for every person in the UK.

 

NISA driving down milk prices   (7th August 2015)

Ian has received a copy of a circular letter from NISA (the so-called family of independent grocer’s) sent out dated 4th August where they say:

 

“This is the latest step in our continual aim to drive down members cost of fresh milk.”

 

In the letter they inform members of a 4.5ppl saving bringing down the price of 2 litres of milk.

 

NISA will certainly attract the attention of protesting farmers with such antagonist statements.  A copy of the letter is in FFA’s inbox.

 

Morrisons – Number 1 target of protesting dairy farmers   (7th August 2015)

For obvious reasons protesting dairy farmers have this week focussed their efforts on Morrisons, Asda, Lidl & Aldi.

 

Rather than seeking to sit round the table with leaders of the protesting farmers Morrisons decided to issue an ill thought out antagonistic letter to the protesters, which was interpreted as Morrisons stamping their authority as to who is really in charge and sticking two fingers up at dairy farmers.

 

The letter refers to “potential personal liability”, “we reserve the right to commence court proceedings”, “injunction”, “reserve the right to commence trespass actions against you personally”, “Personally liable for the financial consequences of these protests and the court proceedings which follow.”

 

And, in bold print “we have and are arranging for further evidence to be gathered about your identity.”

 

“We may use CCTV footage; take photographs of individuals or vehicles present.”

 

The letter closes yours faithfully but with no individuals name attached, however, the name Darren Blackhurst, Morrisons Group Commercial Director, is one name on farmers’ radars, even though he has been on annual leave this week.  He is ex-Tesco and B&Q and nicknamed “Captain Chaos” on account of his reputation for firing first then thinking about what he has done later.  Note, the original Captain Chaos was diagnosed with a multiple personality disorder.

 

David Handley’s response on the FFA news page summed it up “All we want is a fair price, a living wage and be able to make a profit from our business.”

 

Handley has also stated publically that FFA would prefer to meet face to face with retailers.  In the case of Morrisons, if they are serious they need to wheel out Dave Potts, their CEO and not send stand in substitutes who have little or no power to change anything.

 

Note, when Radio 4 Farming Today attempted to arrange to speak to a representative of Morrisons ahead of this morning’s programme they simply hung up on them.  Second choice to a Morrisons representatives was yours truly who also has numerous nicknames!

 

The Milk Trolley Challenge is viral   (7th August 2015)

Protesting farmers buying up all the milk, especially in Morrisons but also in Asda, Lidl and Aldi is spreading like a forest fire across the UK and attracting worldwide interest.

 

OMSCO secure new export contracts   (7th August 2015)

OMSCo, who process milk from 250 UK organic members’ farms, have secured further export business to the USA with its organic mozzarella.  The expectation is that 800 tonnes of Mozzarella will be made and exported in the first year.

 

OMSCO’s total organic cheese production is expected to be around 1800 tonnes a year.

 

Putin destroys around 9 tonnes of EU cheese   (7th August 2015)

Russia has marked the first birthday of its ban of EU dairy products by destroying 9 tonnes of cheese plus 300 tonnes of other products and showing the destruction on Russian TV.

 

The move has caused outrage in a country where over 20 million people try to survive below the poverty line.  Around 170,000 people have signed a petition criticising the stunt, however, its doubtful their protests will prevent further destruction.

 

CHEAP MILK   (7th August 2015)

Mobil garage, Oxford – Buy a loaf of bread and take 2 pints of milk for 1p so half a pence a pint.

 

 

Another Disastrous GDT result with prices down 9.3% – (4th August 2015)

Volume of product on offer at todays auction was significantly increased and prices continued to crash. So much so that there are even calls from some producers that the auctions should be suspended.

 

Todays prices plummeted to average $1815 tonne.

 

Key movers were:

 

SMP           down     14.4% to average $1419 approximately £997

WMP          down     10.3% to average $1590 approximately £1,117

Butter         down     6.1% to average   $2293 approximately £1,610

 

Its grim and its looking like a very long tunnel with some analysts now suggesting low prices will persist throughout 2016.

 

1.5ppl (-0.5 + 1.0) milk price reduction for South Caernarfon Creameries Limited producers (PRODUCER NOTIFIED) – from September 1st – (4th August 2015)

In early July SCC confirmed a 0.5ppl price reduction for 1st September, however, this has now been tripled to 1.5ppl.

 

This results in a liquid standard litre price of 20.84ppl and a manufacturing one of 21.53ppl (www.milkprices.com)

 

1.4ppl milk price reduction for Dairy Crest liquid suppliers – from September 1st  – (4th August 2015)

Dairy Crest have held their liquid price for six consecutive months but it’s come to an abrupt end with the announcement of a 1.4ppl September price cut and the reality is further cuts are almost inevitable.

 

This results in a liquid standard litre price of 21.69ppl (www.milkprices.com)

 

Dairy Crest’s Davidstow milk for cheese price remains unchanged at a healthy 25.34ppl (www.milkprices.com).  At least in this environment it looks to be a healthy price.

 

Dairy Crest’s organic price also remains unchanged at 38.43ppl (www.milkprices.com)

 

0.5ppl milk price reduction for First Milk members (PRODUCER NOTIFIED) - from 1st August  – (4th August 2015)

First Milk have copped for criticism over the fact this latest cut only gave producers ½ a days notice as First Milk abandon part, if not all of the Voluntary Code. We assume the 0.5ppl is an across board reduction.

 

This should result in the following standard litre prices (to be confirmed)

 

The Midlands & East Wales balancing Pool 18.1ppl

Mainland Scotland 18.8ppl

North of England 19.0ppl

Haverford West 19.67ppl

Lake District 19.70ppl

 

0.5ppl milk price reduction for Paynes Dairies suppliers (PRODUCER NOTIFIED) – from 1st August  – (4th August 2015)

Standard litre to be confirmed but expected to be 21.2ppl.

 

 

1.50 Euro Cents Friesland Campina farm gate milk price reduction – (4th August 2015)

Friesland Campina have reduced producers August milk price by €1.50 to €28.50 per 100kg. This is a 5% reduction in one month and compared to FC’s August 2014 price it equates to a 28% year on year drop.

 

www.milkprices.com calculates when this is standardised to a UK standard litre it comes out at 19.4ppl.

 

FFA takes the crisis to retailers and the public – (4th August 2015)

The current crisis down on the dairy farm is wrecking generations of farming families’ efforts and aspirations.

 

FFA are holding a series of rallies and protest with two big ones planned for this Thursday (6th) in Somerset/Devon and Cheshire.

 

The gathering of dairy farmers will not simply be a protest or a blockade because it comes with an invitation to the general public to come along and meet grass roots dairy farmers to understand how grim the situation is and how the outlook is to get worse.

Numbers of farmers attending protest meetings is increasing as the level of discontent rapidly escalates with the continual erosion of milk cheques.

 

For details log onto:             www.farmersforaction.org            tomorrow and Thursday

 

Morrisons importing Irish cheddar – (4th August 2015)

Morrisons are poking a tiger and waving two fingers to British dairy farmers with their constant promotion of Irish cheddar at £2 for 350grams as well as similar offers for their own brand cheddar, which is understood to be Irish.

 

AMPE falls to only 16.7ppl– (4th August 2015)

The July AHDB (DairyCo) AMPE figure now stands at only 16.7ppl and the lowest on record for 13 years. In only 15 months AMPE has halved in value.

 

MCVE stands at 21.7ppl, the lowest for 8 years.

 

Intervention stay open for longer – (4th August 2015)

Intervention will remain open until the 31st December which is a 3 month extension. A new campaign will then open on January 1st with new limits.

To date 1176 tonnes of SMP from Poland, Lithuania and Belgium have already gone into store and the expectation is that the 109,000 tonne limit will quickly be reached at Euro 1698 tonne (£1190).

 

100% sign up for Dairy Crest’s DPO – (4th August 2015)

Dairy Crest Direct report a 100% member sign up to its new DPO

 

Kent County Council support the French – (4th August 2015)

It could only happen in one of England’s home counties but as stupid as it sounds Kent County Council have been handing out French Evian bottled water to lorry drivers on the M20.I bet the French are handing out fresh chilled French milk to all drivers on the other side of the channel.

 

ATTENTION ALL READERS – (4th August 2015)

Note, we are increasingly relying on readers of this bulletin to inform us of price movements because a number of milk processors are now failing to notify us.

 

Please email gayle@ipaquotas.co.uk, if possible, with a scanned copy of any notification, which will remain confidential.

 

Those price adjustments not notified to us by the milk processors are noted with the red words (PRODUCER NOTIFIED)

 

0.85ppl milk price reduction for Arla direct contracted suppliers – from 1st September   (24th July 2015)                                               

This takes producers standard litre price to 20.15ppl. (www.milkprices.com)

 

 

0.8ppl milk price reduction for Arla members (Arla Amba) from 3rd August   (24th July 2015)

This takes producers standard litre price, before to 23.01ppl. (www.milkprices.com)

 

 

United Dairy Farmers stand on for May deliveries (24th July 2015)

Co-operative United Dairy Farmers of Northern Ireland held their May peak production at 21.4ppl which produced a standard litre price of 21.9ppl. (www.milkprices.com)

 

United Dairy Farmers Kendal milk price was unchanged at 24.39ppl

 

 

Some farmers try to switch from “Compete to Grow” to “Shrink to Survive  (24th July 2015)

Regrettably the market sentiment across the world is worryingly negative with all respected analysts having written of any possibility of any sort of ex farmgate price recovery in 2015 and some even questioning whether a glimmer of light will be seen until the second half of 2016 and one or two privately talking into 2017. 

 

Holland’s milk production is up 10% in June and Ireland is reported to be up 12.5% in April and May.

 

There appears to be two alternatives.  A Natural disaster/weather event pops up to cut production or producers cut production.

 

Those in the UK planning to milk cows out and then cull them could be in for a shock when it comes to booking cull cows in this autumn.

 

It’s almost two years to the day that the NFU launched its strategy “Compete to Grow” and two years later some of those who decided to push on are in a financial stranglehold and are now facing the need to shrink to survive.  Some farmers are in serious financial trouble and there is not even a glimmer of light at the end of a very long tunnel.

 

 

Lithuania SMP is first to head for Intervention  (24th July 2015)

Lithuania is the first member state to request the placement of close to 200 tonnes of SMP into public intervention storage but they certainly won’t be the last.

 

 

Graham’s The Family Dairy drops 7ppl B price bombshell on…Scotland’s family dairies   (21st July 2015)

Robert Graham, MD of Graham’s “The Family Dairy”, from Stirling, Scotland wrote a letter on the 9th July to the firm’s 100 or so family dairies, which in one fell swoop savaged the incomes of around 60 farms.

                      

Graham’s were one of the first UK processors to introduce A&B pricing, and grabbed the headlines last week by being the first to impose a B price of between 6 to 7ppl (estimated for August and will soon be closer to 6 than 7ppl) for unwanted surplus litres.

                         

In the letter Robert Graham states “to this end we must reduce the price paid on the ingredient litres (aka the B litres) to 50% of AMPE”. In addition there was a 1.5ppl cut to the firm’s A price, which probably can’t be argued with given the state of the market and is still a healthy liquid standard litre price.

 

Under the Graham’s formula for August producers will receive 23.75ppl on the A litres (based on 90% of a farm’s 1st September 2013 to 30th August 2014 production) and the B litre price will be paid on the rest. This will affect at least 60 of the 100 or so Grahams producers, and will reduce their income by an estimated £180,000 each month, or equivalent to £3000 per farm per month for those affected.

                                                             

The NFUS believe that Graham’s will be the only GB milk buyer paying 10ppl or less for any of their milk.

 

Emails to Ian show the main bone of contention is that producers spent time providing the company with  2015 production forecasts, which they believe have proved to be accurate. If that is true then they believe Graham’s should have anticipated the milk they have received and managed their pool better. But according to Robert Graham some of the 60 B milk producers are 30% to almost 50% above their 100% allocation.

 

In addition, during 2015, Graham’s have supposedly had new producers start to supply them and others are in the pipeline and due to start to supply soon. However Ian has verified that the agreement to take on four farmers goes back a year or more, so while this is unpalatable it is not untoward and is a case of Grahams honouring their commitment and not dumping anyone.

 

Farmers believe that as part of the Graham’s “family” the B price move warranted a producer meeting to discuss the issues and agree a way forward rather than receive the bombshell letter. With hindsight the indication is that Grahams agree they could have handled the situation better. Their letter came out of the blue and rocked the industry and resulted in serious heartache on the farms affected.

 

However whilst a producer meeting to transparently explain the problem would have been preferable the outcome would not have been different. Basically Grahams producers are sending the Company in excess of 1.5 million litres of milk each month which the firm are having to sell into a very weak spot market, mainly in England & Wales, for under10ppl delivered at present and weakening.

 

One producer commented “I remember your father’s words when I joined Graham’s: We are only looking for young ambitious men who want to expand their businesses in a similar way to us.”

 

He agreed it’s those same ambitious farmers who have been hit hard with this short notice price B price annihilation.

So Graham’s have created a PR problem and next month, they have a planning meeting for a new dairy where they may need some friends in high places.

 

On further examination the basic problem is Grahams have 11% (1.5 million litres surplus) more milk each month than they have customers for. Options available to them were as follows:-

 

a.     Give notice to some producers. That is harsh and takes months to affect total milk intake and how are they selected? Presumably starting with those who produce the highest percentage of B litres.

 

b.     Cut the A price by more but that penalises the 40 who have not expanded and kept within the limits and appears unfair.

 

c.     Reduce the A volume from 90% to say 80 or 85% - that penalises the wrong farmers i.e; those who have not expanded.

 

d.     Do nothing and dig a financial black hole- not an option

 

e.     Penalise the farmers who are producing the extra milk by halving the B price.

 

Its harsh for those who have expanded believing they could spread their fixed costs receiving the AMPE price on their B litres at 14.8ppl (June price).  Note the Grahams B price is transparent and takes AMPE less 2ppl haulage less 5% processer margin and from August 1st less 50%.  This price is independently calculated by Stephen Bradley www.milkprices.com.  So it might be a low price but it is still very transparent.

 

Whilst there is no volume limit for Grahams farmers the move has instantly affected production with one producer switching from x3 to x2 day milking.

 

The dilemma faced by Grahams is unfortunately not unique and partly attributable to aggressive retail discounting of milk together with one or more predating processors attempting to undercut the existing liquid supplier.

In some cases it’s a case of either cut the price you charge us for the milk or risk loosing some volume.

 

Spotted on the Graham’s Family Dairy website  (21st July 2015)

 

As a family we’re all used to mucking in