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Note all standard litre prices quoted are before seasonality, balancing charges, capital retentions or production incentive payments/bonus.
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Muller Wiseman to hold producer prices for April (3rd March 2015)
Muller Wiseman joins Dairy Crest in holding producer milk prices for April. All eyes are now on what Arla decide to do for April.
0.62ppl milk price cut for Sainsbury (SDDG) suppliers – from 1st April (3rd March 2015)
This is a reduction to Sainsbury’s’ quarterly re-pricing based on changes in feed, fertiliser and feed prices.
The change takes the Muller Wiseman SDDG standard litre price to 30.98ppl
The change takes the Dairy Crest SDDG standard litre price to 30.92ppl.
The change takes the Arla SDDG standard litre price to 30.86ppl.
0.64ppl milk prices cut for Lactalis (The Fresh Milk Company) producers – from 1st April (3rd March 2015)
This takes their standard litre price down to 23.02ppl on its GDT linked contract and to 22.67ppl on its standard contract (www.milkprices.com)
1ppl milk price cut for Wyke Farms producers – from 1st April (3rd March 2015)
This takes their standard litre price down to 23.05ppl (www.milkprices.com)
0.5ppl milk price increase for United Dairy Farmers co-operative members – for January deliveries (3rd March 2015)
This takes their standard litre price up to 21.44ppl (www.milkprices.com)
AMPE & MCVE respond positively to dairy commodity price increases (3rd March 2015)
Both AMPE and MCVE have increased compared to one month ago reflecting improvement in global commodity prices (see above table) and a weakening in the value of the Euro.
AMPE 23.6ppl up 21% in one month from 19.5ppl
MCVE 25.9ppl up 13% in one month from 23.0ppl
A & B milk price from First Milk will be the final straw for many (3rd March 2015)
First Milk have announced the opening prices for their new A & B pricing schedule and the outcome has to be worse than any of its members could have anticipated.
The April A price for 80% of producers deliveries will be:
The April B price is expected to be between 16 to 18ppl, to be confirmed in May.
So a rough calculation for a standard litre 1 million litre producer taking a mid point 17ppl for the April B milk price produces the following milk prices:
When you deduct the 2ppl capital contribution these prices drop to 18p cheese and 17.8ppl balancing and then some will have seasonality to factor in, and not to mention these producers suffer delayed payments into their bank as well.
The reality is very grim for First Milk members (3rd March 2015)
With paid out prices for April milk likely to be below 18ppl the big question is how many members can continue to milk cows as opposed to hang the clusters up and admit defeat.
Members are paying a huge cost to keep First Milk in business, but this is exerting enormous pressure on their families and cash flow. Many will not be able to survive this latest brutal cut whilst others will be asking what will be next from their company
In a statement it comments “First Milk’s aspiration is to provide consumers with great tasting nutritious food, while delivering value for every part of its farmer’s milk”. That value is certainly not going to its farmer members who must feel battered and almost knocked out.
There is some good news in the form of another First Milk press release trumpeting that it picked up the Nestle UK & Ireland supplier award for “creating shared value.” Only Nestle supplier members see this shared value in their bank accounts though.
Friesland Campina (FC) increase producers milk price again (3rd March 2015)
FC has announced the second consecutive milk price increase. The price paid to producers for March milk will increase by €2.5 (1.8ppl) on top of the 0.93ppl increase announced for February milk. FC state that “declining milk supply in Europe, Oceania and South America results in increasing quotations for milk powders, cheeses and butter.” The new price will be 34 Euro Cents at 3.47 protein, 4.41% fat.
GDT Auction up 1.1% on Average (3rd March 2015)
Todays all index auction average nudged up 1.1% compared to the average achieved two weeks ago.
SMP average $2,935 + 5.9%
Cheddar average $3,377 + 10.8%
Butter average $3,912 + 2.5%
WMP average $3,241 – 1.0%
Italians still owe £1billion in back dated super levy (3rd March 2015)
It’s only days to the end of the European milk quota system and the European Commission has announced it will take Italy to court for failing to collect €1.34 billion (almost £1billion) in super levy fines from Italian farmers.
The European Court of Justice will be the venue where it is hoped the Italian farmers will eventually pay super levy for the 14 year period between 1995 to 2009 when each year Italian farmers should have paid super levy to the Commission. The total unpaid levy due from Italy amounts to €1.752 billion (£1.3 billion), however, the Commission has accepted there has been some loss hence the current estimate they are pursuing is only around £1billion.
Please give generously – a Mini plea for maximum cause
Like this bulletin? Like doing a bit for charity? Well Ian has been doing this bulletin for 24 years and this is the first time in 24 years of writing a bulletin that he has ever asked for readers’ support. But he is doing it now!
In a few weeks time he and a co-driver / navigator / backseat driver (i.e the wife then) will be starting a 6-day classic Mini drive from the North to the South of the two Islands of New Zealand. The route is a gruelling 2,500kms in six days from Kaitaia to Invercargill, following the route of the classic film Pork Pie.
Ian and his pal are paying their own expenses, and entry fees but they’re also raising money for two charities - The Rainbow Trust, which provides emotional and practical support for UK families who have a seriously ill child with a life threatening or terminal illness, and The KidsCan Charitable Trust in New Zealand, which exists to support disadvantaged Kiwi kids.
The Rainbow Trusts vision is to supply 24/7 support to all families who have a child with a life threatening or terminal illness with a Rainbow Trust carer. And it is a great injustice that one in four New Zealand children – some 260,000 - live in poverty, going without the basics that most of us take for granted. Your donation will enable KidsCan to continue to provide food, clothing and basic health care in schools encouraging NZ children to reach their full potential.
Every contribution will go to one of the two causes and Ian hopes reader’s will dig deep and support this appeal. Donations can be made via:
Note when donating ignore any validation notice and simply click on the blue box labelled proceed to page.
Please give what you can and what you’d like to. If anyone would prefer to send a cheque please make it payable to the relevant charity and post to Ian at the office.
Arla to hold its March milk price (23rd February 2015)
Arla AMBA have held their 13,500 member milk prices for the second consecutive month.
In addition the forecast 13th payment has nudged up by 0.1ppl to 0.78ppl, which takes their standard litres to 24.97ppl.
Watch the sheep follow the lead again and the big question is who will blink first with a producer price increase?
Marks & Spencer to hold its producer milk price to 31st March (23rd February 2015)
This is as a result of a change in its half yearly review dates to April and October.
This means producers milk price has held at 34.24ppl (www.milkprices.com) from August to April
Spot Prices (23rd February 2015)
Have lifted and today were quoted at around 24ppl, ranging from 22 to 26ppl.
GDT auction up 10.1% for its 5th consecutive increase (23rd February 2015)
International dairy commodity prices jumped up a massive 10.1% to average $3366 (US) compared to the average achieved only two weeks ago. Markets have without doubt passed the bottom and cheap dairy products are history.
The auctions biggest influencer WMP was up almost 14% to average $3272/tonne and remember only two weeks earlier WMP prices were already up 19.2%.
There are two factors to consider when examining the surge in prices.
Firstly, the quantities of product put forward for auction are down 35% compared to those offered at the same auction in 2014. Volumes offered have reduced by 25% or 80,000 tonnes during the last three months auctions (December to February) compared to those sold a year ago.
In addition, poor farmgate milk prices in New Zealand have resulted in a significant reduction in production due to economics.
Let’s hope this dramatic turn around continues because if it does the next move will be for Fonterra to review its farmgate milk price payout with the intention to pay more to its farmer members.
Whilst the world is still awash with milk it looks like this market has well and truly turned and for those who have had raw treatment from their milk buyer in recent months be aware they could soon be wanting to cuddle up to you, especially those who effectively told farmers to find another milk buyer.
Cheddar +16.8% to average $3054/tonne
WMP +13.7% to average $3272/tonne
SMP +5.7% to average $2744/tonne
Butter +1.1% to average $3823/tonne
First Milk announces A & B milk pricing from 1st April (23rd February 2015)
More changes from the co-op from April 1st as follows:
(a) The introduction of A & B milk pricing
(b) It’s liquid milk pool to be renamed as its balancing pool
(c) Plans to align more closely producers’ butterfat, protein and hygiene payments to each pools end use of milk with a view to rewarding producers accordingly.
Members will receive a letter in early March setting out the pricing changes as they affect their farm and milk production.
First Milk members will be keen to see the pricing mechanism in the hope the fixed price for the A volume catapults First Milk from its permanent relegation position at the foot of all milk price league comparison tables. Whilst the A volume prices for each of the two pools will be different the B volume price paid will be identical and based on commodity returns predominantly achieved through Westbury and spot and short term trading.
Kintyre and Gigha producers are hit as hard as Bute farmers (23rd February 2015)
In our last bulletin we highlighted the near impossible economic dairy farming conditions the 13 remaining dairy farmers on the Scottish island of Bute face.
It’s no better for the 32 who farm on Kintyre and supply First Milk’s Campbeltown Creamery plus the 4 dairy farmers who remain in business on the island of Gigha. (Note, Ian intends to visit Gigha this summer.)
One dairy farmer on Gigha has decided to quit as have at least two on Kintyre, one of whom is the south end of the peninsulas biggest producer.
Other farmers say they have already decided to quit irrespective of promises to invest in the creamery because they are simply “bleeding money”.
When asked to comment on First Milk’s A & B production proposals one commented “it’s another nail in the coffin as anyone expanding will be stuffed on price at a time when the local factory (Campbeltown) is crying out for more milk.”
Sandwich maker to use 900 tonnes plus of Irish cheese (23rd February 2015)
US based Greencore has created 400 jobs with a new factory, which is anticipated will use in excess of 900 tonnes of Glanbia Irish cheddar annually, starting within a month.
Midlands Milk Pool (23rd February 2015)
Midlands milk pool seeks prospective milk purchasers for approx. 45 million litres available April 2016 on a liquid contract. Predominantly level production. Interested parties contact email@example.com
Cheap Milk (23rd February 2015)
Poundland, Oswestry – 2 litres Muller Wiseman milk for £1 less 25p voucher for your next purchase so 75p for 2 litres.
STOLEN – HELP (23rd February 2015)
WOPA SA0039 Mobile Hoof Trimming Crush, stolen from Wells in Somerset area on 7th February 2015 between 7.30-9.30pm ….. Please contact Ian, ON OR OFF THE RECORD, if you know anything about its whereabouts or have any suspicions.
1.5ppl (2 Euro Cents) organic milk price increase from Arla – from 2nd March (10th February 2015)
Organic dairy products appear to be in demand across the globe and Arla have decided that their business requires more organic milk from its members in the years to come as sales head north we believe this is the first UK milk price rise of the year..
1.75ppl milk price cut for Muller Wiseman suppliers – from 5th March (10th February 2015)
This takes their standard litre price to 24.15ppl
The press release centred on the need to reduce the price to ensure MW are competitive against its competitors “including farmer owned co-operatives” meaning Arla. There was also the usual emphasis on the fact the MW milk price is a clean price not “further eroded by deductions or penalties of the kind imposed by other purchases including farmer owned co-ops”.
It is worth noting that Arla AMCO members are on a three month payment holiday from the 0.5ppl member levy as well as the fact the Arla Fat Tax reduced to 0.01ppl from January 1st.
In addition to these points it is a fact if MW senior staff had had their own way the price drop would have been an eye watering 2ppl. It’s difficult to understand why MW are now price followers as opposed to price setters but they certainly are.
1.4ppl milk price cut for Meadow Foods suppliers – from 1st March (10th February 2015)
This takes their standard litre price to 22ppl for a Chester based supplier and 22.04ppl for a Lake District supplier
1.5ppl milk price cut for South Caernarfon Creameries members – from 1st February (10th February 2015)
This takes their standard litre price to 21.75ppl (www.milkprices.com)
1ppl milk price cut for Blackmore Vale suppliers – from 1st March (10th February 2015)
This takes their standard litre price to 26.01ppl (www.milkprices.com)
0.384ppl milk price reduction for Dairy Crest formula contracts – from March 1st (10th February 2015)
This takes their standard litre price to 28.64ppl (www.milkprices.com) The formula contracts premium over the standard Dairy Crest price is excess of 5ppl.
Friesland Campina (FC) increase its milk price for February (10th February 2015)
One swallow does make a summer but the news that FC have increased suppliers milk price by 1.25 Euro Cents (0.93ppl) will certainly be on Arla’s radar when they announce their March member price during the week of 23rd February.
Average 2014 farmgate milk price 31.55ppl (10th February 2015)
This was almost identical to the 2013 average.
Lactalis head for the court room (10th February 2015)
Lactalis appear to be in the news for all the wrong reasons at the moment both in GB and its mother land, France. Reports in the French press confirm 500 Lactalis suppliers in Normandy are taking the milk processor to court over the price they were paid for milk in 2014.
The action is supported by the French dairy trade body FNPL, which calculates the average impact is valued at £6000 per farm.
The case revolves around Lactalis contractual position, which the farmers claim is not transparent and effectively allow Lactalis to determine the price they pay producers. That sounds familiar!
The 500 are pioneers and if successful it’s expected that Lactalis will have an avalanche of claims and similar action to defend.
The global position (10th February 2015)
Fonterra have revised their total years milk intake down by 3.3% (700 million) compared to last season due to a combination of the drought fears in New Zealand and a significant pull back in production by producers who cannot justify feeding concentrates at current prices.
Milk production is now running at 6% plus less than last year on a monthly basis.
Consequently Fonterra has cut its next six months WMP entries to its GDT auction by 25,000 tonnes equivalent to a 15% drop to only 136,000 tonnes.
Global prices across New Zealand, the EU and USA are moving up leading most, if not all, industry pundits to state that the global market has done a U-turn having bottomed out in December.
If Russia is persuaded to completely lift its EU dairy product ban, as opposed to its recent request for a partial lifting, things could change very quickly as those capable of selling into a rising market stand shoulder to shoulder.
OMSCO doubles its product sales to the USA (10th February 2015)
OMSCO has secured a deal which doubles the amount of dairy products they export to the USA.
Currently OMSCO handle two thirds of the UK’s organic milk production amounting to around 250 million litres out of which 7% (17 million litres plus) goes into products for the US deal which is expected to be worth in excess of £25 million in the coming year.
Bute dairy farmers are the hardest hit in the UK (10th February 2015)
Bute is a beautiful place unless you are one of the 13 remaining dairy farmers supplying the island’s only milk buyer, First Milk. In less than 12 months their milk price has collapsed from a respectable 32ppl to under 20ppl and with all inputs, other than grass, having to be shipped in from the mainland the outlook is very grim.
Osama Bin Laden masked employee was unfairly sacked (10th February 2015)
An industrial tribunal has decided that an employee at Crediton Dairy was unfairly dismissed for wearing a rubber Osama Bin Laden mask and posting a selfie on his Facebook page, which clearly showed part of the old Milk Link logo.
Ian wants to rent a small shed in the Lewes/Brighton area (10th February 2015)
If anyone reading this bulletin knows of a lockable shed, which could be available to Ian for a month and within 15 miles of Lewes, please email firstname.lastname@example.org
It’s needed for the re-assemly of a 1961 classic Mini Pick-up and should be completed in two weeks but to be safe let’s say up to 1 month.
The global dairy recovery has landed with Westbury powder +18% (3rd February 2015)
Global prices went down with a bang and it certainly looks like they could be bouncing up as fast, if not faster, than they crashed down.
Today’s GDT auction saw average prices up for the fourth consecutive auction with the average price up a whopping 9.4% in 2 weeks to average $3042. The last time an average was seen above this level was in July 2014.
WMP up a staggering 19.2% to average $2874/tonne
SMP up 6.7% to average $2598/tonne
Butter up 6.1% to average $3783/tonne
Cheddar down 11.1% to average $2636/tonne
Arla Westbury SMP up 17.8% to average $2520/tonne
It took three months from the GDT auction first falling in late January 2014 before Arla and Paynes Dairies were the Dambusters having implemented price cuts from 1st May causing an avalanche of cuts within days. How long before these tow and/or First Milk lead the charge upwards?
2ppl milk price cut for The Fresh Milk Company (Lactalis) suppliers – from March 1st (See below for more detail) (3rd February 2015)
1.5ppl milk price cut for Crediton Dairy suppliers – from 1st March (3rd February 2015)
This takes their standard litre price to 26.36ppl (www.milkprices.com)
In addition this price will be held until at least 1st June.
1ppl milk price cut for Wyke Farm Suppliers – from 1st March (3rd February 2015)
This takes their standard litre price to 24.05ppl (www.milkprices.com)
1.5ppl milk price cut for Dairy Crest suppliers – from 1st March (3rd February 2015)
This takes Dairy Crest’s Davidstow cheese suppliers milk price to 25.09ppl and its liquid supplier’s milk price to 23.09ppl.
Dairy Crest hold milk prices to July (3rd February 2015)
Having announced the 1.5ppl cut (see above) Dairy Crest have taken a massive lead as the first of the big processors to commit to holding producer milk prices until at least July 1st.
Unfortunately the headline in one online food bulletin was “Dairy Crest avoids milk price cut” followed by “Dairy processors have halted milk price cuts for the time being as the market struggles to right itself” - Hardly the whole truth with a 1.5ppl drop.
This takes producers well past the spring flush and for its liquid producers it could mean their next price move will be a notification from Muller Wiseman assuming the deal between the two is approved by the competition authorities.
It’s good news for producers and is a stabilizing sign. There is now more than a glimmer of light that global and EU prices have bottomed out. It could be that DC has read the tea leaves and that any price movement for July is more likely to be up rather than down.
First Milk to hold members March milk price (3rd February 2015)
It was almost inevitable that First Milk would not inflict further pain on its members by cutting their March milk price and this has now been confirmed.
Its www.milkprices.com standard litre prices are
Dairy UK and DairyCo to sponsor The Milk Race (3rd February 2015)
Both Dairy UK and DairyCo will jointly sponsor the third return of the legendary Milk Race, which takes place in Nottingham in May.
Chairman of The Dairy Council Sandy Wilkie commented “This is a wonderful opportunity for the industry to highlight the fact that dairy foods are naturally nutrient rich and the nutrients they provide are important for all age groups.”
The Milk Race ran between 1958 and 1993 as a regular annual event before it was pulled.
The Fresh Milk Company (AKA Lactalis) corner its suppliers (3rd February 2015)
In a letter to producers from MD Mark Taylor dated 30th January The Fresh Milk Company (FMC) shocked producers.
First up was a table topping, whopping 2ppl price cut from March 1st which was billed as “a 2ppl discretionary cut to the current basket formula”. One producer emailed Ian to say The FMC definition of discretionary was “do what the hell we want”.
To rub salt in the wound the letter went on to confirm the reduction was “out with the spirit of the current agreement”.
The FMC’s (Lactalis) approach to producers has certainly come as a surprise to producers and will no doubt have the UK’s independent milk pricing guru Stephen Bradley (www.milkprices.com) scratching his head as the person who calculates the FMC producers basket milk price which is now a complicated calculation to the detriment of the producers.
If that wasn’t enough they intend to introduce a change to milk pricing in less that two months by April but no details are available. All of these moves “with the intention of securing long term milk supply at sustainable milk price for both farmer and processor.
The letter has certainly left a nasty taste with some producers who hopefully have good memories. One line in Ian’s next Dairy Farmer Article (due out next week) says it all “Remember what happens in this crisis and how your milk purchaser treats you”
First Milk Vice Chairman’s evidence to be investigated (3rd February 2015)
First Milk’s vice chairman Nigel Evans gave evidence at last Wednesdays Scottish Parliament Dairy Inquiry and the thud of MSP’s jaws hitting the floor was deafening when he claimed that First Milks member payment over the last three years compared to the payout relative to its competitor milk processors would be “a lot better”.
The full transcript of the relevant part reads as follows:
The operative words that you just used are “at the moment”. When we look at prices over periods of time, we see a lot more commonality of pricing. The truth is that, because of product mix and the different markets that companies work in, there will always be differentials in pricing. Taking as an example the skimmed-milk powder pricing that we have talked about, it is trading at a price equivalent to 14p a litre, but 12 months ago it was trading at a price that was nearer 40p a litre. That kind of situation has a substantial impact on the pricing of different elements of the market.
So if we were to look back over the past three years and analyse the price that was being paid by the private companies as set against the co-operative’s price, are you telling me that the co-operative would be performing better in how it responded to its members or worse?
Do you mean in terms of our price relative to that of our competitors?
We would be performing a lot better.
Fortunately MSP Michael Russell concluded by stating “we should get that analysis”.
It appears to be an outrageous claim however to prove whether the evidence by Evans can be backed up by the facts requires one call or email to Stephen Bradley AKA www.milkprices.com
Ian has already emailed the convener suggesting they immediately contact Stephen for that independent analysis and make their findings public.
The smart money is on the facts simply proving that all that has happened is that the gap between First Milk and its competitors has widened.
Scottish Parliament tackle evasive retailers head on (3rd February 2015)
This week the inquiry will hear evidence from retailers and the Grocer Code Adjudicator Christine Tacon.
Tesco, Sainsbury’s, Lidl and Marks & Spencer have each received a “special invitation” from Rob Gibson MSP who is the convener of the inquiry.
Basically all four retailers declined to accept the Parliaments first invitation to attend. This second invitation is worded slightly differently and directed to the CEO.
It reads “Should you decline this request, the committee will set aside a seat for you at one of those meetings to indicate that Tesco/M&S/Lidl/Sainsbury’s was invited but declined the invitation and we will also then consider compelling evidence”. Ouch!
If you would like to view the letters or the evidence click on http://www.scottish.parliament.uk/parliamentarybusiness/CurrentCommittees/85896.aspx
The expectation is that Tesco Tom and his mates will accept this latest invitation and appear this week.
No mention of ASDA so we assume they have already agreed to attend to give evidence as have Morrison’s.
First Milk’s Accounts (3rd February 2015)
These are still to be scrutinized but here are a few headlines:
(a) Only 122 members out of up to 1200 in total were either present or represented at the AGM. That was a result for the First Milk Board and management to have only around 10% present in body or on paper.
(b) Almost 20% of First Milk’s intake goes into Westbury yet they still insist on calling it a liquid contract
(c) In the first 6 months of the current financial year the co-op lost on average £2m each month (£12.1 million) to the end of September having paid out more money to members than they could afford. Was this the Senior Management who sanctioned the member payouts and failed to cut the price to match receipts or was it the Farmer Board who refused to sanction the Senior Management’s price cuts?
(d) Adams paid £3milliion for First Milk’s cheese customer base. Pre-tax profit was up from £0.8million to £3.5million but if you deduct the £3.0m from Adams it’s down to £0.5m.
Lowest priced milk? - Unless you spot lower prices (3rd February 2015)
4 pints of Country Life branded milk for 59p at Simply Local, Burntwood WS7 4QH
The milk is supplied, once again, by Johal Dairies (www.johaldairies.co.uk) .Cheap milk hawked around by a handful of processors is said to be decimating prices and destabilizing the whole market.
4 pints 79p Lidl, Wincanton, Somerset
Highest priced milk? - Unless you spot higher prices) (3rd February 2015)
£1.14/litre Welsh branded milk in Clawddnewydd, Ruthin
£1.33/litre local shop on Gigha Island of the West Coast of Scotland
Arla Amba stand on price for February (23rd January 2015)
Arla have confirmed this morning that its 13,500 members will receive a stand on milk price for February as received in January.
The gradual improvement in GDT auction results (see below) is a factor which has played a part in Arla’s global forecasts. For it’s 3,000 British members there is a small bonus in the slight increase of 0.06ppl in the 13th payment forecast which takes the standard litre price to 24.87ppl (www.milkprices.com).
Arla Directs – stand on price for March (23rd January 2015)
This leaves producers standard litre price at 23.4ppl (www.milkprices.com)
0.67ppl milk price cut for Muller Wiseman Co-operative suppliers - From February 1st (23rd January 2015)
This is a quarterly review and takes producers standard litre price down to 29.84ppl (www.milkprices.com)
GDT average up 3.8% (23rd January 2015)
The GDT auction average has increased for the third consecutive auction with WMP up 3.8%, the highest WMP average since November 4th and the overall auction average up 1%.
Notable movers (23rd January 2015)
WMP +3.8% to average $2402 tonne
SMP +1.0% to average $2389 tonne
Arla Westbury SMP +4.6% to average $2140 tonne
Futures markets are also heading North. One New Zealand analyst commented “This now appears to indicate that the market recovery that many have been predicting since last year is now in flux.” Fingers crossed this is the start of a long term upward trend.
Arla to sell lactose on the GDT auction (23rd January 2015)
Arla is to sell a significant volume of food grade lactose at future auctions starting on April 15th. Lactose is used in confectionary and food manufacturing including baking preparations as well as in pharmaceutical.
The Arla lactose will come from its impressive Jutland Denmark site and whey from Arla’s Lockerbie and Llandyrnog plants go to the Danish site.
GDT now has in excess of 650 registered auction buyers from 90 countries across the world who last year bought 900,000 tonnes of product through the auction.
Top marks to Sainsburys (23rd January 2015)
Full marks to Sainsburys for taking out significant adverts in the The Express, Star, Mail, Times and Telegraph this week. The advert was under the strap line “At Sainsburys we support our British fresh milk farmers, does your supermarket?”
The advert concluded with:
“We believe the farmers who produce our milk should also make a living.”
It’s a very clear message from Sainsburys where they firmly nail their colours to the mast in support of British dairy farmers who supply Sainsburys through their dedicated liquid milk. However, its still a retailer and discounter scrum on cheese where only Tesco pay a premium to a large group of dedicated farmers on mature cheddar.
It’s a pity Morrisons’ PR machine does not operate in the same way and indeed that of some other retailers and discounters who appear to have an insatiable appetite to drive down prices to consumers, processors and dairy farmers.
Morrisons switch milk from Dairy Crest to Arla Aylesbury (23rd January 2015)
Whilst Dairy Crest have retained some of Morrisons liquid milk business for the next three years the outcome of the recent tender process is that they have lost 70 million litres to Arla. Have Morrisons placed 70 million litres of extra business at the expense of Dairy Crest based on price, service, were they drawn to the most modern state of the art liquid milk processing facility in the world? AKA – Aylesbury or was it because Morrisons wanted to be seen to support a co-op where the money is shared evenly amongst the members?
At the end of the day the loss of Dairy Crest volume is likely to affect Muller Wiseman more than DC assuming the pending liquids deal is approved by our completion authorities.
Morrisons dedicated liquid milk supply group (23rd January 2015)
The phones were red hot on Wednesday with numerous media keen to get an industry response to the news that “Morrisons is to start recruiting farmers for its first dedicated milk pool.” The story originated from Farmers Weekly but it appears to have either been a red herring or a complete misunderstanding.
Neither Dairy Crest Direct or Arla AMCO have had discussions with Morrisons over setting up a dedicated group.
Things progress at snails pace with Morrisons when it comes to its intentions with dairy. For example, it has been running a small pilot cheese producer group with First Milk in South Wales since July 2013. They gained some positive PR 18 months ago at the launch with claims that “the retailer hopes to expand the project to supply all of its cheddar through this process should the trail prove successful”. But all is eerily silent.
First Milk’s CEO Grocer article seeks to reassure customers (23rd January 2015)
Kate Allum, CEO of First Milk, whom many believed was in public hibernation, commented in an article in last weeks’ Grocer that she was surprised by the fact “we received more coverage than any other dairy industry story I can recall. We were not talking about an acquisition or the launch of a new product.”
No Kate, the media interest was because First Milk do not have enough money in the bank to pay your 1,000 plus farmers their two weeks worth of milk on the 12th and 26th January and that’s the position going forward. It’s never happened before so it shouldn’t have come as a shock as to how big the story was.
Kate then went on to comment:
“This move significantly improves our cashflow, which was negatively affected by falling dairy market prices throughout 2014”
This could be re-written as follows:
“This move negatively affects our members cashflow at a time when they are struggling to cope with one of the worst milk prices in Great Britain of close to 20ppl. They are the hard working families who are picking up the bill for falling dairy market prices and our failure to add value to the milk cheques we have traditionally paid them on the 18th of each month, which will now be paid on the 26th with the remainder on the 12th of the month.”
Whilst Kate’s commentary flags up the fact First Milk customers “understand the actions we have taken are positive steps” most First Milk members are extremely worried and are by no means convinced the move is positive so far as their short and long term bank balances are concerned. However, their prayer mats are pointed towards Glasgow, China, Ireland and anywhere they see hope!
Let’s hope the farmer meetings and next week’s First Milk AGM inject some confidence in members, especially when the accounts are released and presented and it declares its future strategy to improve returns to members.
Arla UK launches quark based protein yoghurt range (23rd January 2015)
Arla have launched a range of high protein, fat free, quark based yoghurts in three pilot flavours.
Brain storming (23rd January 2015)
A very good friend of Ian’s has asked for a bullet point list of the major challenges the rural sector faces in the next five years. Answers by email to email@example.com. Note, this is not a dairy specific question and any help will be appreciated and acknowledged.
1ppl milk price cut for Yew Tree Dairy (Woodcocks) suppliers – from 1st February (16th January 2015)
This takes their standard litre down to 25ppl (www.milkprices.com)
1ppl milk price cut for Barbers suppliers – from 1st February (16th January 2015)
This takes their standard litre down to 25.63ppl (www.milkprices.com)
0.262ppl milk price reduction in Dairy Crest formula – from 1st February (16th January 2015)
This takes their standard litre down to 29.0210ppl (www.milkprices.com).
This gives an average premium of more than 4ppl between the DC formula price and its non-aligned standard litre price.
UK milk deliveries up 7.1% (16th January 2015)
Cumulative UK milk deliveries for the first nine months of the quota year are up 7.1% (+722 million litres).
December milk production was up 3.6% compared to December 2013.
First Milk Director Willie Campbell will want to forget Monday (16th January 2015)
At Monday’s 25th Semex Conference it wasn’t many minutes before opening speaker NFU President Myrig Raymond mentioned the plight of more than 1,000 First Milk producers.
David Handley followed up with what Chairman John Allen of Kite described as a “powerful and emotional speech” on the subject of First Milk, Handley said that First Milk’s payment deferral move was “a disgrace”.
During question time, up popped First Milk board member Willie Campbell and a loud clunk of press and delegates jaws could be heard when Campbell declared “I am proud of what we (First Milk) have done.”
An unfortunate choice of words and within minutes Sky News and an avalanche of media were clamouring to interview Campbell and challenge him on his jaw dropping statement.
Below is a cartoon and report, which Scottish Farmer produced which accurately summaries events:
Previously that morning BBC TV featured an on farm interview with Willie Campbell on its main national news.
That didn’t go well as viewers were drawn to Campbell’s scruffy cap, which was described as older than him and resembling the sort of cap a pantomime Eddie Grundy would wear. It was certainly a poor advert for a modern professional dairy farmer who is also a board member making financial decisions on behalf of 1,000 plus co-op members.
The decision was quickly taken that Campbell was no longer suitable to present to the media and all interviews were pulled. With hindsight First Milk should have had either Jim Paice or Nigel Evans present at the Conference to address all questions.
All in all First Milk had a very bad day at the office on Monday and it can only get better.
First Milk what next?? (16th January 2015)
First Milk have two remaining member meetings taking place next week. Next will arrive its overdue financial accounts for the year ended March 2014 followed by its AGM on the 30th January.
In addition, there are rumblings of a possible legal challenge by a small group of First Milk Nestle producers on grounds of discrimination. This could be a very hot potato to handle.
There are also questions being asked by qualified accountants as to whether the co-op passes the test of trading as a going concern.
But whilst all of these points are bouncing about no one appears to have addressed the real question.
What radical changes are First Milk going to make to turn the ship around? They can’t expect members to plug the holes and bridge the shortfall as they have recently with their £22million snatch and grab because that is passing the pain to its members who are already under extreme pressure. Their banks and suppliers may be sympathetic but they will be looking 100 yards down the road to see what dramatic business turnaround changes First Milk are making. So what are First Milk going to do different other than claim they need to add value to a third of their milk?
Wyke Farms hold producer prices for February (9th January 2015)
The stand on litre price is 25.05ppl
1.5ppl milk price cut for Glanbia cheese suppliers – from 1st February (9th January 2015)
This takes their standard litre price to 23.86ppl (www.milkprices.com)
1.5ppl milk price cut for Belton Cheese suppliers – from 1st February (9th January 2015)
This takes their standard litre price to 24.15ppl
1.5ppl milk price cut for Crediton Dairy producers – from 1st February (9th January 2015)
This takes their standard litre price to 27.86ppl (www.milkprices.com)
1.2ppl milk price cut for Meadow Foods producers – from 1st February (9th January 2015)
This takes their standard litre price to 23.4ppl (www.milkprices.com)
1.2ppl milk price cut for The Fresh Milk Company producers (Lactalis) – from 1st February (9th January 2015)
Two contrasting stories, which were emailed to Ian (9th January 2015)
(1) UK Retail prices
Asda have cut their price for four pints of own-label milk to 89p under a ‘rollback’ promotion. They are the first of the big four supermarkets to go as low as this on a price point, although Aldi cut their price of four pints from 95p to 89p in a November promotion.
(2) Dairy Crest Increases cost of pinta on milk&more
As Dairy Crest announces 29th December farm gate price cuts for February (-7.85p since the summer) it has also increased the price it now charges for a pint of milk delivered to the doorstep from 79p/pint to 81p/pint - from 28th December - sent through from a milk&more consumer aghast at what is happening to farm gate prices....
Comment (9th January 2015)
Will doorstep consumers continue to support Dairy Crest’s Milk&More when the differentials become even more astronomic? ASDA 4pints at 89p, or milk&more doorstep 4pints at £3.24...??
The hunt is on for Britain’s most expensive conventional milk (9th January 2015)
2 litres of branded Muller-Wiseman whole milk from Spar in Nethy Bridge in the highlands of Scotland for £1.79.
Do you know of any place which can top trump that?
First Milk defer December onwards milk payments (8th January 2015)
First Milk have informed producer members that their December milk payments, which were scheduled to hit producers bank accounts on the 12th and 26th January will be deferred by 14 days and paid in two stages on the 26th January and 10th February.
This deferral will continue throughout 2015 until First Milk's Board decide to vary it.
First Milk cancel 1.1ppl of its 1st February milk cuts (8th January 2015)
Less than a week after First Milk announced its 1st February price cuts of 2.43ppl for cheese and 1.6ppl liquid it has announced that 1.1ppl of both cuts will not be implemented and will be cancelled. The net result is that from February 1st members on the cheese contract will have a 1.33ppl cut and those on the liquid contact will have a 0.5ppl cut.
BUT (and it's a HUGE but):
First Milk to increase member capital contributions (8th January 2015)
Instead of the price cut it is to increase member capital contributions from the current 0.5ppl to 2ppl, back dated to milk supplied from 1st December 2014 and forward dated to 31st August 2015 (9 months). Twinned with this is an increase in the member capital investment target from the current 5p to 7ppl.
Combining the 1.1ppl price cut reversal with the 2ppl capital contribution will give a net additional cost to First Milk members of 0.4ppl. (2ppl – 1.1ppl reversed cut less 0.5ppl current capital contribution)
In Summary (8th January 2015)
This is unwelcome news for struggling First Milk members and clearly the co-op has an immediate cash flow crisis, and to cut to the chase it cannot pay for members' milk as planned. For its members they have a simple choice to stay with First Milk or quit milk, because finding an alternative milk purchaser and joining the 230 to 300 plus who have no milk buyer from 1st April is not a sensible option.
There are, however, some positives Ian can see for members to consider:
(a) If your ship is heading for rocks do you wait until it hits those rocks or take action to steer a different course? First Milk’s board has at least taken action and if it didn’t the business simply would have run out of cash, and soon. Some action is much better than no action.
(b) Whilst it’s a rolling 14 day payment deferral it could have been worse. It could for instance have skipped a month and missed one milk cheque, or even worse closed the doors and sunk the ship in the spring.
(c) Some thought has certainly gone into ensuring all First Milk members share the pain proportionally. The 1.1ppl price cut reversal does not affect its Nestle and Tesco aligned producers, who are immune from the cuts, but by reversing the price cut by 1.1ppl and taking the extra 0.4ppl in capital contributions all pay pro rata, including its Nestle and Tesco farmers. This is surely a basic principle of how a co op works.
The plan is that the combined package will put First Milk’s finances and business into a stronger position and will inject a much needed £20 million into the business.
It’s not an easy decision to take and time will tell whether the plan works to ensure both First Milk’s members and the company survive and prosper.
Let’s hope these moves stabilise the business and help rebuild its cash flow.
It’s delayed AGM on the 30th January is likely to be well attended.
GDT auction prices up 3.6% (8th January 2015)
It’s nothing to trumpet about but perhaps there could be a small glimmer of light at the end of a very long and dark world dairy tunnel. However, note that the volume of product on offer was down 27% (12,700 tonnes). So almost a 30% drop in the quantity on offer v only a 3.6% uplift is sobering.
The average price at this week’s auction rose 3.6% compared to the results achieved three weeks earlier (December 16th).
Key movers of interest were:
Butter up 13.2% to average $3558 tonne (£2338)
Cheddar up 3.2% to average $3090 tonne (£2030)
SMP up 2.8% to average $2386 tonne (£1568)
WMP up 1.6% to average $2307 tonne (£1515)
Arla Westbury SMP down 7.7% to average $2045 tonne (£1345)
Note, a significant gap has opened up between Arla Westbury SMP at £1345/tonne and New Zealand SMP at £1625/tonne. A difference of £280/tonne (or 21%)
The reason for the difference according to one seasoned independent wise analyst is a combination of weak currency and high stocks of SMP in Europe. EU SMP production for 2014 to the end of October is up 24.5% hence the high stocks and weak prices.
Inserting the GDT average for EU butter @ £2150 and Arla SMP @ £1345 into the 2014 AMPE formula gives an AMPE of 18.4ppl, which does not allow for the cost of transporting the milk from farm to processing factory. Taking farmgate transport costs into account will give an equivalent farmgate AMPE of between 16.4 to 16.9ppl. This is based on an ex farm collection costs of between 1.5 to 2ppl however if the milk has to then be transhipped to Westbury deduct a further 2ppl.
Inserting the New Zealand GDT average for butter at a price of £2338 and the New Zealand SMP average at £1625 gives an AMPE of 22ppl. So world butter and SMP prices are ahead of EU prices, which to some extent is a positive.
Note, EU milk production in 2014 to the end of October is up 5.3%.
Farmers Weekly Editor is new AHDB CEO (8th January 2015)
Jane King, who left her position as editor of Farmers Weekly at the end of last year, is to head up the AHDB.
So with a new chairman and new CEO ,a few more changes and surgery the industry could soon see a more ambitious and courageous AHDB and its sector boards and oh how that is long overdue.
New chairman Peter Kendall commented to The Farmers Guardian
“Her communication skills and experience of both repositioning and leading a well-known agricultural service brand through a period of change means she will be able to lead AHDB through an important period as it works towards becoming a centre of excellence for the UK industry.”
As one communications top cat commented to Ian via email “In appointing Jane AHDB are sending a clear message that they want to communicate better.”
With Jane at the helm they are likely to get there and she will be very alert to the fact she will have to crack some eggs to make her communication omelettes.
Crude oil breaks the $50 dollars a barrel barrier (7th January 2015)
Brent crude oil fell below $50 dollars a barrel this morning to touch $49.66 the lowest price since April 2009.
Muller Wiseman (MW) hold producer prices for February (7th January 2015)
Amidst an avalanche of further new year milk producer price cuts, Muller Wiseman have confirmed they will not be cutting producer prices before 1st March at the earliest.
The stand on standard litre price is 25.9ppl.
MW’s press release contains a couple of interesting quotes:
Carl Ravenhall, Managing Director of Müller Wiseman Dairies said:
"In an extremely challenging environment, Müller UK & Ireland Group is working hard to add value to milk produced by British dairy farmers.”
“We recognise that this is a tough time for dairy farmers and we are doing everything we can to maintain a leading milk price, whilst retaining our ability to compete, particularly against processors and farmer owned co-operatives who reduce their milk prices with little notice.”
MW are acknowledging the fact they operate in what is a British added value market, not withstanding the fact cream and butter returns have impacted on both processor and producer returns. Compare this declaration to some of the other GB milk purchasers statements where they clearly paint a picture that they operate in a global market pointing the finger exclusively at weak European and world commodity prices as well as poor GDT auction results as justification for their price drops.
This leads on to Ravenhall’s choice words in his next line, highlighted in red by me.
It’s his reference to those who reduce their prices with little, if any, notice. Clearly MW are in competition with these processors who quickly bank any farmgate price reductions and could then mischievously use such gains to their advantage in this falling market with predatory pricing. However, on the flip side when prices take a turn North and go up the likes of MW who are code compliant should, theoretically, be paying out increases a month later than those who give no notice.
Ian is aware of lots of scams and interesting moves milk purchaser moves. These include processors (plural) who have ended a number of producer contracts who are buying extra milk on the spot market (short term gain) as well as a number of milk buyers who are paying a farmgate price based on commodity values who then have the nerve to trumpet how strong their brands are both locally, nationally and abroad.
It sounds like these milk buyers are simply dropping the milk price simply because they can based on global commodity prices then proceed to sell into a British added value market with their strong brands.
It’s a win win and resembles having your cake and eating it.
1.5ppl milk price cut for Glanbia cheese suppliers – from 1st February (7th January 2015)
This takes their standard litre price to 23.86ppl (www.milkprices.com)
1.5ppl milk price cut for Belton Cheese suppliers – from 1st February (7th January 2015)
This takes their standard litre price to 24.15ppl
2.43ppl milk price cut for First Milk cheese suppliers – from 1st February (5th January 2015)
This takes their standard litre down to 20.47ppl (www.milkprices.com)
Total drop since June 2014 is a market leading one at 12.03ppl.
1.6ppl milk price cut for First Milk liquid (or to be more accurate ingredients/commodity) suppliers – from 1st February (5th January 2015)
This takes their standard litre down to 20.10ppl (www.milkprices.com)
Total drop since June 2014 is a table topping 12.4ppl.
First Milk were the first British milk purchaser to drop producers standard litre prices below 30ppl and are now the first to drop to as near as damn it 20ppl. Regrettably all bets are off on them being first to drop below 20ppl by spring. It’s brutal and grim but with not alternative but to keep cutting producer milk prices.
2ppl milk price cut for Dale Farm (United Dairies NI) producers – for November deliveries (5th January 2015)
This takes their standard litre down to 22.44ppl (www.milkprices.com)
1.8ppl milk price cut for Paynes Dairies producers – from 1st January (5th January 2015)
This takes their standard litre down to 23.2ppl (www.milkprices.com)
1.75ppl milk price cut for Dale Farm (United Dairies) Kendal producers – for November deliveries (5th January 2015)
This takes their standard litre down to 27.39ppl (www.milkprices.com)
1.2ppl milk price cut for Dairy Crest producers – from 1st February (5th January 2015)
This is an across the board cut and the resulting standard litre prices are as follows: (www.milkprices.com)
Non aligned liquid 24.59ppl
Davidstow Cheese 26.59ppl
1.6ppl reduction in Dairy Crest liquid formula – Not until January 2016 (5th January 2015)
This is one year’s notice of an agreed re-basing of the core and simplified formula contracts.
Note, the current differential/premium for liquid formula contracted producers against Dairy Crest’s standard liquid contract is a healthy +3.3ppl.
AMPE falls below 20ppl having lost 50% in a year (5th January 2015)
AMPE has fallen below 20ppl to only 19.8ppl and MCVE now stands at 23.7ppl.
This means AMPE has halved from 38.9ppl in the past 12 months whilst MCVE is down 38% over the same period.
It’s certainly time to get the prayer mats out and point them towards either Beijing or Mother Nature. Until our prayers are answered the possibility of intervention buying increases by the day.
Friesland Campina (FC) cut January price to circa 23.7ppl (30.25 Euro Cents) (5th January 2015)
This represents a 0.50 Euro Cents drop on its December price.
This is further bad news given the fact that Arla tend to follow what FC do.
Cheap Milk (5th January 2015)
It was a certainty that post Christmas either ASDA or Tesco would price match Lidl, Aldi and Iceland with their 4 pints for 89p and it’s happened. Here are today’s cheap milk deals:
8 pints whole or semi-skimmed milk £1.50 FarmFoods (33ppl)
4 pints whole or semi-skimmed milk 89p Morrisons (39.2ppl)
4 pints whole or semi-skimmed milk 89p ASDA (39.2ppl)
2.03ppl milk price cut for Arla members – from 5th January (23rd December 2014)
The Arla on account price will reduce by a further 2.5 Euro Cents/kg from 5th January, which taking into account the updated 13th payment and the reduction equates to a 2.03ppl producer price drop for both Arla Milk Link and AMCO members.
This will take the standard litre prices (www.milkprices.com) down to:
Arla Milk Link 24.81ppl
Arla AMCO members receive some welcome relief from the full impact of the hefty cut with a three month payment holiday (January, February & March) from the 0.5ppl member levy which will reduce to zero for most members who currently pay the 0.5ppl levy. For those who pay the accelerated 1ppl levy the amount deducted will reduce to 0.5ppl.
In addition, the butterfat reconciliation (AKA The Arla Fat Tax) has been reduced from 0.45ppl to 0.01ppl from 1st January.
The combined result is that AMCO members will be cushioned from the full impact to the tune of 0.94ppl (0.5 + 0.44) for the first three months at least.
There is little more to say other than it’s an unwelcome end of year announcement and the factors behind it are well reported, haven’t changed and there is no sign they will change.
In a nutshell further farmgate price reductions for all seem inevitable in 2015.
1.4ppl milk price cut for Arla Directs – from 1st February (23rd December 2014)
This takes their standard litre down to 23.4ppl (www.milkprices.com)
1ppl milk price cut for Grahams Dairies suppliers – from 1st January (23rd December 2014)
This takes their standard litre down to 26.5ppl (www.milkprices.com)
99.9% vote for Dairy Crest to sell its liquids business to Muller (23rd December 2014)
At a meeting 99.9% of Dairy Crest’s shareholders who voted said yes to the sale.
GDT auction up 2.4% (19th December 2014)
As always the devil is in the detail with butter leading the charge up, however, both SMP and Cheddar averages continued to head south.
Butter +10.4% to average $3145/tonne
WMP +1.4% to average $2270/tonne
Cheddar -0.6% to average $3002/tonne
SMP -3.2% to average $2320/tonne
Auction average +2.4% to average $2609/tonne
Quota market remains very active (19th December 2014)
We assumed the milk quota market would be dead by now, given the fact it only has around 15 weeks of its life left before it is confined to the history books.
However, the current dairy crisis with talk of some member states pushing for a post 1st April 2015 continuation of the quota system (unlikely), together with the possible introduction by some UK processors of so-called A and B milk production quotas (highly likely) have ensured the market is active.
A number of farmers who have taken milk quota from us this week have mentioned the introduction of A & B production limits/quotas and the fact they want to insure against the fact these could be pushed by the beaurocrats based on quota held at 31 March 2015 as opposed to processor led based on production in a period between 2012-2015. The market continues to twist and turn and we are back on the hunt for sellers of milk quota.
If you have any milk quota to sell please contact Jacquey on 01335 324594 or Jacquey@ipaquotas.co.uk
Dutch farmgate price falls to 20.3pl (19th December 2014)
Dutch milk co-operative and cheese processor DOC have cut their December farmgate milk price by almost 4 Euro cents (3.1ppl) to 25.82 Euro cents, which equates to 20.3ppl
Seasons Greetings (19th December 2014)
Ian and the IPA team would like to wish you a very Merry Christmas.
We plan to be back on New Year’s Eve assuming there is some dairy news to share. All the best
1.75ppl milk price cut for Helers Cheese producers - from 1st January (12th December 2014)
This takes Helers producer standard litre price down to around 25.55ppl.
1.5ppl milk price cut for Yew Tree Dairy (AKA Woodcocks) producers - from 1st January (12th December 2014)
This takes the producers standard litre price down to 26ppl (www.milkprices.com)
1.2ppl milk price cut for Muller (Wiseman) non aligned producers - from 10th January (12th December 2014)
This takes the producers standard litre price down to 25.9ppl (www.milkprices.com)
0.306ppl milk price cut for Dairy Crest formula contracted producers - from 1st January (12th December 2014)
This takes the producers standard litre price down to 29.287ppl (www.milkprices.com). A producer price advantage of +3.377p over Dairy Crest’s standard litre price.
Fonterra offer no Christmas cheer as it slashes its producer price (12th December 2014)
Fonterra has, for the third time, reduced its forecast producer member payout for 2014/15 by a further 11% from $5.30/kg of milk solids to $4.70.
Converting this from milk solids into ppl at 4% butterfat and 3.3% protein produces a forecast farmgate price of 17.62ppl, which including a forecast dividend/bonus is likely to weigh in at just under 19ppl assuming between now and Fonterra’s year end, at 31st May 2015, there are no further price adjustments.
The original forecast price announced in May was $7.00 NZ so the latest drop gives a cumulative forecast reduction of 33%. That’s a hell of a drop in 12 months.
FFA broker transparent deal with Iceland (12th December 2014)
Those who comment that FFA are only about protesting and that no good comes of it will be left with red agitated faces
with today’s news that, following recent protests at two Iceland distribution depots FFA have negotiated a new way for Iceland to price its liquid milk requirements.
Presently Iceland obtain all of their liquid milk from either Arla or Muller non aligned farmers and going forward Iceland are prepared to be open and transparent and, if required, will open their books up to scrutiny to prove that they are not responsible for applying any pressure to their processors on liquid milk prices. The deal means Iceland will simply move their price by the amount their processor moves its non aligned farmgate milk price.
So if Arla or Muller’s milk price goes down 1ppl Icelend pay 1ppl less. If the farmgate price moves up 1ppl the opposite happens.
Whilst there will be some fine detail to iron out at least this should take Iceland out of the equation as a potential retailer who is exerting further unnecessary downward pressure on already weak farmgate milk prices.
Second Iceland FFA announcement (12th December 2014)
By the second week in February, at the latest, Iceland, have confirmed to FFA than at least 70% of their in store packed cheddar, which they deal with will be British and will bear the Red Tractor logo. All of this cheese is packed at Leek by Adams.
Another positive move. In one week that’s Iceland off the FFA radar having accumulated several gold stars.
UK November Milk Production (12th December 2014)
November output stood at 1.1174 billion litres up 4.7% on November 2013 production. Cumulative production for the first 8 months of the quota year is up 677 million litres (+7.5%).
The mould is certainly set for this year’s total milk production to be the highest on record during the 30 years of quota.
Irish Dairy Board (IDB) set to be renamed Ornua (12th December 2014)
The IDB board has approved the name change to Ornua as part of its preparation for the post quota world opportunities and its corporate identity review. It’s a take on the Gaelic Or Nua, which means new gold. That’s exactly what a Commission report “prospects for agricultural markets and income 2014 to 2024” called milk. “Milk remains the white gold for the next decade”
This year’s Ceremony of The Christmas Cheeses (12th December 2014)
Ian was fortunate to be invited to last week’s annual Ceremony of the Christmas Cheeses at the Royal Hospital, which for him is the first signal that Christmas is getting close.
Close to a quarter of a tonne of our finest British cheese was donated by our cheesemakers for the pensioners to enjoy.
The Ceremony has been organised by The Dairy Council for more than 50 years and as Sandie Wilkie, The Dairy Council Chairman, commented “This year is all the more special as we commemorate the 100th anniversary of the outbreak of WW1”
16 PRICE CUTS IN 5 DAYS (5th December 2014)
6.19ppl milk price cut for Muller formula producers - from 1st January (5th December 2014)
This confirms last week’s predicted price fall and takes the producers standard litre price down to 22.95ppl (www.milkprices.com)
2ppl immediate milk price cut for South Caernarfon Creameries – from 1st December (5th December 2014)
This takes the producers standard litre price down to 24.78ppl (www.milkprices.com)
1.87ppl milk price cut for The Fresh Milk Companu (AKA Lactalis) – from 1st January (5th December 2014)
This takes the producers standard litre price down to 25.39ppl for those on a 3 month contract (www.milkprices.com)
1.6ppl immediate milk price cut for Paynes Dairies suppliers – from 1st December (5th December 2014)
This takes the producers standard litre price down to 25ppl (www.milkprices.com)
The cut comes in two parts with 0.8ppl price cut plus 0.8ppl haulage charge. (See story below)
1.5ppl milk price cut for Belton Cheese suppliers – from 1st January (5th December 2014)
This takes the producers standard litre price down to 25.65ppl (www.milkprices.com)
1.5ppl milk price cut for Crediton Dairies suppliers – from 1st January (5th December 2014)
This takes the producers standard litre price down to 29.36ppl (www.milkprices.com)
1.5ppl milk price cut for Glanbia suppliers – from 1st January (5th December 2014)
This takes standard litre price to an estimated 25.37ppl (www.milkprices.com)
1.4ppl milk price cut for Wyke Farms suppliers – from 1st January (5th December 2014)
This takes the producers standard litre price down to 25.05ppl (www.milkprices.com)
1.25ppl price cut for Dairy Crest suppliers – from 3rd January (5th December 2014)
This takes the Davidstow producers standard litre price down to 27.78ppl (www.milkprices.com)
This takes the liquid producers standard litre price down to 25.79ppl (www.milkprices.com)
1.25ppl milk price cut for Meadow Foods suppliers – from 1st January (5th December 2014)
This takes the producers standard litre price down to 24.6ppl
1ppl milk price cut for First Milk liquid suppliers – from 1st January (5th December 2014)
This takes the producers standard litre price down to 21.7ppl (www.milkprices.com)
1.1ppl milk price cut for First Milk cheese suppliers – from 1st January (5th December 2014)
This takes the producers standard litre price down to 22.90ppl (www.milkprices.com)
1.0ppl milk price cut for Barbers suppliers – from 1st January (5th December 2014)
This takes the producers standard litre price down to 26.92ppl (www.milkprices.com)
1.1ppl milk price cut for Waitrose (Dairy Crest) suppliers – from 1st January (5th December 2014)
This takes the producers standard litre price down to 33ppl (www.milkprices.com)
0.81ppl milk price cut for SDDG (Sainsburys) suppliers – from 1st January (5th December 2014)
This takes the producers standard litre price down to 31.6ppl (Muller), 31.54ppl (Dairy Crest) and 31.48ppl (Arla) (www.milkprices.com)
0.5ppl milk price cut for Booths suppliers (via Muller) – from 1st January (5th December 2014)
This takes the producers standard litre price down to 34.5ppl (www.milkprices.com)
This means taking the two extremes from above on 1st January Muller Booths suppliers will receive a standard litre price of 34.5ppl and a First Milk liquid supplier will receive 21.7ppl. A difference of 12.8ppl, which for the 1 million litre standard litre producer equates to £128,000 a year.
Or to put it another way those farmers aligned to Booths and their family retail business will receive 60% more for every litre of milk they produce than a First Milk liquid producer will receive.
No Christmas cheer from Paynful Paynes (5th December 2014)
In addition to a no notice haulage charge and price cut totalling 1.6ppl (see above) comes another painful blow in the form of immediate cancellation of Paynes seasonality, which allowed a 5% tolerance above a producers level profile. This has been replaced from November with what Stephen Bradley of www.milkprices.com describes as “the ultimate discretionary balancing charge.”
Basically, if you produce any extra milk you will be paid on realisation and this has been backdated a month to include November delivered milk.
Milk delivered above Paynes planned requirements, which are secret, will be paid at a spot price, which is also top secret and verified by Paynes. Despite the fact the letter to producers went out at the very end of November the company were unable to say what they had achieved on the November spot market. However, the letter does suggest a current spot market price, as at the 27th November, of 18 to 20ppl and goes onto suggest prices as low as 12 to 14ppl this month. The milk prices guru Stephen Bradley is certainly correct to question these appalling numbers as have other processors. They are off the mark and the 14ppl price can only be for a few days over the Christmas period and having said that the lowest Christmas price we have heard is 16ppl.
In addition, Paynes are investigating the introduction of A and B pricing.
Mixed results in this weeks GDT auction (5th December 2014)
Overall the average all products index was down 1.1% compared to the result achieved only two weeks ago, however, the 1.1% fall is heavily influenced by the 7.1% fall in WMP prices due to the fact 65% of the product auctioned is WMP. WMP has halved in value in less than 9 months and was last seen at this level in July 2009.
The key movers were (all prices in US $)
WMP down 7.1% to average $2229/tonne (£1423)
SMP up 5.7% to average $2423/tonne (£1547)
Cheddar up 5.2% to average $3017/tonne (£1926)
Butter up 7.3% to average $2849/tonne (£1820)
Inserting the GDT average for butter and SMP into the 2014 AMPE formula gives a price of only 18.7ppl, which does not factor in the cost of transporting the milk from farm to processor, which takes the simple ex-farmgate AMPE on these figures down to between 15.7 to 16.7ppl.
Baltic states milk producers take a beating (5th December 2014)
There is little wonder the European Commission realise Estonia, Latvia and Lithuania milk producers desperately need some help. These are the countries hardest hit by the Russian import ban and farmgate prices have collapsed to under 13.5ppl!
Crediton Dairy sack employee for Bin Laden selfie (5th December 2014)
The employee was dismissed for gross misconduct following a selfie photograph of him wearing an Osama Bin Laden rubber mask at the dairy, which he then posted on his Facebook page. The matter has gone to an employment tribunal.
Friesland Campina December cut is not good news (5th December 2014)
European milk processing giant Friesland Campina (FC) have announced a 3.75 Euro Cent (3ppl) December milk price cut to give a standard payout of 30.75 Euro Cents, which equates to 24ppl.
In eleven months the FC guaranteed price has fallen by 12.25 Euro Cents (9.6ppl) from a top of 43 Euro Cents in February. Why is this relevant to the UK? Simply because the one milk processors price Arla AMBA monitor and track is that paid to farmers by FC so if FC sneeze, Arla are likely to catch a cold and the majority of the UK processors and farmers could easily end up with the flu.
1.63ppl milk price cut for Arla AMBA Co-op members - from 1st December (28th November 2014)
This takes Arla members standard litres price down to 26.84ppl and Tesco producers standard litre down to 27.54ppl (www.milkprices.com)
1.75ppl Milk price cut for Dale Farm Kendall Producers for October Deliveries (28th November 2014)
This takes producers standard litres price down to 29.14ppl (www.milkprices.com)
1.5ppl milk price cut for United Dairy Farmers Co-op members October Deliveries (28th November 2014)
This takes members standard litres price down to 24.44ppl (www.milkprices.com)
6ppl milk price cut for Muller Formula contracts must be on the cards (28th November 2014)
The Muller formula is a straight forward number crunching exercise and given the current AMPE @ 21.5ppl MCVE @ 25.6ppl and likely competitor prices the smart money is on a 1st January formula price close to or under 23ppl.
This price will run for the first 3 months of 2015 and compares to the October to December current formula price of 29.13ppl and if confirmed will be a drop in excess of 6ppl (-20%).
The Muller formula is transparent and based on AMPE 50%, MCVE 25% and a basket of competitor prices 25%. It’s a price based predominantly on the real value of milk turned into commodities and according to Ian’s number crunching 23ppl will be very close to the confirmed figure unless Santas Muller & Kerrs are feeling particularly jolly and generous on which odds of 1000 to 1 are on offer.
100 redundancies in Arla UK (28th November 2014)
They say firms cut cost when things get tough and Arla are doing that in the UK. (Note it appears some in the industry are taking the opposite view and have spent more money but that’s for another day.)
Around 100 staff will be made redundant to provide a leaner (Arla didn’t say meaner) Arla as they restructure.
FFA target Iceland (28th November 2014)
Iceland’s current promotion of 4 pints for 89p triggered two protests by FFA at Iceland distribution depots this week at Warrington and Swindon. Senior management at Iceland were quick to respond and speak to General Handley in an attempt to understand why they were targeted.
EFRA Dairy Prices hearing (28th November 2014)
Tuesdays EFRA select Committee enquiry into Dairy Prices heard evidence from David Handley (FFA), George Dunn (TFA), Rob Harrison (NFU Dairy Board), Dr Judith Bryans (DairyUK) and Christine Tacon (The Groceries code adjudicator).
The committee were quick to challenge Rob Harrison as to why in 2012 the NFU backed FFA and its direct action and protests yet in 2014 the NFU do not support FFA. In response Rob Harrison stated that on this occasion there is no individual bogey-man or company which needs to be exposed and that his organisation (NFU) were working constructively with retailers and processors.
The Tenant Farmers CEO George Dunn supported FFA and peaceful direct action pointing out that it was one of the few ways that angry upset dairy farmers who can see their businesses going down the pan can vent their frustration as opposed to sitting back and doing nothing.
The NFU have convinced themselves that all FFA protests are blockades and are under the impression that FFA led by Handley and “idiots” are wasting their time and protesting for the sake of it.
The jury is out on that but judging by the noises coming from the NFU’s top table trio the NFU are certainly feeling FFA and its supporters are well ahead of them in terms of both farmer and consumer support and, as such, the NFU feel threatened. Note, Handley is due to appear on BBC1’s The One Show on Monday at 7pm.
There were loud calls from Handley and Dunn for the Groceries code adjudicator to be given powers to look at dairy, in particular the section between processor and retailer/ food service etc.
Handley went on to promote the case for his A + B quota idea but when asked by the EFRA committee why it was not receiving more industry support he stated that the fact the initials FFA were involved was a barrier.
Another organisation who should be starting to feel the heat are Dairy Co.
Dunn drew the committee’s attention to the fact they collect £7million a year from producers and at times like this producers expect them to spend money on promotion. He commented “they (Dairy Co) are two years out of date with their thinking and Dairy Co need to be more accountable.” (Some will accuse Dunn with being far too generous to credit Dairy Co with being just two years behind the thinking and aspirations of farmers.)
The need for additional funding to go from Dairy Co to the Dairy Council came over loud and clear with claims by Handley that the Dairy Co levy money was not directed in the right way.
Ian’s summary would be
Dairy Crest Sack Milkman following his appearance on The Jeremy Kyle Show (28th November 2014)
Shaun Dodds, a Dairy Crest Milk and More milkman, was immediately sacked following a recent appearance with his wife on the Jeremy Kyle Show.
The show headline was “Is my husband cheating on his milk round?” and during the interview Shaun’s wife commented “it says you deliver milk and more but more seems to be the only thing that you deliver.”
Shaun called in sick in order to appear on the show and failed all the lie detector tests on the show.
Taking the facts into account Dairy Crest reportedly found him guilty of gross misconduct due to dishonesty.
It’s a good job Ernie (AKA Benny Hill & the fastest milkman in the west) didn’t work for Dairy Crest in the 1970’s because he, too, would have been sacked. As the song goes ‘a milkman’s life is full of fun in that fairy dairy land.’
And guess where his nibs is staying tomorrow evening. You got it, Quedgeley, in Gloucestershire where the Dodds live! No doubt he will be enquiring whether the local Ernie is around!
If you spot any similar Dairy related stories please alert us to them.
GDT auction results crash again to record low points (21st November 2014)
This week’s GDT auction saw average prices weaken further with 39,613 tonnes sold to average $2,561 US dollars per tonne representing a 3.1% drop on the average achieved only two weeks ago. The tonnage on offer was down 5,886 tonnes (-13%) to the quantity sold only two weeks earlier yet still prices weakened.
The biggest drop was in WMP, which averaged $2,400 tonne a fall of $122 (-4.1%) with March delivered WMP falling 8.7%. The price of WMP has halved since February 2014.
Average SMP prices dropped a further 5.7% to average $2,299 with January delivered product down 7%. This is easily the lowest price recorded since the GDT auction started in July 2008 and the average price has more than halved in only eight months from the $4,584 recorded in March 2014. These are markets processors are selling into and when you have oceans of milk you either sell at the going price or you don’t sell and stock pile.
Arla Westbury SMP down to $2,240 (£1,428) from $2,415 a month earlier representing a further fall of $175 tonne
Cheddar was up 5% to average $2,861 tonne.
AMPE & IMPE (21st November 2014)
The current October AMPE stands at 21.4ppl and if you insert this week’s average GDT prices it gives a sobering AMPE figure of only 17.3ppl. Using the GDT price achieved for Westbury Powder gives an AMPE price of 16.9ppl. Note, the AMPE figures do not allow for the cost of transport to dairies which can knock off a further 2 to 3ppl. With the intervention price at just under 17ppl the fear that product will go into intervention in early 2015 grows closer to reality by the day.
“Houston we have a problem” (21st November 2014)
European and world milk prices are falling and, bar a miracle, the majority of UK farmgate prices are almost certain to fall further and in some cases monthly from now until well into 2015. It’s a global trend and will continue until supply and demand get back in balance.
Milk buyers are not only refusing to take on new suppliers, many are desperate to offload as many existing suppliers as they can in a bid to balance orders to supplies.
The best advice is not to upset your milk purchaser if they are prepared to collect every litre of the milk you produce and can find a home for it, especially in the spring flush of 2015. Some will not find this message palatable but the reality is this situation is extremely serious and there is no end in sight. Time to buckle up and to a certain extent keep your head down and button it, unless you intend to cut production.
First Milk win super gold (21st November 2014)
A bit of good news for First Milk with its Haverfordwest extra mature cheddar taking super gold having been judged to be one of the world’s best cheeses at the World Cheese Awards.
25th Semex International Dairy Conference, Radisson Blu Hotel, Glasgow (21st November 2014)
Sunday 11 to Tuesday 13 January 2015
This is not a sales pitch on behalf of SEMEX but in complete contrast to the demand for milk, demand for places at The SEMEX Conference are record breaking, having passed the 200 milestone. If you want to go, move quickly.
Call Helen on 0800 86 8890 or email firstname.lastname@example.org
Sunday 11 January
From 19.30 Conference Gala Reception and Grand Buffet
Monday 12 January
Chairman, John Allen, Senior Partner, Kite Consulting
Session 1: 09.15 to 10.30
• Meurig Raymond, President, National Farmers Union • David Handley, Chairman, Farmers for Action
Session 2: 11.00 to 12.45
• Ake Hantoft, Chairman, Arla Foods amba • Neil Kennedy, Interim Chief Executive, Adams Foods • Danielle Pinnington, Managing Director, Shoppercentric
Session 3: 13.45 to 15.30
• Gwyn Jones, Chairman, RUMA (Responsible use of Medicines in Agriculture Alliance) and Chairman of DairyCo • Paul Larmer, Chief Executive, Semex Alliance • Dr Lewis James, Lecturer in Sports Nutrition, Loughborough University
18.30 25th Anniversary Civic Reception
19.00 Burns Supper
Tuesday 13 January
Includes visit by HRH The Princess Royal
09.00 Opening by conference chairman, John Allen
Session 4: 09.10 to 10.20
• Clay McCarty, Partner, McCarty Family Farms, Kansas, USA • Steve Miller from award-winning Shanael Holsteins, Worcester
Session 5: 10.45 to 12.15
• John Fetrow, Professor of Dairy Production Medicine at the University of Minnesota • Sally Wilson, Partner, Evolution Farm Vets
Session 6: 13.15 to 15.15
• Liz Philip, Principal, Askham Bryan College • David Yates, dairy farmer, Castle Douglas • David Swale, Partner, Joylan Farms, Lancashire • Conference close
UK milk production +625 million in 7 months (14th November 2014)
UK milk production continues to soar and for the seven months to the end of October stood at 8.5 billion litres (not adjusted for butterfat), which represents close to an 8% increase.
For October the increase was +6.2% compared to October 2013. The last time the UK produced 8.5 billion litres by the end of October was 11 years ago in 2003/04 when very painful over production super levies totalling £8 million were paid by dairy farmers on a smaller total quota.
Butterfat tests for October stand at 4.10% +2 points on October 2013 with a cumulative butterfat of 3.94%.
0.798ppl milk price cut for Dairy Crest formula contracts – from 1st December (14th November 2014)
The reduction applies to all three formulas resulting in standard litre prices falling below 30ppl.
The new standard litre prices are:
April 2014 core formula contract 29.783pl
Simplified formula & July/October 2014 core formula contract 29.593pl
These figures compare favourably with the current DC standard litre liquid price of 27.04ppl.
Russia – The world’s no. 3 dairy importers milk production to decline (14th November 2014)
Russia’s domestic milk production is forecast to drop in 2014 and 2015 by 2.5% according to a USDA report. Given the fact they are the third largest dairy importers in the world there will certainly be some pressure on Mr Putin & his advisors when a 2.5% drop in domestic production is married with his 12 month EU dairy import ban, which is not scheduled to end until August 2015.
Is this Britain’s cheapest milk? (14th November 2014)
2 litres for 69p (34.5ppl)
This is the price in The Manchester superstore, Florence Street, Bradford BD3 8EX and is milk supplied to them by Paynes Dairies.
Up until this point Costco, Gateshead wore the badge for the cheapest milk with 4 litres for £1.55 (38.7ppl) but this deal certainly top trumps Costco.
It looks like a farmer visit could be on the cards.
The superstore is a 2014 Manchester Food & Drink Award Best Newcomer nominee. They certainly won’t be getting a Christmas card from FFA or a bag of presents from Santa’s helpers in the names of Handley or Rowbotham.
GDT auction average -0.3% but the devil is in the detail (7th November 2014)
The gains were clocked up in the March 2015 and beyond delivery contracts for WMP with gains of 7.5% and 10.4%. Given the fact around 60% of the product sold on GDT is WMP it has a huge influence on the outcome of the auction average.
Key movers of interest:
Cheddar down a whopping 9.2% to average $2728 tonne (£1710)
Butter down 4.1% to average $2505 tonne (£1570)
SMP down 1.2% to average $2457 tonne (£1540)
WMP up 1.6% to average $2522 tonne (£1580)
If you insert these figures into the DairyCo AMPE calculator you come up with a sobering AMPE of only 17.4ppl. It’s a simplistic view but it’s a sobering indicator.
Dairy Crest half year results (7th November 2014)
Whilst the main news has been DC’s sale to Muller they simultaneously released their half year results to the end of September. The results were in line with city analysts expectations.
Profit before tax is down 95% from £19.7 million (2013) to only £900,000.
The liquids division lost £12 million (excluding a £7.5m property sale proceeds)
Net debt has risen by 9% from £192.3 million (2013) to £209.6 million. Note, this reflects the significant investment DC are making at Davidstow and its DLVP processing plant.
Dairy Council for Northern Ireland secure £400,000 (7th November 2014)
The Dairy Council for NI has secured £500,000 of EU funding out of a total available of just under £4 million.
The funds will be used to support the promotion of cheese in Northern Ireland as well as exports to Third Country markets. The promotions run for three years and are match funded so the total spend will be around £800,000.
The Northern Ireland Third Country export programme will target China, Japan, South East Asia and Middle East.
Other countries to benefit from the promotional funds include GB, France, Ireland and Denmark.
Dairy Crest’s Philippines call centre cops for some stick (7th November 2014)
According to an article in The Western Daily Press Dairy Crest’s doorstep customers have “been left with a sour taste in their mouths for having to call The Philippines to order milk from a depot a mere two miles away from their homes.”
Residents in Henry Road, Hempsted, Gloucester were far from happy at knowing they were calling The Philippines capital city, Manilla, to handle their daily pinta orders and payments.
UK Milk Production (7th November 2014)
UK milk production for October was up by 67.2 million litres compared to production in October 2013.
Cumulative production up the end of October 2014 is up by 625.1 million litres compared to the same period in 2013.
Cheap Milk Watch (7th November 2014)
Costco, Gateshead selling Lanchester Dairies milk – 4 litres for £1.55 = 38.7ppl - That’s cheap milk!!
FREE TO GOOD HOME (7th November 2014)
1 x Pure Light Sussex Bantam Cockerel
2014 hatch very well marked. We could meet someone along the main roads or motorway between Newton Stewart down to Penzance if it helps. Email email@example.com
Muller to buy Dairy Crest’s struggling liquids division & an extra 1.3 billion litres of milk (6th November 2014)
Dairy Crest has agreed to sell its liquids division and assets to Mullers for £80 million. The deal includes DC’s liquid milk, cream, Frijj & flavoured milk, bulk butter and powder businesses. In terms of plant it includes DC’s Foston, Hanworth, Chadwell Heath and Severnside operations plus 73 depots.
The deal could take most of 2015 before it is given the green light from both Dairy Crest’s shareholders and the relevant Competition Authorities.
What does it mean?
It’s difficult to find any negatives in the marriage, which appears to be a very neat solution, which benefits the whole dairy industry.
It leaves DC with a very tight supplying farmer milk pool, amounting to 400 farmers, around its Davidstow factory, plus its spreads factory at Kirby, packing at Frome and its Nuneaton distribution depot. DC will be able to focus on its Davidstow demineralized whey powder and infant formula project.
It gives Muller an extra 1.3 billion litres of milk supply to make a 3.0 billion litre milk pool (Arla is circa 3.4 billion litres)
It adds 700 farmers to total 1900 plus Muller suppliers or 16.5% of the 11,500 GB producers (Arla has 3,300)
In addition, the milk fields Muller will take on compliment their existing fields.
No one will argue that consolidation has to happen, particularly, in the struggling liquids sector. If approved it will mean the GB dairy industry has two well invested, scale and efficient liquid milk processors in Muller and Arla and that must be a plus. Let’s face facts DC had a liquids division turning over nearly £1 billion a year making close to zero profit. That is unsustainable.
Muller will consolidate and its inevitable some operations and depots will be closed as Muller strive to strip out and reduce cost.
What next? Well other than the two approvals required as mentioned above the question is when will GB dairy see the middle ground consolidation starter horn sounded. They simply cannot all survive and its looking like a disaster zone today as they all chop the legs from under each other.
Finally, maybe a profitable shrunk DC will attract a takeover bid for the rest of its business and prized Cathedral City cheese brand aswell as Country Life butter and Clover brands.
The share price jumped 55p within minutes of today’s announcement and city analysts were telling clients to buy DC shares “today”, especially with the cash flow injection the sale to Muller will bring. At 14:00 hours today (Thursday) it’s share price was up almost 60p at £4.85.
1.8ppl milk price cut for First Milk’s cheese supplying farmers – from 1st December (6th November 2014)
This takes producers standard litre price down to 24.00ppl (www.milkprices.com)
1.4ppl milk price cut for First Milk’s so-called liquid pool supplying members – from 1st December (6th November 2014)
This takes producers standard litre price down to 22.7ppl (www.milkprices.com)
1.21ppl milk price cut for Lactalis suppliers – from 1st December (6th November 2014)
0.75ppl milk price cut for Barbours cheese suppliers – from 1st December (6th November 2014)
This takes producers standard litre price down to 27.92ppl (www.milkprices.com)
0.6ppl milk price cut for Wyke Farm suppliers – from 1st December (6th November 2014)
This takes producers standard litre price down to 26.45ppl (www.milkprices.com)
3ppl milk price cut for Arla Directs – From 1st December (31st October 2014)
This comes on the back of the 3ppl cut for November 1st so 6ppl in a month and it seems inevitable more price cuts will take place in the coming months especially in the first four months of 2015.
This takes producer’s standard litre down to 24.8ppl.
The direct pool totals around 40 million litres which is a little over 1% of the total Arla UK milk intake.
Arla have a choice.
(1) Reflect the real value of the milk given the fact that its direct pool is badged as surplus to their retail requirements.
Or (2) Maintain a price closer to the current Arla members price of 28.47ppl effectively cross subsidising.
Option 2 would risk a back lash from Arlas member suppliers so option 1 is the road they have taken and it’s a steep rocky road.
The issue for those Arla directs who are unhappy with the price is that whilst they could leave in three months time finding an alternative milk purchaser who will pay them the same or more for their milk will be an almighty challenge especially next spring.
1.5ppl milk price cut for suppliers to Grahams Dairies – From November 1st (31st October 2014)
This drop is certainly not a code complaint notice to producers.
It takes producers standard litre price down to 27.5ppl (www.milkprices.com)
No change for Dairy Crest prices for December (31st October 2014)
It’s stand on for Dairy Crest suppliers for December.
No Change for Muller Wiseman non aligned suppliers for December (31st October 2014)
It’s stand on for Muller Wiseman non aligned suppliers for December at 27.1ppl.
First Milk December price announcement (31st October 2014)
As we go to press First Milk have announced embargoed price adjustments on both its cheese and liquid contracts from December 1st. Ian has an important local charity fund raising event to attend so respecting the embargo you will hear more on the two price reductions next week.
GDT Auction next Thursday (31st October 2014)
The worlds dairy traders will be eagerly awaiting the results of next weeks GDT auction.
Forecast volumes of SMP and WMP to be auctioned in the next three auctions through to December have been reduced by Fonterra.
Fingers crossed less = more and the + 1.4% all products average price recorded at the last auction continues to rise.
Large numbers picket Irish owned Adams Foods (31st October 2014)
FFA paid a visit with 400 supporters to Adams Foods Leek which is owned by the Irish Dairy Board. The main gripe was the fact Adams are importing cheap cheese from its mother land which is going into value packs for caterers and retailers often irritatingly claiming it’s made from British and Irish milk.
Ian has had confirmation that Irish cheese is been touted at £2150/ tonne.
The outlook for Dairy is bleak (31st October 2014)
October AMPE stands at 21.4ppl down 17.5ppl in only 9 months and MCVE at 26.3ppl down 11.6ppl the same period. What are some of the key factors affecting ex-farm gate milk price forecasts.
i. New Zealand output to September 1st is up 12.5%
ii. The Russian import ban means 3% of EU milk output has to find a new home.
iii. UK milk production + 8.1% and EU 28 milk production + 5% to the 1st September.
iv. Chinas WMP and SMP imports have plummeted.
Its September SMP imports are down 45% (13,315tonnes) compared to those recorded in September 2013.
Its September WMP imports are down 37% (16,207 tonnes) compared to those recorded in September 2013.
The worlds Dairy Industry certainly needs China to get its shopping trolley out again and to return to the market.
Until then the outlook is bleak unless something happens to trigger a dramatic cut in world milk output.
Lake District Dairy Co Secure contract with Brakes (31st October 2014)
The Lake District Dairy Co, owned by First Milk, has announced a deal for its 2kg catering packs of Quark will be sold to Brakes catering suppliers who will deliver the products nationally to hotels, restaurants and catering outlets etc. This is a significant win for the commercial team at First Milk.
Dale Farm (United Dairy Farmers Co-op) secures cheese export business to Japan (31st October 2014)
Dale Farms stand at this weeks Paris show (SIAL) was a media and agricultural top brass magnet following their exciting announcement of a “significant contract” to sell Dale Farm cheddar into Japan from December.
The deal is with one of Japans leading food manufacturing companies Hoko Co Ltd.
Dale Farm recently completed a £50 million processing investment the result of which is its ability to produce 1,000 tonnes of quality cheddar each week.
Dale Farms milk comes from its 1,500 co-operative members.
Dairy Crest recalls two batches of milk from Foston (31st October 2014)
According to the Food Standards Agency (FSA) Dairy Crest have withdrawn two batches of milk from Morrisons and Budgens as a precaution after the discovery of cleaning fluid contamination. Both batches originated from Dairy Crests Foston, Derbyshire processing plant.
Story taken direct from Dairy Industry Newsletter (31st October 2014)
Dairy Crest's half-year results, due to be published on Thursday next week (November 6) will show zero pre-tax profit growth, according to a report in today's Investors Chronicle. The report says DC's dairies, which have produced tiny profits in recent years, will actually produce losses in the period, despite an £8m contribution from property profits. Things might improve in the second half but analysts aren't expecting profit growth for the full-year either. Rumours of contract renegotiations with Marks & Spencer and Wm Morrison are described as "unhelpful".
Phenomenal story as organic chocolate milk production increases by 4000% in October (31st October 2014)
Its an incredible story but in early October New Zealand dairy Lewis Road Creamery launched a Whittakers organic chocolate flavoured milk producing 1,000 litres a week.
Today the creamery is on double shifts and sweating its machinery & staff to turn out 40,000 litres a week.
The demand has been phenomenal with some shops limiting customers to two bottles each and one claiming it has had to put a security guard by the shelves to police purchasers.
Retail prices are 300ml bottles £1.80 and 750ml bottles £3.10.
Regrettably with the success has already come copy cat counterfeit product.
2ppl milk price cut for suppliers to The Wensleydale Creamery - from 1st November (24th October 2014)
This takes producers standard litre price down to 28ppl (www.milkprices.com)
No change to Arla’s November milk price (24th October 2014)
One swallow does not make a summer but the news that Arla has decided to hold its October milk price for its 13,500 owners through November is good news. Note, the forecast 13th payment has reduced to 0.57ppl (-0.08ppl). This takes Arla’s standard litre price down to 28.47ppl (www.milkprices.com) before the 0.45ppl AMCO fat tax.
However, you should not read too much into the decision to hold prices because regrettably the long term fundamentals have not changed. There is no sign of recovery in milk prices and further price falls seem inevitable.
What to do with DairyCo’s £600,000 windfall (24th October 2014)
DairyCo are one of the few businesses to benefit from the massive increase in GB production and have comfortably netted an additional £600,000 of revenue in the past 12 months alone, and its growing daily. It’s money they didn’t anticipate, didn’t budget for, and consequently shouldn’t have earmarked for anything.
But what to use this windfall on? Simple, in the opinion of Ian, David Handley and an increasing number of farmers. They need to use it, together with any match funding they can attract, to help farmers adapt and plan in this new volatile world, and to increase the promotion and defence of milk products to help them on the domestic market.
DairyCo desperately need an intravenous injection to improve their credibility with levy paying farmers who are in uncharted waters and facing a crisis. They have a new chairman at a time when many farmers are increasingly questioning what they achieve with the levy money.
Let’s hope DairyCo step forward and use the windfall wisely in areas like providing better quality information, analysis and signposting to dairy farmers and to promote dairy against a relentless attack of the anti dairy brigade.
Arla call on its 3,000 UK members to promote British dairy products (24th October 2014)
Arla are calling on its 3,000 UK farmer owners to help promote their own dairy products to British shoppers.
The campaign will call for shoppers to put British dairy products in their shopping baskets like Anchor, Cravendale and Lurpak under the banner of “Support Our Farmers”.
In one of the largest consumer advertising and PR campaigns the dairy industry has seen for years, perhaps ever, and which marks a major strategic change for the company to link farmers and their brands with consumers, the campaign is being backed up with advertisements in the national press, together with leaflets and social media. The face of the campaign is the industry’s new pin-up Pirelli calendar girl Barbara Hughes.
Let’s be honest if one in four British dairy farmers can’t back and promote the campaign and their own products it’s a poor show. Who better to promote the brands than the farmers who own them, and who get the profit from the sales.
Arla’s Support our Farmers initiative in numbers (24th October 2014)
One Goddess fronting up the initiative (Barbara Hughes).
One twitter account @arlafoodsuk #supportarlafarmers.
Five brands being highlighted. Cravendale, Lactofree, Anchor, Castello, Lurpak.
Twenty newspaper insertions in National daily and Sunday papers.
Hundred (+) major retailers, discounters, food service businesses being spoken to about the merits of trading with a farmer-owned business.
Three thousand UK farmer owners set to benefit.
Four thousands Arla employees mobilised to support the campaign.
Thousands of leaflets and fliers printed and distributed.
Millions of consumers being communicated to through PR and newspaper adverts.
Billions of words spoken by farming leaders over the years calling for initiatives to better connect farmers with consumers, and hundreds of articles and opinion pieces written by the likes of The Farmers Weekly reiterating the need for those initiatives.
Six lines of copy (yes, six lines) devoted by the self same Farmers Weekly when a scheme that does EXACTLY what it has been rabbiting on for years about, actually does come along.
One word to sum up our leading agricultural paper: Shameful.
European cheese is filtering into Russia (24th October 2014)
Evidence has emerged that EU cheese is entering Russia through the back door in what is effectively a grey market.
Whilst Russia banned the direct importation of a number of EU dairy products, notably cheese, it appears to be turning a blind eye to the re-export of EU cheese which will help reduce the downward spiral.
England V Lithuania – Euro 2016 Qualifier (24th October 2014)
Venue: Wembley Date: Friday 27th March 2015 Time: 19:45 hours
Ian has priority booking for up to 8 tickets. If you are interested email firstname.lastname@example.org for more details.
READER OFFER – Free pinpointpal GPS tracker (24th October 2014)
Some new technology we just instantly know is applicable for farming.
Ian Potter Associates has partnered with a pinpointpal to bring you a fantastic reader offer in this weeks newsletter.
Pinpointpal is a British designed and made GPS vehicle tracker. Easily installed into your chosen vehicle or piece of equipment, pinpointpal then connects to a free downloadable app on any apple or android device, or connect via the internet, to give you real time location information every minute of everyday. To learn more simply visit www.pinpointpal.com
To that end we want to find farmers to test out this new generation of very small, very cost effective type of vehicle tracker.
Why should you consider fitting a tracking device? Well, the latest NFU Mutual Rural Crime Survey found that rural theft now stands at £44.5m (2013) up 5.2% on the previous year. Thieves are targeting both high value tractors, but also lower value equipment that are not fitted with high tech systems.
Quad bikes and ATVs are increasingly being targeted with the cost of thefts up a staggering 14% in 2013.
To help combat this, one of the many free services included with pinpointpal are free movement alerts, sending notification direct to you if your vehicle has been moved outside of its own personal ‘defined limits beyond which an alert will be generated’ boundaries you set. If this is because it has been stolen then simply keep the police informed of its location and recovery can be made quickly before any harm is done.
This is a fantastic device (Ian has got one) and clearly the major benefits of the device are for normal theft tracking and health and safety in remote locations. And the good news is that we have 10 units to give away to 10 lucky readers. To take advantage of this great offer just mail us at Lydia@ipaquotas.co.uk and tell us what application you plan to use it for and why you would benefit from pinpointpal. The unit is totally free, normal price £250 inc. vat and includes 2 years free monitoring. There are no hidden cost extras!
2.29ppl milk price drop for Tesco cheese suppliers – from 1st November (17th October 2014)
This takes producers standard litre price down to 33.36ppl (www.milkprices.com)
0.843ppl milk price drop for Dairy Crest Formula Contracted producers (17th October 2014)
This takes producers standard litre price down to 30.48ppl for the liquid core formula contract and 30.391ppl for the simplified and core formula contracts for those who signed in July/October and 30.581ppl for the April Core formula signees. (www.milkprices.com).
It leaves the DC formula price a healthy 3.23ppl higher than the current DC standard liquid price.
0.8ppl milk price drop for Waitrose suppliers – from 1st November (17th October 2014)
This takes producers standard litre price down to 34.1ppl (www.milkprices.com)
World auction average up 1.4% - but don’t put the bunting up yet (17th October 2014)
It was certainly an encouraging sign to see this week’s GDT auction price average 1.4% more than it did two weeks ago. Key details of the movers were as follows:
WMP up 3.1% to average $2503 / tonne
Butter up 3.9% to average $2614 / tonne
Cheddar down 1% to average $3007 / tonne
SMP down 3.6% to average $2462 / tonne
Westbury SMP down 4.7% to average $2415 / tonne
The last time the average SMP price was at this level was in early June 2011 and at the current level of $2462 it’s close to 50% of its value recorded 10 months ago in early January.
The slight upward movement in this week’s average GDT price is, fingers crossed, a small glimmer of light in an otherwise very long and dark tunnel dairy farmers are stuck in.
EU Commission report predicts a 3.7% milk production increase (17th October 2014)
The Commission’s latest dairy report confirms that to the end of July 2014 the twelve month increase in production from 27 member states amounts to +5.8%.
The report also states that the average time lag between low commodity prices translating to farm gate milk prices is between 3 to 6 months.
By November EU milk production is expected to dip below that of November 2013 and during 2015 is expected to increase by a more moderate 1.6%.
The cumulative 2014 milk production is predicted to be +3.7% on that recorded in 2013.
Big turnout for FFA protests (17th October 2014)
Co-op Andover, Hampshire – 300 farmers plus 6 tractors
Dairy Crest, Foston, Derbyshire – 200 farmers plus vehicles.
Iceland Junction 21 M6 (Thelwell) - Towards 150 farmers. No doubt numbers were boosted following claims made earlier this week by Iceland that they have “The cheapest milk in the UK” offering 4 pints for 89p!!!!!!
Penrith dairy farmers meeting – 560 attended
TV crews have struggled to get up and down the country to keep up with the swelling numbers of meetings.
Lactalis rub salt in wounds of struggling producers (17th October 2014)
Below is an extract from an article written by Douglas MacSkimming of The Scottish Farmer. One question is, does the Voluntary Code offer any help?
A GROUP of 20 milk producers supplying cheese manufacturer Lactalis at Stranraer have been rocked by the news that their milk cheque is to be cut by three pence per litre to cover the cost of collection.
The producers – all from over the Border in Cumbria – were given the shock news at the beginning of this week.
Wigtownshire farmer Rory Christie, chairman of the Milk Supply Association which supplies Lactalis and the Caledionian Cheese Company, told The Scottish Farmer: “I am in critical discussions with Lactalis over this matter. This is not the way producers should be treated.
“Some 26 Cumbrian producers have been supplying Lactalis on a year’s contract which came to an end on October 1,” he explained. “Five were lucky to leave and find another buyer, but the remainder have been told that, while their milk will still be collected until they find a new buyer, they will be charged 3p. This is not a good situation.”
The Dairy Council hits out at anti-dairy extremists (17th October 2014)
This week the Daily Express headlined an article “Is milk giving you concern? Seven reasons to ditch dairy.” It follows hot on the heels of a similar extremist article, which appeared in the Daily Mail.
Fortunately, the Dairy Council stepped forward onto the front line to defend the image of British dairy products and published a hard hitting industry response to the article with well research facts. Well done.
Financial support is on the radar for dairy farmers in Finland, Estonia, Lithuania and Latvia (17th October 2014)
The EU Commissioner has indicated that targeted financial support could be made available to support dairy farmers in the above countries who are judged to be hardest hit by the Russian embargo.
In terms of the percentage of their dairy output exported to Russia pre-7th August 2014 the numbers are:
Arla explores new ways to allow dairy to be included in food aid programmes (17th October 2014)
Arla are calling for industry support for dairy ingredients to be included as part of emergency food programmes. Dairy ingredients are not included at present due to cost concerns, however, Arla are hoping to demonstrate from its research that dairy ingredients are affordable and cost effective due to how nutritionally packed
3ppl milk price drop for Arla Directs suppliers from 1st November 2014 (10th October 2014)
This takes producers standard litre price down to 27.8ppl (www.milkprices.com)
2.4ppl milk price drop for Paynes Dairies suppliers from 1st October 2014 (10th October 2014)
This takes producers standard litre price down to 26.6ppl (www.milkprices.com)
2.25ppl milk price drop for Meadow Foods suppliers from 1st November 2014 (10th October 2014)
This takes producers standard litre price down to 25.85ppl (www.milkprices.com)
1.75ppl milk price drop for Yew Tree Dairy (Woodcocks) from 1st November 2014 (10th October 2014)
This takes producers standard litre price down to 27.5ppl (www.milkprices.com)
1.65ppl milk price drop for Helers Cheese suppliers from 1st November 2014 (10th October 2014)
This takes producers standard litre price down to 27.44ppl (www.milkprices.com)
1.5ppl milk price drop for Belton Cheese suppliers from 1st November 2014 (10th October 2014)
This takes producers standard litre price down to 27.15ppl (www.milkprices.com)
1.5ppl milk price drop for Glanbia Cheese producers from 1st November 2014 (10th October 2014)
This takes producers standard litre price down to 26.9ppl (www.milkprices.com)
Gwyn Jones takes on the challenge of DairyCo Chairman (10th October 2014)
It is six months since Tim Bennett finished as Chairman of DairyCo and at last the government has announced the appointment of Gwyn Jones as replacement Chairman.
Peter Kendall will no doubt be pleased to have one of his NFU’s dream team whom he can trust working with him again.
Gwyn has certainly taken on a big job because DairyCo takes £6.5 million of farmers’ money and the grass roots current feedback is that they are considered poor value for money and have gone into ostrich mode and have buried their heads in the sand when it comes to tackling difficult issues, particularly posting its levy paying farmers as to where milk prices are heading.
NFU claims are jaw dropping (10th October 2014)
Until this week the NFU have been publically invisible in connection with the current dairy industry milk pricing crisis. On Monday their communications and spin department welded into action as the so-called big gun was quickly wheeled out.
On the NFU’s website President Meurig Raymond opened up a piece on milk prices with what was an astonishing claim.
“Today the issue of milk prices has made it onto the BBC after press briefing from the NFU.”
Sorry, but I think we all know the issue of milk prices made it onto the BBC following FFA’s comments, dialogue, protest announcements and media briefings at the weekend and during the previous week.
On Tuesday a second NFU press release stated when referring to the 2012 crisis “The NFU led the way with SOS dairy holding peaceful protests, and taking the campaign to retailers and processors. We engaged directly with the public and their support continues to stand us in good stead today.”
This second statement smacks of breath taking arrogance and a re-writing of history and simply cannot go unchallenged.
David Handley and FFA led SOS dairy where they galvanised unprecedented public support. FFA even had the SOS song written by one of its supporters The Dobro Doctor.
Granted the NFU did wheel out its top gun Peter Kendall who stood shoulder to shoulder with David and whilst the two didn’t always agree they did work well with each other for the benefit of the industry for a while. In fact, it was a gritty Northern branch of FFA from Yorkshire who kick started the protests.
For the NFU’s spin doctors to make such a claim is disrespectful to FFA and every person who stood on the picket lines in 2012.
Farmers look to David Handley & FFA to take the lead (10th October 2014)
FFA has been quick to come out to face and help dairy farmers who are witnessing a serious winter of milk price meltdown and despair.
Monday saw Muller take on FFA head to head with the release of an antagonistic press release headed “Militants asked to stop and think before damaging the industry”
Muller pre-judged the protest as one threatening illegal blockades and referred to FFA as a militant group like some sort of radical fundamentalists.
One commentator drew the comparison between Kerrs and his press release being like as new willy-waving pupil going to a new school and walking into the playground and smacking the biggest older lad in the month in front of 500 of his mates and expecting to get away with it.
Regardless of the press release there were huge turnouts of 1200 farmers for this week’s protests at Market Drayton (Monday) and Bridgwater (Wednesday). On Monday the protest was at the Muller factory whilst on Wednesday it was the turn of Morrisons whose current liquid milk tendering and lack of commitment to UK dairying is quickly attracting attention and making them dairy farming’s number 1 enemy and a prime FFA target. If that translates to consumers voting with their feet Morrisons boss Dalton Phillips will be very lonely.
The Voluntary Code Review (10th October 2014)
It’s taken almost 8 months for The Rt Hon Alex Fergusson MSP to review and report on the Voluntary Code of Best Practice the results of which were released this week.
The unfortunate timing of the codes review means it is of less interest to farmers that it was six months ago when responses and submissions were invited. Not that it was ever a must read.
The big issue now is collapsing milk prices not notice periods or the ability to sell milk to two processors. For some finding one processor willing to accept milk is a real issue with some farmers having to accept under 18ppl at farm gate level.
The staunch defenders of the code will continue to refer to it whenever they can but with co-op’s operating as they do it’s hard to see how the review will help gain traction and interest. The reality is you could probably count the number of people seriously interested in the code on one hand.
UK Milk Production is still strong (10th October 2014)
UK milk production for September was up 7.4% (+79 million litres) compared to production in September 2013.
Cumulative production for the first 6 months of the quota year is up 8% (+552 million litres) to 7.4 million.
Muller suffers £55 million loss (10th October 2014)
This was the headline in this week’s Shropshire Star.
A large part of the loss is attributed to the integration of all Mullers UK businesses which were brought into one entity.
Muller maintains the underlying profit of the business compares favourably to the previous year, however, no numbers or meat on the bones were volunteered.
How do Handley’s find the time? (10th October 2014)
Whilst David Handley is the leader and ambassador for FFA, like most people behind every good man is a good woman kicking him up the arse. Not only does Marilyn run the farm in his absence she is also very active behind the scenes with FFA as well as putting up with David!
This is the outcome of her recent complaint to the Press Complaints Commission, which as been published on their website this week and is a credit to her:
Mrs Marilyn Handley
Clauses Noted: 1
Publication: Daily Mail
Mrs Marilyn Handley complained to the Press Complaints Commission that the newspaper had breached Clause 1 (Accuracy) of the Editors' Code of Practice in an article containing advice on how to stem constant tiredness. The complainant said that cows are not injected with hormones to keep them producing milk; that they are not treated with antibiotics which can pass into milk consumed by humans; and that it was inaccurate to say that milk is allowed to have a certain number of red and white pus cells in it.
The complaint was resolved when the PCC negotiated the removal of the article from the newspaper's website and the publication of the following correction in the print newspaper:
"A book serialisation of The Tiredness Cure by Dr Sohere Roked on September 1 said that hormones and antibiotics injected into dairy cattle can pass into retail milk, that there is a legal limit for the number of pus cells it may contain, and that most flour is ‘bleached'. We are happy to clarify that it is illegal to use hormones to stimulate milk production in the UK, that testing prevents antibiotics from passing into retail milk, and that the limit relates to all somatic cells. Flour is no longer bleached in the UK."
Date Published: 06/10/2014
Independent Press Standards Organisation
c/o Halton House
London EC1N 2JD
The Daily Mail earlier printed:
2.25ppl milk price drop for South Caernarfon Creameries suppliers – from 1st November (3rd October 2014)
This takes producers standard litre price down to 26.76ppl (www.milkprices.com).
2ppl milk price drop for suppliers to The Fresh Milk Company (Lactalis) – from 1st November (3rd October 2014)
This takes producers standard litre price down to 28.45ppl (www.milkprices.com).
1.9ppl milk price drop for Muller Wiseman suppliers – from 1st November (3rd October 2014)
This takes producers standard litre price down to 27.1ppl (www.milkprices.com). The total cut in recent months amounts to 6.5ppl.
1.75ppl milk price drop for Barbers suppliers – from 1st November (3rd October 2014)
This takes producers standard litre price down to 28.85ppl.
1.5ppl milk price drop for Wyke Farms suppliers – from 1st November (3rd October 2014)
This takes producers standard litre price down to 27.05ppl (www.milkprices.com).
1.5ppl milk price drop for Blackmore Vale Farm suppliers – from 1st October (immediate) (3rd October 2014)
This takes producers standard litre price down to 29.75ppl (www.milkprices.com).
1.3ppl milk price drop for all Dairy Crest producers – from 1st November (3rd October 2014)
This takes producers standard litre price for DC cheese (Davidstow) contracted producers down to 29.04ppl and for its liquid contracted producers down to 27.04ppl (www.milkprices.com). For DC’s organic milk suppliers the price remains unchanged at 39.68ppl.
1ppl milk price drop for First Milk liquid contracted members – from 1st November (3rd October 2014)
This takes producers standard litre price down to 24.1ppl (www.milkprices.com). Members have seen 8.4ppl (26%) wiped of their milk price in only 6 months.
0.3ppl milk price drop for First Milk Cheese contracted members – from 1st November (3rd October 2014)
This takes producers standard litre price down to 25.8ppl (www.milkprices.com).
GDT prices fall a further 7.3% (3rd October 2014)
This weeks GDT results could only be described as a disaster as an average 7.3% was wiped off prices recorded only two weeks ago.
Key movers were as follows:
WMP down 10% to average US $2443/tonne
Butter down 6.6% to average US $2514/tonne
Cheddar down 1.2% to average US $3028/tonne
SMP down 2.7% to average US $2540/tonne
Westbury SMP down 1.2% to average US $2535/tonne
One of the concerns behind the numbers is the fact that in the case of WMP the biggest drop of 10.7% occurred for the January delivery powder.
Similarly the biggest drop in SMP prices came for April 2015 delivery, which fell 5.8%. Clearly the long term view is not good based on these trades.
GDT auction prices for WMP have more than halved in the space of 8 months (-52%) whilst average SMP prices are close behind having dropped 48% in the past 9 months.
What do these numbers mean? (3rd October 2014)
If you take an EU butter price of £2300/tonne and the average Westbury GDT price of £1563/tonne the resulting AMPE is 21.3ppl.
Note, there are some who are incorrectly inserting a world butter price of £1550/tonne, as per the GDT auction results, which delivers an AMPE of only 17.6ppl. This is inaccurate and ignores EU import taxes. It does, however, give a pointer towards ex-farm gate milk price.
SFP exchange rate for 2014 payments (3rd October 2014)
The exchange rate will be 1 Euro = 77.73p. Another blow for dairy farmers as the rate paid drops by 5.875p (7.0%) compared to last years.
Previous rates have been:
1.7ppl milk price drop for United Dairy Farmers members - from 1st August (26th September 2014)
This takes producers standard litre price down to 27.24ppl (www.milkprices.com)
1.75ppl milk price drop for Grahams Dairies suppliers - from October 1st (26th September 2014)
This takes producers standard litre price down to 29ppl (www.milkprices.com)
Dairy Crest (DC) to close two more factories (26th September 2014)
DC are in consultation with 260 employees at its doorstep glass bottling plant at Hanworth, London and its cream potting plant in Chard, Somerset, both of which will close by 2016.
The anticipated closure costs amount to £15million.
At the same time, DC informed the city that its 6 monthly financials to the end of September are in line with expectations, however, it also confirmed that despite its dairies (liquid) operation has once again made a loss despite a sizeable increase in property sale profits.
EU close Private Storage Aid (PSA) for cheese after less than 3 weeks (26th September 2014)
The EU has closed the doors on further PSA for cheese due to an unexpected tonnage coming from areas of Italy who do not traditionally export to Russia. The door closing was done to give the EU some thinking time in order to avoid the possibility of hitting the 155,000 tonne limit quickly, however, there are no immediate plans to re-open PSA for cheese.
In the 13 days between the 8th and 21st September a staggering 100,000 tonnes of cheese were offered into the PSA scheme. Of this, the Italians accounted for 84,000 tonnes yet their total exports of cheese to Russia in 2013 totalled 7,000 tonnes.
1.67ppl (2 Euro Cents) price drop for Arla Foods AMBA members (25th September 2014)
Arla have announced one of their biggest producer price drops for their 13,000 members, of 2 Euro Cents from 29th September. The total GB adjustment equates to 1.67ppl, including a quarterly currency exchange rate adjustment. At the same time the butterfat reconciliation (AKA the fat tax) has been reduced from 0.6ppl to 0.45ppl from 1st October.
In addition Arla’s forecast end of year (31st March) 13th payment has been adjusted down from 0.81ppl to 0.65ppl (-0.16ppl) and whilst this is constantly under review producers should plan for this to either hold or be adjusted down further by the end of the year.
Arla’s problem appears to be the same as that of all other Dairy Companies - their European milk intake is up 7% and turnover/revenue is declining due to the dramatic impact from falling global dairy commodity prices in particular those driven by China and more recently the Russian import ban.
There are numerous questions which spring to mind in relation to future milk price drops, four of which are: (25th September 2014)
32ppl Tesco milk price until Spring 2015 (24th September 2014)
Tesco have announced the TSDG price for the next six month period to 1st May 2015, commencing 1st November 2014, which will be a healthy 32.01ppl, including the 0.5ppl Promar supplement or 31.51ppl excluding this element.
All of Tesco’s liquid processors are paying prices well below the Tesco cost tracker, hence the new price is a cost of production price.
Whilst the new price represents a reduction to the current one few, if any, TSDG members will blink realising that Tesco had good grounds for reducing the price they pay for liquid milk several months ago. As it is Tesco have cushioned any blow during those months and have actually held the price they pay for the past 7 months.
The next review will be for prices from 1st May 2015.
GDT auction average unchanged (19th September 2014)
Tuesday’s Global Dairy Trade auction produced an average all products index identical to that recorded two weeks ago.
Within the average were some notable movements and scary averages:
Cheddar Cheese down 6.5% to average $3077 tonne (£1885)
BMP down 6.9% to average $3140 tonne (£1925)
Butter down 2.5% to average $2698 tonne (£1641)
WMP up 0.6% to average $2692 tonne (£1650)
SMP up 0.9% to average $2619 tonne (£1605)
Westbury/Arla SMP down 6.2% to average $2565/tonne or £1570 …. Ouch!!
Spot Milk Price Watch (19th September 2014)
Current prices vary on a daily basis but seem to be around 27ppl +/- 2ppl. A cold snap of weather would do a lot to boost liquid milk sales and spot milk sales.
2.27ppl milk price drop for Muller Wiseman formula contracted suppliers – from 1st October (19th September 2014)
This takes producers standard litre price down to 29.14ppl. Muller Wiseman’s total 2014 formula price cut amounts to 5.41ppl.
0.5ppl (0.498ppl) milk price drop for Dairy Crest Formula contracted suppliers – from 1st October (19th September 2014)
This takes producers standard litre price down to 31.43ppl (liquid formula) and 31.23ppl (simplified liquid formula), which is a tasty 3.2ppl above the current standard Dairy Crest liquid standard litre price. Dairy Crest’s total 2014 formula price cut amounts to 1.3ppl.
0.62ppl milk price drop for Sainsburys aligned suppliers – from 1st October (19th September 2014)
This is a cost of production adjustment and takes producers standard litre price down to a respectable and for some an envious:
32.41ppl – Muller Wiseman
32.29ppl – Arla
32.35ppl – Dairy Crest
Sainsburys total 2014 price cut is therefore 1.74ppl
All standard litre prices quoted are those calculated by www.milkprices.com
Milkprices.com commented as follows:
“If the current level of production cost in the SDDG milkpool is supposedly 32.41ppl, (a First Milk producer) having to run a business moving forward on a milk price of 25.1ppl and 26.1ppl depending on whether supplying Liquid or Manufacturing pools respectively, is to put it mildly, a hymulayan task. With a respective difference of 7.3ppl and 6.3ppl for our standard 1mltr/yr supplier, this accounts to annualised differences of £73k and £63k compared with our SDDG supplier—serious sums of money when one considers the prospect that total annual milk revenues from this size of businesses is around £250k to £260k based on the latest First Milk prices.”
The only issue here is that our contention is that First Milk’s liquid contract is not what it states on the label.
Big turn out at FFA dairy meetings (19th September 2014)
FFA have held two meetings one in Frome and last night a second in Market Drayton. Producers attending both meetings and representing in excess of 1 billion litres have pledged their support to FFA and last night’s crowd of 500 plus took Chairman David Handley by surprise. There was clear evidence of real pain and hardship from the audience. Several reports confirm that NFU Dairy Chairman Rob Harrison came under attack from the audience with reference to his presentation and comments at the Telford Dairy Day Show only 24 hours earlier.
For the moment, FFA and Handley are keeping their powder dry until at least the 1st October by which time Tesco’s cost of production will be public and any further price cuts for 1st November will be known.
In connection with any additional price cuts Ian is firmly putting his money on the fact some liquid processors will struggle to explain and justify why they need to cut further and that that will be the overnight trigger for Handley & FFA to step onto the front line with their troops to try and change the game plan.
DAIRY CRISIS MEETING - CARMARTHEN LIVESTOCK MARKET - THURSDAY 25 SEPTEMBER 2014 - 7.30pm for 8pm
FFA will welcome members and non members to another Dairy Crisis Meeting at Carmarthen Livestock Market on Thursday 25 September 2014. 7.30pm for 8.00 pm when the speaker will again be David Handley.
Bring along your neighbours and friends, he says, to make up a car load and share your views on the way forward in the current turmoil within the industry. The restaurant will be open to serve light refreshments.
Arla Announcements (19th September 2014)
Arla have announced two international investments.
The first is a new factory in Denmark, which will triple Arla’s capacity to produce whey protein hydrolysates, which is a key ingredient in sports, nutrition as well as infant allergy products. It should be up and running in around two years and will cost an estimated £32.5 million.
The second announcement is Arla’s bid to acquire an Egyptian firm Arab Dairy Products as Arla seeks to establish itself as one of the big 6 dairy players in Egypt.
Next Week (19th September 2014)
It is anticipated that Tesco will announce its half yearly cost of production number crunching and the TSDG milk price from 1st November.
1.9ppl milk price drop for Meadow Foods suppliers – from 1st October (5th September 2014)
This takes producers standard litre price to 28.1ppl (www.milkprices.com)
1.8ppl milk price drop for Glanbia Cheese – from 1st October
This takes producers standard litre price to 28.34ppl on the constituent contract (www.milkprices.com)
This takes producers standard litre price to 28.40ppl on the base contract (www.milkprices.com)
1.5ppl milk price drop for Crediton Dairy suppliers – from 1st October (5th September 2014)
This takes producers standard litre price to 30.86ppl (www.milkprices.com)
1.0ppl milk price drop for Paynes Dairies – with immediate effect from 1st September (5th September 2014)
This takes producers standard litre price to 29.00ppl (www.milkprices.com)
1.0ppl milk price drop for South Caernarfon Creameries –from 1st October (5th September 2014)
This takes producers standard litre price to 29.01ppl (www.milkprices.com)
The Russian EU dairy product import ban (5th September 2014)
The rumours of a possible truce between Russian and the Ukraine desperately need to be converted into reality asap following which pressure should be applied to re-open the export trade from the EU to Russian in a bid to stabilise EU dairy product prices. As it is Russia is attempting to replace EU product from other sources and its struggling.
One of the volume sources for product is Argentina, however, they have thrown a spanner in the works with a limit on exports of dairy products with the introduction of high minimum export prices.
For example, SMP is trading at around $2700/tonne (GDT auction average was only $2600/tonne) and Argentina’s minimum export price is $4000/tonne.
According to Greenmark Dairy Ingredients so far as the EU is concerned to put the Russian ban into perspective during 2013 Russia’s total EU dairy imports was equivalent to 2.2 million tonnes of milk.
Bringing this back to a butter and SMP equivalent the 2.2 million tonnes represents 268,000 tonnes of SMP and 70,000 tonnes of butter.
The bad news continues with GDT average down another 6% (2nd September 2014)
Today’s GDT auction results hold no cheer and not even a glimmer of light for dairy farmers as the average price weighed in at $2787 down 6% on that achieved two weeks ago with all prices recording negative movements. The last time the average was at this level was in July 2012.
Key prices of interest:
SMP down 9.5% to average $2600/tonne – a drop of 45% in only 7 months
BMP down 12.9% to average $3174/tonne – a drop of 34% in only 7 months
Cheddar down 4.9% to average $3275/tonne – a drop of 34% in only 7 months
Butter down 5.6% to average $2753/tonne – a drop of 42% in only 7 months
WMP down 4.3% to average $2673/tonne – a drop of 47% in only 7 months
Arla Westbury SMP down 8.7% to average $2735/tonne down 31% in less than 5 months
To put this into context at current exchange rates if you insert today’s GDT average for butter (£1657/tonne) and the Westbury SMP GDT average (£1646/tonne) into the AMPE formula you get a figure of under 19ppl - Ouch
3ppl milk price cut for all First Milk members – from 1st October (1st September 2014)
It was black Monday for First Milk members most of whom were no doubt shell shocked to learn of this latest 3ppl across the board price cut. First Milk have not dressed up the background to the latest cut simply to state it gives them a milk buying price in line with current market returns.
In terms of its milk buying competitors the gap between First milk and others is certainly widening but they have to do what they have to do in an attempt to balance the books. One thing is certain some of their members have no alternative but to either buckle up and accept the cut or exit the industry because changing milk buyers is not an option.
So in the space of 5 months First Milk’s liquid contracted producers have seen 7.4ppl knocked of their milk price equivalent to an eye watering 30% drop to give a 1st October standard litre price of only 25.1ppl.
For its cheese contracted producers it’s been a case of five consecutive cuts totalling 6.4ppl to produce a new 1st October standard litre price of 26.1ppl.
It’s for First Milk members to ask questions and comment but no doubt their initial reaction will be the same as Ian’s as the thud of his jaw hitting the floor could be heard.
This is starting to look like an industry plunging into crisis at speed and whilst only one month ago in this column Ian stated that some producers would be on 25p before Xmas he never imagined it would be by 1st October.
There are now suggestions that some could receive a milk price below 22p by January and even 20ppl has been mentioned. It’s grim and as one recognised EU guru commented to Ian today “It’s going to be a blood bath with casualties.”
1.5ppl milk price reduction for suppliers to Yew Tree Dairy (Woodcocks) – from 1st October (1st September 2014)
This takes producers standard litre price to 29.25ppl (www.milkprices.com)
1.75ppl milk price reduction for suppliers to Dairy Crest – from 1st October
This produces the following standard litre prices:
1.5ppl milk price drop for Wyke Farms suppliers - from 1st October (1st September 2014)
1.5ppl milk price drop for Belton Cheese suppliers - from 1st October (1st September 2014)
This takes producers standard litre price to 28.65ppl (www.milkprices.com)
1.8ppl milk price reduction for Muller Wiseman non aligned farmers –from 1st October (29th August 2014)
This takes producers standard litre price down to 29ppl (www.milkprices.com)
1.75ppl milk price reduction for Dairy Crest non aligned farmers –from 1st October (29th August 2014)
This is yet to be confirmed and is the word on the street!
1.03ppl milk price reduction for United Dairy Farmers Co-op members – for July deliveries (29th August 2014)
This takes producers standard litre price to 29.34ppl (www.milkprices.com)
European Commison (EC) step forward with emergency measures (29th August 2014)
The EC will open up Private Storage Aid for butter, SMP and some exported cheeses in an attempt to cushion the fall out from the Russian import ban. The storage aid will cover the storage costs for between three to seven months.
In addition intervention for butter and SMP will continue until at least the end of 2014.
Commissioner Ciolos commented
“Where material risks of market destabilisation appear, I will continue to use the new CAP to act pre-emptively to stabilise the market.”
Note the Commission has already agreed emergency support measures for peaches and nectarines and perishable fruit and vegetables.
Lets hope the scheme covers cheddar.
Dairy SOS 2014 targets DEFRA/Government (29th August 2014)
The deepening dairy crisis, which has been escalated as a result of the Russian ban on all major EU dairy products, has triggered a change of focus by FFA. Dairy markets were already falling and the Russian ban means they are now set to collapse, and FFA is adamant that hard working dairy farmers should NOT pay the price for this politically orientated market collapse.
High stock levels put into storage are a short term solution and inevitably get released back on the market when any crisis is over. This invariably delays price recovery. Perhaps for months or a year!
FFA says is now time for the UK Government to step forward and support dairy, so it has organised an online petition calling on DEFRA ministers and the Government to step forward and buy some of the surplus cheese and butter with a view to distributing it free via food banks, thus preventing stock-piling that will only affect you several months down the line, and short-term large-scale price falls.
It is believed that this along with a buy British Campaign is almost certain to receive widespread public support and backing.
The idea was put to FFA on Tuesday morning and its Chairman David Handley seized the opportunity with both hands realising the Government hold the keys to helping to solve two problems – food surpluses caused by Russia and food poverty. How Cameron’s popularity would rise before the election!
Questions will be asked by a few as to why the NFU’s, RABDF or Dairy Co etc did not think of the idea, or were not offered it. Answers on an email.
This is about a few people in this industry making things happen. Forget a 2020 strategy and vision, we need a 2014 and 2015 solution NOW! We don’t need a ‘leading the way’ (with no leader) document, nor a “compete to grow” document where dairy farmers are encouraged to churn out more milk (when we’ve no processing and now fewer markets), no “White paper”, no similar do-good strategy documents. Further details of other ideas under consideration will be posted on this website this week. Fingers crossed that grass roots farmers will persuade all their friends, neighbours, suppliers and contacts to sign up and there will be media support.
Other ideas are in the pipeline require some investment. There lies another problem in so far as those who take subscriptions and levies from Dairy Farmers tend to have a “can’t do” mentality, regularly placing obstacles in front of ideas as to why they can’t get involved because it is outside of their so called remit.
Remember: There are those who make things happen. Those who watch things happen and those who wonder what happened.
It’s your industry. Things need to happen now. Quickly. Let’s make things happen.
For details of the petition log on to http://www.farmersforaction.org/4.html
Email comments on the food bank idea to email@example.com and I’ll pass them on.
Fonterra to build 1.6 billion litre/year drier (29th August 2014)
Fonterra is set to invest around £208 million in its domestic processing capacity including a new high capacity drier in the North Island capable of processing 4.4 million litres/day or 1.6 billion litres a year and producing 30 tonnes of WMP per hour. The Co-ops investment includes a new drier at one of its South Island plants.
GDT results are mixed but still grim (22nd August 2014)
This Tuesday’s GDT auction results on the face of it looked encouraging; however, the devil is in the detail.
Overall, the average was down only 0.6% to the auction price recorded two weeks ago. Notable price moves were as follows:
Butter +4.9% to $2940 tonne or £1770 tonne
WMP +3.4% to $2804 tonne or £1688 tonne
Cheese -7.9% to $3453 tonne or £2079 tonne
Arla Westbury SMP -12.0% to $2995 tonne or £1800 tonne
Average -0.6% to $3000 tonne and the lowest for two years
If you take the GDT average auction butter price @ £1770 and the GDT Arla UK SMP average auction price @ £1800 and plug both into the 2014 AMPE calculation it gives you a tearful 21ppl AMPE.
If you take the current average Dutch butter price (€3200 tonne) and the average Dutch food grade SMP price (€2150) the AMPE comes out at just over 24ppl (24.1p).
It doesn’t matter whose figures you use the result is bleak.
Queen and “Under Pressure” as Russian ban bites (22nd August 2014)
The Russian ban on EU dairy products is starting to bite very hard, particularly, for cheese which is dropping in value almost daily.
Current EU quotes suggest values of only €2800 tonne (£2250 = to circa 22.5ppl). Latest figures to June 2014 confirm that Russian imported 110,000 tonnes (28.7%) of cheese directly from the EU in the first six months of 2014 but this excludes cheese EU member states sold to countries like Belarus, Ukraine and Lithuania, which is exported to Russia.
One trader and commentator believes finding alternative markets for this tonnage of cheese is close to mission impossible as opposed to a challenge. So anyone with unsold average to low quality cheese in stock maturing is in for a big does of medicine. Going forward it seems inevitable that milk will be switched out of cheese into powder, which will do nothing to stop the downward spiral in SMP, WMP and butter prices.
As the Queen group song goes it’s: “Under Pressure”
1.2ppl price reduction for Arla AMCO members – from September 1st (22nd August 2014)
This takes members www.milkprices.com standard litre price down to 30.38ppl, which excluding the butterfat adjustment/fat tax (0.6ppl) and the estimated 13th payment (0.81ppl) gives a standard litre paid out price of 28.97ppl. For Arla Milk Link members it will be 30.38 with the 13th payment (0.81ppl) coming in March 2015 so the monthly money to bank for them for September milk will be 29.57ppl.
Milk protests are likely to start as soon as next week (22nd August 2014)
Farmers For Action (FFA) have posted a dairy crisis news item on their website warning of 25p or less milk prices.
The proposal is for peaceful protests to kick in presumably targeted mainly at those involved in the domestic market, particularly liquid milk processors and retail distribution outlets etc.
For the full press release click on http://www.farmersforaction.org/4.html
Roger Evans to leave First Milk – Why? (22nd August 2014)
The Scottish Farmer has this week released the secret known to many that Roger Evans, Shropshire dairy farmer, Dairy Farmer columnist, former First Milk Chairman and (at one time) anti anything Arla or Muller-Wiseman is to leave the co-op to supply Muller-Wiseman.
First Milk have commented they are disappointed to see any member leave, however, what’s surprising about this is zero comment from Roger by way of any explanation to The Scottish Farmer journalist who contacted him this week. This is the man, remember, who has written hundreds of thousands of words over the past 25 years plus in Dairy Farmer and other magazines, plus books, giving us his view on virtually everything to do with dairying. He has enlightened readers on all that happens on his farm, so it is strange that he could not even find a single sentence to explain his decision to leave, especially given that leaving First Milk must be one of the biggest decisions he has ever taken relating to his farm.
On that score we will no doubt have to wait for his next Dairy Farmer article, when all will presumably be revealed!
First Milk change milk cheque payment dates (22nd August 2014)
The co-op have given members three months notice that milk cheque payments will change from paying for all milk delivered in a month on the 17th of the month following to paying 50% on the 10th and the remaining 50% on the 24th.
The co-op state this is to help member clash flows.
The change will commence in November when the October deliveries will be made in two equal instalments.
UEFA Euro 2016 Qualifying Tickets (22nd August 2014)
Ian has access to early bird tickets for the following England football matches at Wembley with a discount of £5.00 per ticket of up to four tickets for each match with more available without the discount, if required.
England v San Marino 9th October 2014
England v Slovenia 15th November 2014
England v Lithuania 27th March 2015
If interested please email Lydia@ipaquotas.co.uk before Tuesday 26th to ensure the pick of the areas to sit.
0.55ppl milk price reduction for Paynes Dairies suppliers – from August 1st (18th August 2014)
This comes on the back of an un-reported 1.2ppl reduction in June. This takes producers standard litre price down to a level 30ppl (www.milkprices.com).
0.053ppl milk price reduction for Dairy Crest formula contracted producers – from September 1st (18th August 2014)
This is the third consecutive minor price change of less than 0.1ppl.
The new standard litre price will be 31.93ppl for the DC liquid core formula and 31.73ppl for the simplified liquid contract (www.milkprices.com). This means the differential between the standard DC liquid price (30.09ppl) and the formula is more than 1.6ppl.
Russian import ban crashes cream market (18th August 2014)
It was a certainty that the 12 month EU dairy product import ban from Russia would mean we all catch a cold.
This week commodity prices have crashed notably, cream prices have crashed back to £1100 tonne from £1380. To put this into ppl terms it’s a drop equivalent to 1.6ppl for a liquid processor to which they are all instantly exposed.
The Southern Irish milk price is down to 34 Euro Cents litre (27ppl). It looks like the EU dairy industry is heading down the drain as everyone gets sucked into the plug hole vortex. There is even talk that EU prices are heading towards intervention levels. Traders are allegedly cutting each others throats and prices to win orders and replace lost Russian business.
Tomorrow’s GDT auction must surely see another significant price drop. As one ingredients buyer commented:
“A mixture of fear and hope will be greeting next week’s GDT event.”
Unfortunate timing from one of First Milk’s Scottish Taliban (18th August 2014)
Willie Lamont, Area Representative for First Milk, must have cringed when he saw his letter appear in this weekend’s Scottish Farmer on the same day The Grocer headlined First Milk’s retailer de-listings.
Basically, Mr Lamont lambasted David Handley for his earlier call to sack the First Milk Board and its Chairman Jim Paice. To some extent he has a point in terms of only First Milk’s members have the right to demand any change of management. Unfortunately he then went on to extol the virtues of First Milk’s
“decision to invest in innovative new food products and to seek greater added value from existing products.”
Turn to Fridays edition of The Grocer and a headline, which included First Milk dairy drinks, loose listings, which explained how First Milk have revealed that its Lake District dairy brands Frumoo and Caffe Latte drinks have lost all their supermarket listings. Both are still in production and “sold through some retailers” and First Milk have stated that they have learned a lot from its first venture in dairy drinks and that it has used that experience when working on the launch of its Team Sky high protein breakfast smoothies, which are incidentally made in Austria.
Rob Newbery to leave his NFU Chief Dairy Advisor position (18th August 2014)
Rob Newbery is to leave his position as NFU Chief Dairy Advisor to take on the role as Director for the West Midlands NFU region. So in the space of six months the two NFU people who pushed the introduction of the Voluntary Code of Practice have both departed just ahead of the codes so called independent review. Will the new crew push it as hard post the review in the new world of cooling dairy prices?
The European Puzzle (8th August 2014)
In a week of bad news leading European milk processor Friesland Campina (FC) has stunned many with a price increase announcement to its suppliers. Given the fact Arla spend a lot of time watching what FC do it will be interesting to see whether Arla widen the gap further between the FC and Arla AMCO price at the end of August.
Russian ban of EU dairy products adds to the problem (8th August 2014)
The announcement that Russia has banned dairy product imports for one year, in response to sanctions imposed on Russia as a result of the Ukranian crisis, is a bitter blow to an industry heading south at speed. All of the EU powder, cheese and butter destined for Russia will have to find new homes and that will put further pressure on what is a weakening market. The ban came into force on the 7th August but does not include infant formulas. Other areas included in the Russian ban include the USA, Australia, Canada and Norway.
One milk processor described as “nothing short of a disaster given the EU exports 300,000 tonnes of cheese to Russia each year.”
0.65ppl milk price reduction for First Milk liquid contracted members – from 1st September (6th August 2014)
This takes producers standard litre price down to 28.1ppl. During the past four months the total price reduction amounts to 4.4ppl.
0.5ppl milk price reduction for First Milk cheese/manufacturing contracted members – from 1st September (6th August 2014)
This takes producers standard litre price down to 29.1ppl (www.milkprices.com) and is the 4th consecutive monthly price reduction, totalling 3.4ppl
1ppl milk price reduction for South Caernarfon Creameries suppliers – from 1st September (6th August 2014)
This takes producers standard litre price down to 30.01ppl.
Wyke Farms launch £1.2 million promotion (6th August 2014)
Wyke Farms have announced plans to invest £1.2 million to support and promote its branded cheese, in particular, its Provenance and Somerset countryside roots.
The campaign goes live on 1st September with national TV adverts, including a 30 second slot during the Coronation Street break as well as Breakfast TV.
GDT prices crash 8.4% again (5th August 2014)
That sinking feeling Ian had three weeks ago came again at 16:30 today with the outcome of today’s GDT auction results.
Basically, the average was back 8.4% on that recorded only three weeks ago, which in itself was down 8.9%.
So overall close to a 50% drop in only 6 months since February.
This is not volatility it’s extreme volatility and it comes less than 8 months before the European quota regime ends.
It’s time a batten down the hatches and buckle up for farmers and processors who are in for a very rocky ride.
Don’t shoot the messenger but for some a farm gate standard litre price of 25p or less now seems on the cards before Xmas, and the only question is how low world prices will drop before they level and more importantly when will the U-turn happen.
Main movers in today’s auction:
Cheddar down 10.2%
WMP down 11.5%
SMP down 6.5%
It’s simple world and EU milk production is up and Chinese demand has cooled down. This is a lethal combination for dairy farmers in the UK who will shortly have the cows on winter rations whilst they are on bread and water.
1.2ppl milk price reduction for direct suppliers to Arla – from 1st September (1st August 2014)
This takes producers standard litre price to 30.8ppl (www.milkprices.com)
1ppl milk price reduction for suppliers to Wyke Farms – from 1st September (1st August 2014)
This takes producers standard litre price to 30.05ppl (www.milkprices.com)
1ppl milk price reduction for suppliers to Crediton Dairy – from 1st September (1st August 2014)
This takes producers standard litre price to 32.36ppl (www.milkprices.com)
0.85ppl milk price reduction for suppliers to Belton Cheese – from 1st September (1st August 2014)
This takes producers standard litre price to 30.15ppl (www.milkprices.com)
Muller Wiseman hold firm on September milk prices (1st August 2014)
The suggestion that if Arla sneeze everyone catches a cold is true unless you are Ronald Kerrs and involved in price negotiations with Muller.
Full credit to Muller Wiseman and its farmer board for deciding to hold its September producer price at a time when Arla, Dairy Crest, First Milk and a heap of liquid milk and cheese processors have announced price drops. This is certainly not willy-waving and will silence critics of both MW and its farmer board. No doubt NFUS wish they had written their press release post this announcement.
Adams Foods buy Foodtech business from Dairy Crest (1st August 2014)
Adams Foods, based in Leek, have acquired the Crewe based Foodtech specialist ingredients business from Dairy Crest for £1.2 million.
Colston Basset Stilton Cheese wins Supreme Award (1st August 2014)
The Supreme Champion cheese out of 4,500 entries at this week’s Nantwich International Cheese Show was awarded to a Stilton from Colston Basset.
Commonwealth games, sun, and supping something strong befuddles NFUS' brains! (30th July 2014)
Ian had a double take on the latest NFU Scotland dairy press release whose lead caption was:
“Milk price cuts must reflect market place reality – Union calls on processors to pay based on performance."
To put the markets into perspective, globally there has been a 40% drop in GDT auction prices in less than five months and yet, during the same period, UK prices are down 10%! That's the reality. Thus, on the basis of these figures the price cuts, to date, appear to be fully justifiable and do, in fact, “reflect market place reality.”
Further down the NFUS' press release Ian's eyes rolled to the back of his sockets and round again with the statement that “the Union believes paying a price that reflects company performance will pay dividends.”
It is wholly naive and frankly outrageous to suggest farm gate milk prices should be linked to milk purchaser/processor performance! Whilst co-ops like Arla and First Milk aim to pay out the most they can to members on a monthly basis NFUS simply cannot put forward a legitimate reason as to why any successful processor should pay its farmers more than competitors, some of whom are less competent! In addition, even if this theory had any merit at all, Ian suggests NFUS looks down the other end of the telescope, because the theory also means a poor performing company would be justified in dropping prices further!
Remember back in 2012, when UK processor's financial results were disastrous and deteriorated further when protesting farmers succeeded in lifting farm gate milk prices? Under the NFUS' idea of "performance payments" farm gate milk prices would have dropped in 2012, not gone up.
Markets simply do not work in the way NFUS suggests, and even if they did feed merchants should immediately demand more money for dairy cake from farmers whose financial performance is currently good!
Sorry NFUS but this idea is bonkers! Get out the sun, off the pop, and get back to the drawing board!
1.2ppl price reduction for suppliers to Glanbia Cheese – from 1st September (29th July 2014)
This takes producers www.milkprices.com standard litre price to 30.11ppl.
1.1ppl milk price reduction for Dairy Crest Suppliers- from 1st September (25th July 2014)
The resulting standard litre prices will be
Davidstow (cheese) 32.09ppl
This is the first Davidstow price change in 10 months
0.94ppl price reduction for Arla Ambo Co-op members – from 4th August (25th July 2014)
This takes producers headline standard litre price to 31.58ppl.
The 0.94ppl net reduction is basically 1.25 euro cents converted to sterling to give a decrease of 0.98ppl in the account price plus 0.04 increase in the 13th payment.
Tesco continue to hold firm on TSDG farmgate milk price (25th July 2014)
Tesco continue to hold firm on both their Muller Wiseman and Arla directs milk price for August and into September with no price change for September 1st.
This puts the TSDG Arla directs price at 34.2ppl and Muller Wiseman price at 34.3ppl (These figures include the base price plus 0.2ppl welfare code premium and 0.5ppl Promar costing’s).
This should put a smile on the faces of TSDG dairy farmers given the way all other prices are heading.
Spot Price is sliding big time (25th July 2014)
Having rapidly rocketed to 35ppl (June 20th) spot prices have crashed back to under 26ppl and the immediate outlook is not encouraging.
GDT Auction (25th July 2014)
Prices having crashed by almost 9% at the last auction 10 days ago mean all eyes will be on next Tuesdays auction results with most praying for prices to level.
Lurpak butter is top of two leagues (25th July 2014)
According to the latest figures from A.C. Nielsen, Lurpak is now the UK’s No1 butter brand both in volume and value.
The brand is worth around £300m outperforming its closest rival by 500 tonnes a year.
CLA Game Fair goes from strength to strength (25th July 2014)
he CLA game fair clocked up 143,500 visitors in 3 ay at Blenheim Palace in what was a fantastic celebration of all that is great about our countryside.
Politically one of the highlights was the head to head between UKIP leader Nigel Farage and CLA deputy president Ross Murray where a large crowd jostled for position outside a crammed Theatre to hear a debate as to whether the UK should remain in the EU.
Whether you agree with UKIPS plan to remove the UK from Europe and the CAP is a hotly debated point but for certain Farage pulls a crowd and puts on a good show and performance.
So 143,000 plus people attended the Game Fair within days of the RASE auctioning over £400,000 of its valuables to pay off some of its debts.
In days gone by the Royal Show eclipsed the Game Fair however since the first Game Fair in 1958 the Event has been well directed and gone from strength to strength.
Ian’s first Game Fair was as a boy in shorts at Raby Castle in 1972. Next year’s event will be Harewood House, Leeds.
1ppl milk price reduction for suppliers to Yew Tree Dairy – from 15th August (18th July 2014)
This takes their standard litre price to 30.75ppl
0.75ppl milk price reduction for suppliers to Grahams Dairies (Scotland) – from 1st August (18th July 2014)
This takes their standard litre price to 30.75ppl (www.milkprices.com)
0.044ppl milk price reduction for Dairy Crest’s Formula contracts – from 1st August (18th July 2014)
This results in the following standard litre prices (www.milkprices.com)
Core liquid formula 31.98ppl
Simplified liquid formula 31.79ppl
A tiny reduction of less than -0.1p/l, which is making the DC/DCD formula price look attractive compared to the current competitive set.
Meadow Foods have signed up 19 out of the 22 producers from Rock Farm – following the recent decision to close the plant by Cool Milk’s Jon Thornes and his associates. (18th July 2014)
Global Dairy Auction prices crash back a further 8.9% (16th July 2014)
Tuesday’s GDT auction was a disaster with the average price for all products dropping 8.9% in only two weeks to average $3309/tonne and an index price, which was last seen in late 2012.
Notable movers were:
Whole Milk Powder down 10.9% to average $3088/tonne
Skim Milk Powder down 7.1% to average £3516/tonne
1.2ppl milk price reduction for Muller Wiseman non aligned producers – from August 3rd (7th July 2014)
This will take producers www.milkprices.com standard litre price to 30.8ppl
1ppl milk price reduction for Meadow Foods suppliers – from August 1st (7th July 2014)
This will take producers www.milkprices.com standard litre price to a level 30ppl.
1ppl milk price reduction for Wyke Farm suppliers – from August 1st (7th July 2014)
This takes producers www.milkprices.com standard litre price down to 31.05ppl.
1.75ppl milk price drop for First Milk liquid contracted farmers - from August 1st (7th July 2014)
1.25ppl milk price drop for First Milk manufacturing/cheese contracted farmers - from August 1st (7th July 2014)
Initial emails to Ian which arrived within the first 15 minutes of the First Milk price announcements included:
“Jesus that is brutal”
“last to take the price above 30ppl first to take it under”
“That’s not a spoonful of medicine it’s a ladle”
With a manufacturing standard litre price of 29.1ppl and a so-called liquid contract price of 28.25ppl both after capital levy deductions it was a bit of a surprise to read that in the letter to members from First Milk’s Chairman Jim Paice notifying them of the price reduction, he concluded by stating:
“As you may have seen Arla have reduced their price from this week, almost a month earlier than us, citing the negative trend in global markets. Our analysis of their price and the deductions which they apply means that our actual price paid will still be more than Arla AMCo price for most of our producers.”
Ian has investigated this statement further with First Milk in order to establish what evidence they hold to substantiate the claim. Without going into detail the claim should have been better researched before it was communicated to members. In the detail there were some rogue figures and wild assumptions. If the facts had been better researched the statement would have been along the lines that the Arla AMCO headline price is not what is paid out to farmers and there are sizeable deductions, which significantly narrow the perceived gap between the First Milk and Arla AMCO headline prices. On that point we agree.
No doubt First Milk suicide bombers will beat their chests and complain loudly that Ian is once again having a pop at First Milk and bigging up Arla, but on this story as with others First Milk only have themselves to blame as they have once again had a dig at Arla, which is a fellow farmer-owned company and is one that really should be one of its major strategic partners.
So after First Milk’s suicide bomber members have read this story, and before they pen another angry email to Ian perhaps they should consider writing to First Milk alternatively put some mittens on so they can’t use the keys on their keyboards.
0.75ppl milk price reduction for suppliers to Barbers Farmhouse Cheese – from September 1st (7th July 2014)
This will result in a standard litre price of 31.39ppl (www.milkprices.com)
Global Dairy option prices down almost 5% (7th July 2014)
Just when everyone was starting to think there was a glimmer of light that the value of dairy commodities was beginning to stabilise comes the grim news that this week’s GDT auction has seen the average price drop by 4.9%.
Notable movers were as follows:
Butter down 13.6% to average $3,181 per tonne
Whole milk powder down 5.4% to average $3,459 per tonne
Cheddar down 2.9% to average $4,226 per tonne
Skimmed milk powder down 0.9% to average $3,810 per tonne
These prices, in many cases, have wiped out recent gains and more with the largest hit taken on butter prices.
Dairy Crest announce partnership with Fonterra to sell DWP (7th July 2014)
Dairy Crest have confirmed that it’s demineralised whey powder (DWP), which will be produced from its new £45 million facility at Davidstow, will be sold on a commission basis by Fonterra. The DWP will be used by Fonterra as a base ingredient for infant formula powders and the agreement will run for a minimum of 5 years with production expected to commence in the spring of next year.
In addition, Dairy Crest have announced a further £20 million investment at Davidstow to manufacture GOS, which is a lactose based pre-biotic used in infant formulas. Dairy Crest will partner Fayrefield Foods Limited of Chester in a joint venture in the GOS project. Fonterra will be responsible for all marketing and selling of the GOS, which is likely to be produced in 2015.
Tesco Young Farmer Scheme opens its doors (7th July 2014)
Earlier this year Tesco launched the Future Farmer Foundation to help get young farmers off to a great start in their farming careers. The programme is open to both new entrants and next generation farmers aged 20 to 35 years old from all sectors, offering business planning workshops, supply chain experience, mentoring and training. Already 50 Future Farmers are currently experiencing the programme, and Tesco have opened applications for the next intake, who will join the programme in September. If you know of any bright ambitious young farmers or farming entrepreneurs they can find out more and apply by visiting - www.tescofuturefarmerfoundation.com or calling 0800 977 4639.
Dairy Crest milk prices held for August (26th June 2014)
Dairy Crest Direct (DCD) and Dairy Crest (DC) have agreed to stand on with both the (DC) liquid and cheese (Davidstow) farm gate milk prices for August.
This is good news and once again demonstrates that DC do not simply catch a cold when Arla sneeze.
Dairy Crest’s market leading Cathedral City branded cheese is undoubtedly the corner stone of the Davidstow cheese price and as stated in the latest DCD newsletter “This pence per litre return built upon the less volatile and successful branded cheddar.”
The current DC standard litre prices are therefore as follows:
Core & simplified formula 31.829ppl
Standard liquid 31.19ppl
Manufacturing/Davidstow cheese 33.19ppl
All eyes are now firmly fixed on what Muller Wiseman and First Milk do on Monday/Tuesday of next week ahead of the NEC Livestock Event.
Muller Wiseman are a GB liquid milk business.
First Milk have towards half of their milk going into cheese with almost all of the cheese sold by Adams/IDB on a basket formula, leaving the remaining member milk to go into other ventures it has invested in, including Westbury. Many of these should be delivering a boost to members milk price, including milk brokering whose future looks good with spot prices at 35ppl in June as well as the fact that commodity prices have bottomed.
1.23ppl (1.5 Euro Cents) milk price reduction for Arla (AMCO) members - from July 7th (25th June 2014)
This should take member standard litre to 32.52ppl before deductions. In addition, the anticipated 13th payment has been increased by 0.04ppl.
Whilst this is unwelcome news for Arla members it has to be remembered it is a European price and just because the mighty Arla sneeze does not mean every GB dairy farmer has to catch a cold.
With GB milk suddenly in very short supply and spot prices continuing to raise almost daily, now trading at 35p, there are some processors questioning whether they will need to follow Arla’s lead.
For those who believe they have a good case to follow Arla with further price reductions from 1st August (under the Voluntary Code) they will have to be mindful to at least maintain their standard litre price at a minimum of 30ppl or risk serious cross examination as to how competent their sales people are.
0.028ppl milk price rise for Dairy Crest formula contracts – from July 1st (20th June 2014)
It’s a small but positive increase which takes producers standard litre price to 32.02ppl for the liquid core formula and 31.83ppl for the simplified liquid contract. (www.milkprices.com)
Auction prices up 1% (20th June 2014)
This weeks GDT auction saw average prices increase by 1%.
Notable movers were:
Butter + 1% to average $3699
Cheddar + 2.4% to average $4381
WMP + 2.4% to average $3658
SMP – 0.2% to average $3855
Note later SMP contracts for September/October delivery showed price increase.
Spot milk continues to head North at 35ppl (20th June 2014)
Spot milk is desperately short and this week trading at 34 to 35ppl.
The strong prices have seen cheese processors exit the market as buyers with some on the brink of turning to spot milk sellers as a more profitable outlet than turning their milk into cheese.
Friesland Campina (FC) price increase is very significant (corrected story from last weeks) (20th June 2014)
The news that FC has increased their June milk price by 1.75 Euro Cents to 42 Euro Cents/kg is significant. This converts to a UK standard litre price equivalent of 39.43euro cents (31.45ppl). The move significantly narrowed the price differential between Arla and FC. The FC move could be the first sign that continental Europe farm gate milk prices will only drop by a tiny amount if at all in the coming months. It’s a very positive market indicator.
West Country Milk anticipate milk prices falling all year (20th June 2014) - text temporarily removed
Muller Wiseman- Grocer Brand of the Year Gold Award winners (20th June 2014)
Muller took the Grocers Gold Award beating stiff blue chip competition from brands like Pepsi, Heineken, Cadbury and even Arla.
Rocky Rock Farm Close its Dairy (20th June 2014)
Durham based Rock Farm Dairy has had a chequered history and has now closed with the loss of at least 80 jobs.
Rock packed its last milk last Thursday 12th and deliveries to customers stopped on Friday 13th- unlucky for some. Rock recently lost some key liquid customers who have indicated they experienced problems, with consistency of quality product and service resulting in a estimated 60% of Rocks business migrating to Paynes Daires with the remaining business to be packed or taken on by Lancaster Dairies as part of a deal with Rock.
On the positive side it appears Rocks small band of 24 farmer suppliers have been given a reasonable deal in so far as most if not all have been given three months notice to find a new milk buyer.
During this period the bulk of their milk will be traded on the spot market/short term contracts with two traders where fortunately prices are firming almost daily. (see above)
Finding a new milk buyer will not be easy for some of these farmers who are very much out on a limb. Several have previously blotted their copy book with either Arla or Meadow both of whom are now cautious they don’t get another whipping as the 4th emergency service. Note Meadow came to the rescue when some of the Rock farmers were left high and dry by the collapse of Fresh Pastures only to find Meadow were dumped after a couple of weeks supply.
With some of the Rock Farm farmers on a tasty 1 year fixed price milk contract at 34.5ppl they look like having to take a bath with any new milk buyer.
Rock Farm was taken on from the Administrators by Cool Milks John Thornes two years ago on what at the time was reported to be a 20 year lease of the processing site with a 10 year break clause.
£5 million nose award (20th June 2014)
Nigel Pooley received a Long Service Award at the Bath & West Show from the Duchess of Cornwall after more than 50 years in the dairy industry. Nigel is Wyke Farms master cheese grader and has graded in excess of 1.4 million tonnes of cheddar whilst working for Wyke Farms and his nose is valued at £5 million by Wyke.
Have the European and GB markets turned north? (11th June 2014)
One swallow does not make a summer but with Friesland Campina’s price up for June (see above) and spot prices increasing across the piste it could be a case of the only way is up for baby.
GB spot prices now 28/29ppl.
Italian spot prices up to 40 Euro Cents (32.4ppl)
Dutch spot prices up to 36 Euro Cents (29ppl)
Lactalis give notice to outlying Cumbria producers (11th June 2014)
Lactalis are the latest milk purchaser to give notice to producers who are not within their core catchment area having given 12 months notice to farmers in Cumbria, who are now on the hunt for a new milk buyer.
May production (11th June 2014)
Provisional May production was up 98.7 million litres on May 2013 (+8%) with peak daily production coming almost 3 weeks earlier than is normal around the 3rd May (43.7m litres/day). Cumulative production for the first 2 months stands at + 266 million litres or + 11.33%. Cumulative butterfat is down 5 points to 3.95%.
Ippl milk price reduction for Wensleydale Creamery suppliers – from 1st July (9th June 2014)
This produces a standard litre price of 31.35ppl (www.milkprices.com)
0.5ppl milk price reduction for Glanbia Cheese suppliers – from 1st July (9th June 2014)
This produces a standard litre price of 31.30 (consistent contract) and 31.40ppl (base schedule contract) (www.milkprices.com)
GDT auction prices drop on average by a further 4.2% (5th June 2014)
Another mixed bag of results at Tuesdays Auction which saw the average all products index fall by 4.2% to average $3,756 tonne which is the 8th consecutive fall in the average products auction price.
Notable movers to the auction prices achieved only two weeks ago were:
WMP down 8.5% to average $3594 tonne
SMP up 2.1% to average $3863 tonne
Cheddar up 8% to average $4236 tonne
Arla Westbury SMP up 1.5% to average $3830 tonne
SMP increase were for contracts delivered during the next three months.
1ppl milk price reduction for suppliers to Belton Cheese - from July 1st (5th June 2014)
This takes producers standard litre price down to 31ppl