Dairy Industry news and features

This page was last updated at 21st  August 2015 (Press your refresh/reload button for the latest information)

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

 

  

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

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

 

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

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

 

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

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

 

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

 

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

 

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

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

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

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

 

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

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

 

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

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

 

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

 

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

 

Key prices were

WMP up 19.1% to average US $1856 tonne

Butter up 10.8% to average US $2541 tonne

SMP up 8.5% to average US $1521 tonne

Cheddar up 4.4% to average US £$2778 tonne

 

Next GDT auction will be September 1st

 

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

 

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

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

 

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

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

 

Iceland Part 2     (21st August 2015)

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

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

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

 

UK SMP goes into Intervention   (21st August 2015)

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

 

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

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

 

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

 

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

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

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

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

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

 

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

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

 

Snaptag   (21st August 2015)

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

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

 

 

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

 

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

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

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

 

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

 

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

 

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

 

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

 

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

 

So let’s assume it happens and retailers continue with their obsession to offer the cheapest milk as a loss leader and are still selling 4 pints for 89p.  The Morrisons Milk for Farmers will then sit along side the 89p milk at £1.12 for 4 pints.

 

The extra 10ppl will go to Arla as Morrisons dominant supplier but because Arla are a co-operative the money is not ring-fenced to GB but in the pot to benefit 13,000 members. See below for latest NFU gaff on this point.

 

Ian hopes it works and that all the farmers benefit but somehow history tells him it’s doomed to fail and could even experience a backlash before it is launched. If Morrisons are serious about helping they should cut the gimmicks and try to adopt the Arla Marque on all Dairy Products. See below reference cheese.

 

Once it’s on the shelves we will soon learn whether consumers are willing to pay an extra 10ppl but it’s a massive 26% uplift.

 

Only time will tell whether the Morrisons move will be sufficient to satisfy those who were protesting at Morrisons premises a week ago.

 

What Next?   (14th August 2015)

If I were Asda, Lidl & Aldi I would be banging on the NFU’s door offering my own variation on the farmers’ milk brand and agreeing to pay 10ppl or more direct to the farmers in the hope it buys more time and ensures protesting farmers stay away.  If that’s considered part of the solution all retailers should be pushed to do it.

 

Contrast Morrisons to the pledge retailer Booths have made   (14th August 2015)

Northwest retailer Booths have 32 stores and have pledged to pay the very best price for liquid milk to its farmers under their Fair Milk scheme.  Currently they pay their farmers 33ppl.  Now that’s worthy of real publicity and is certainly fair trade.

 

NFU Gaff in announcing Asda commit to pay 28ppl for 100% of its liquid milk   (14th August 2015)

According to an NFU press release Asda have delivered, what is undoubtedly, a significant improvement in the farmgate milk price it pays Arla for all of its liquid milk from next Monday 17th to 28ppl. However interestingly in the official Asda press release, which came out after the NFU’s there is no mention of the 28p and no mention of the money going to British Farmers.

In its press release the NFU state that the 28p “will then be expected to pass this onto its British Farmer suppliers.”

No way NFU because to do this would necessitate a complete re write of the Arla Co-op principles which 13,000 dairy farmers have signed up to. This would spark a Dairy War.

 

In addition it’s a dangerous road to even consider because it could be met with thankyou cards from the Danes & Swedes to the NFU. Think about it the Danes could say if that’s the game we will retain all the money from lurpack butter in Denmark.

 

Surely the NFU as a farmer organisation understand how a successful Co-op works and Arla are certainly not going to rewrite their constitution and rules to re nationalise its milk pricing.

 

NFU President Meurig Raymond commented “It is now important that Arla ensures this is delivered to British Farmers on the ground, with immediate effect.”

Oh dear perhaps more thought and less haste from NFU Communications department is required, because this is pants.

 

However, the move by Asda is seismic and on the issue of cheese it is already well ahead of Tesco and Morrisons for its Red Tractor support.

 

Milk is now 6ppl cheaper than bottled water   (14th August 2015)

That was the strap line in last week’s Grocer.  The research requires no further commentary.

 

Irish & New Zealand cheese & Milk – The facts on own label  (14th August 2015)

Here is a sample of cheeses found this week in two retail stores:

 

Morrisons Mature White Cheddar packaging confirms it is produced in the UK using British and Irish milk.

 

Morrisons Red Leicester packaging confirms it is produced in the UK using British and Irish milk.

 

Morrisons Milk White Cheddar packaging confirms it uses British and Irish Milk and is packed in the UK.

 

Tesco Everyday Value Grated Cheddar packaging confirms it’s produced in the UK, Ireland and New Zealand using milk from the UK, Ireland and New Zealand.

 

Tesco Everyday Value Mild Cheddar packaging confirms it’s produced in Ireland using milk from Ireland but packed in the UK.

 

Tesco Half Fat Mature Cheese packaging confirms it’s produced in Ireland but packed in the UK.

 

Those people at Adams, Leek (AKA Ornva Foods) are certainly busy bees packing all this own label cheese.

 

If you have further similar evidence please email us photographs of both sides of the packaging.

 

Cheese imports from Ireland equate to an estimate 100,000 tonnes annual equivalent which is a whopping 1 billion litres of milk. The Irish have virtually closed their market to British and Northern Irish produce and French farmer demonstrations are heading towards closing down their markets to foreign imports despite the EU market principles. If British consumers and food service back Red Tractor cheese 100% processors claim the farmgate price paid to farmers for milk for cheese would increase by between 3 to 5ppl.

That’s where the battle ground is with retailers and food service to keep the Irish cheese out.

If the French agriculture minister can state:

“In the current crisis, everyone is responsible, from the consumer to the local politician who must favour French products”

Why can’t all our leaders be nationalistic for once?

 

Medina and Freshways involved in Muller and Dairy Crest Deal  (14th August 2015)

The competition have announced that they are inclined to accept Muller Wisemans undertakings with a view to eliminating the need to progress to what would be costly multi million pound stage 2 in terms of fees etc.

 

The competition and Markets Authority have opened up a consultation period until October 19th with the proviso matters could be concluded earlier.

The proposed undertaking and remedy will see Muller Wiseman process around 100 million litres of milk a year for either Freshways or Medina for up to 8 years.

These two processors are considered by the CMA to be effective competitors to Muller. However it must be noted that Medina already trade large quantities of milk with Dairy Crest.

If the remedy is adopted and a deal struck it could be up and running by January 1st 2016.

 

24.5ppl milk for sale in Coventry   (14th August 2015)

Yes 2 litres of Country Life milk for only 49p at Kalma Foods, 629 Stoney Stanton Road, Coventry (Tel. No. 02476 272380).  Supplied by Johal Dairies.

 

Why wouldn’t you track your vehicles and equipment for £25 a year? (14th August 2015)

Pinpointpal can be used on all vehicles and machinery including quad bikes, tractors, trailers, and generators, the list is endless. It can also been used to track workers locations and mileage which in turn will increase productivity within the work place. For more information on the device contact Lydia on 01335 324594 or lydia@ipaquotas.co.uk.

 

 

2.35ppl (1.85 + 0.5) milk price reduction for suppliers to Bowland Fresh Milk with only 24 hours notice (PRODUCER NOTIFIED)   (7th August 2015)

The 1.85ppl reduction results in a producer base price of only 18.1ppl from August 1st.  In addition Bowland Fresh have raised the base price protein from 3.2% to 3.3%, which producers say is equivalent to a further 0.5ppl price cut on top of the 1.85ppl cut.  That equates to a milk price of only 17.6ppl.

 

0.8ppl milk price reduction for Muller Wiseman suppliers – from 7th September  (7th August 2015)

This takes producers standard litre price down to 22.35ppl.

 

1ppl milk price reduction for suppliers to Glanbia – from September 1st    (7th August 2015)  

This takes producers standard litre price down to 21.35ppl. 

 

In addition, from 1st January Glanbia’s standard litre will be based on 4.2% butterfat & 3.4% protein following the earlier decision by independent milk price analyst, Stephen Bradley of www.milkprices.com to change the manufacturing cheese milk price constituents in his standard litre comparison to these levels.

 

0.9ppl milk price reduction for suppliers to Heler’s Cheese (PRODUCER NOTIFIED) – from September 1st    (7th August 2015)

 

Fonterra slash its forecast milk price by 27% in only 10 weeks to only 12.2ppl    (7th August 2015)

On the 28th May Fonterra set its opening forecast farm gate milk price at $5.25 per kg of milk solids for the 2015/2016 year.  Today, only 10 weeks later, that forecast has been slashed by 27% to only $3.85 due to “a continued significant imbalance in the global dairy market between weak demand and surplus supply”.

 

New Zealand dairy farmers have an estimated break even cost of production of around $5.30/kg ms.

 

The equivalent UK standard litre price at today’s exchange rate is 12.19ppl with a total forecast payout including a co-op dividend of 13.78ppl.

 

GDT results (continued)   (7th August 2015)

Tuesday’s catastrophic auction results were partly due to a 78% increase in the volume of WMP offered.  In addition, it is clear that a significant volume of the product sold was at the opening bid equivalent to a reserve price.

 

The WMP average at $1590/tonne (US) is equivalent to half the average New Zealand cost of production.

 

The next auction will be on 18th August when prices are almost certain to fall further.

 

How big is the UK’s milk problem?   (7th August 2015)

Muller’s bean counters have been doing some interesting number crunching.  The extra 1.6 billion litres of milk we have produced in the last 12 months represents 80,000 ex-farm tanker loads equivalent to a whopping 220 extra loads a day or 40 pints of extra milk for every person in the UK.

 

NISA driving down milk prices   (7th August 2015)

Ian has received a copy of a circular letter from NISA (the so-called family of independent grocer’s) sent out dated 4th August where they say:

 

“This is the latest step in our continual aim to drive down members cost of fresh milk.”

 

In the letter they inform members of a 4.5ppl saving bringing down the price of 2 litres of milk.

 

NISA will certainly attract the attention of protesting farmers with such antagonist statements.  A copy of the letter is in FFA’s inbox.

 

Morrisons – Number 1 target of protesting dairy farmers   (7th August 2015)

For obvious reasons protesting dairy farmers have this week focussed their efforts on Morrisons, Asda, Lidl & Aldi.

 

Rather than seeking to sit round the table with leaders of the protesting farmers Morrisons decided to issue an ill thought out antagonistic letter to the protesters, which was interpreted as Morrisons stamping their authority as to who is really in charge and sticking two fingers up at dairy farmers.

 

The letter refers to “potential personal liability”, “we reserve the right to commence court proceedings”, “injunction”, “reserve the right to commence trespass actions against you personally”, “Personally liable for the financial consequences of these protests and the court proceedings which follow.”

 

And, in bold print “we have and are arranging for further evidence to be gathered about your identity.”

 

“We may use CCTV footage; take photographs of individuals or vehicles present.”

 

The letter closes yours faithfully but with no individuals name attached, however, the name Darren Blackhurst, Morrisons Group Commercial Director, is one name on farmers’ radars, even though he has been on annual leave this week.  He is ex-Tesco and B&Q and nicknamed “Captain Chaos” on account of his reputation for firing first then thinking about what he has done later.  Note, the original Captain Chaos was diagnosed with a multiple personality disorder.

 

David Handley’s response on the FFA news page summed it up “All we want is a fair price, a living wage and be able to make a profit from our business.”

 

Handley has also stated publically that FFA would prefer to meet face to face with retailers.  In the case of Morrisons, if they are serious they need to wheel out Dave Potts, their CEO and not send stand in substitutes who have little or no power to change anything.

 

Note, when Radio 4 Farming Today attempted to arrange to speak to a representative of Morrisons ahead of this morning’s programme they simply hung up on them.  Second choice to a Morrisons representatives was yours truly who also has numerous nicknames!

 

The Milk Trolley Challenge is viral   (7th August 2015)

Protesting farmers buying up all the milk, especially in Morrisons but also in Asda, Lidl and Aldi is spreading like a forest fire across the UK and attracting worldwide interest.

 

OMSCO secure new export contracts   (7th August 2015)

OMSCo, who process milk from 250 UK organic members’ farms, have secured further export business to the USA with its organic mozzarella.  The expectation is that 800 tonnes of Mozzarella will be made and exported in the first year.

 

OMSCO’s total organic cheese production is expected to be around 1800 tonnes a year.

 

Putin destroys around 9 tonnes of EU cheese   (7th August 2015)

Russia has marked the first birthday of its ban of EU dairy products by destroying 9 tonnes of cheese plus 300 tonnes of other products and showing the destruction on Russian TV.

 

The move has caused outrage in a country where over 20 million people try to survive below the poverty line.  Around 170,000 people have signed a petition criticising the stunt, however, its doubtful their protests will prevent further destruction.

 

CHEAP MILK   (7th August 2015)

Mobil garage, Oxford – Buy a loaf of bread and take 2 pints of milk for 1p so half a pence a pint.

 

CAR FOR SALE    (7th August 2015)

Unfortunately, Ian’s wife’s Audi A5 TDI Quattro Cabriolet S Line 3.0 litre automatic diesel is back on Ebay and ends Sunday 16th August 2015.  In brilliant red, new July 2009, only 32,000 miles. 

 

Click link for further details:  http://www.ebay.co.uk/itm/271950598283?ssPageName=STRK:MESELX:IT&_trksid=p3984.m1555.l2649

 

Another Disastrous GDT result with prices down 9.3% – (4th August 2015)

Volume of product on offer at todays auction was significantly increased and prices continued to crash. So much so that there are even calls from some producers that the auctions should be suspended.

 

Todays prices plummeted to average $1815 tonne.

 

Key movers were:

 

SMP     down     14.4% to average $1419 approximately £997

WMP    down     10.3% to average $1590 approximately £1,117

Butter   down     6.1% to average   $2293 approximately £1,610

 

Its grim and its looking like a very long tunnel with some analysts now suggesting low prices will persist throughout 2016.

 

1.5ppl (-0.5 + 1.0) milk price reduction for South Caernarfon Creameries Limited producers (PRODUCER NOTIFIED) – from September 1st – (4th August 2015)

In early July SCC confirmed a 0.5ppl price reduction for 1st September, however, this has now been tripled to 1.5ppl.

 

This results in a liquid standard litre price of 20.84ppl and a manufacturing one of 21.53ppl (www.milkprices.com)

 

1.4ppl milk price reduction for Dairy Crest liquid suppliers – from September 1st  – (4th August 2015)

Dairy Crest have held their liquid price for six consecutive months but it’s come to an abrupt end with the announcement of a 1.4ppl September price cut and the reality is further cuts are almost inevitable.

 

This results in a liquid standard litre price of 21.69ppl (www.milkprices.com)

 

Dairy Crest’s Davidstow milk for cheese price remains unchanged at a healthy 25.34ppl (www.milkprices.com).  At least in this environment it looks to be a healthy price.

 

Dairy Crest’s organic price also remains unchanged at 38.43ppl (www.milkprices.com)

 

0.5ppl milk price reduction for First Milk members (PRODUCER NOTIFIED) - from 1st August  – (4th August 2015)

First Milk have copped for criticism over the fact this latest cut only gave producers ½ a days notice as First Milk abandon part, if not all of the Voluntary Code. We assume the 0.5ppl is an across board reduction.

 

This should result in the following standard litre prices (to be confirmed)

 

The Midlands & East Wales balancing Pool 18.1ppl

Mainland Scotland 18.8ppl

North of England 19.0ppl

Haverford West 19.67ppl

Lake District 19.70ppl

 

0.5ppl milk price reduction for Paynes Dairies suppliers (PRODUCER NOTIFIED) – from 1st August  – (4th August 2015)

Standard litre to be confirmed but expected to be 21.2ppl.

 

 

1.50 Euro Cents Friesland Campina farm gate milk price reduction – (4th August 2015)

Friesland Campina have reduced producers August milk price by €1.50 to €28.50 per 100kg. This is a 5% reduction in one month and compared to FC’s August 2014 price it equates to a 28% year on year drop.

 

www.milkprices.com calculates when this is standardised to a UK standard litre it comes out at 19.4ppl.

 

FFA takes the crisis to retailers and the public – (4th August 2015)

The current crisis down on the dairy farm is wrecking generations of farming families’ efforts and aspirations.

 

FFA are holding a series of rallies and protest with two big ones planned for this Thursday (6th) in Somerset/Devon and Cheshire.

 

The gathering of dairy farmers will not simply be a protest or a blockade because it comes with an invitation to the general public to come along and meet grass roots dairy farmers to understand how grim the situation is and how the outlook is to get worse.

Numbers of farmers attending protest meetings is increasing as the level of discontent rapidly escalates with the continual erosion of milk cheques.

 

For details log onto:       www.farmersforaction.org            tomorrow and Thursday

 

Morrisons importing Irish cheddar – (4th August 2015)

Morrisons are poking a tiger and waving two fingers to British dairy farmers with their constant promotion of Irish cheddar at £2 for 350grams as well as similar offers for their own brand cheddar, which is understood to be Irish.

 

AMPE falls to only 16.7ppl– (4th August 2015)

The July AHDB (DairyCo) AMPE figure now stands at only 16.7ppl and the lowest on record for 13 years. In only 15 months AMPE has halved in value.

 

MCVE stands at 21.7ppl, the lowest for 8 years.

 

Intervention stay open for longer – (4th August 2015)

Intervention will remain open until the 31st December which is a 3 month extension. A new campaign will then open on January 1st with new limits.

To date 1176 tonnes of SMP from Poland, Lithuania and Belgium have already gone into store and the expectation is that the 109,000 tonne limit will quickly be reached at Euro 1698 tonne (£1190).

 

100% sign up for Dairy Crest’s DPO – (4th August 2015)

Dairy Crest Direct report a 100% member sign up to its new DPO

 

Kent County Council support the French – (4th August 2015)

It could only happen in one of England’s home counties but as stupid as it sounds Kent County Council have been handing out French Evian bottled water to lorry drivers on the M20.I bet the French are handing out fresh chilled French milk to all drivers on the other side of the channel.

 

ATTENTION ALL READERS – (4th August 2015)

Note, we are increasingly relying on readers of this bulletin to inform us of price movements because a number of milk processors are now failing to notify us.

 

Please email gayle@ipaquotas.co.uk, if possible, with a scanned copy of any notification, which will remain confidential.

 

Those price adjustments not notified to us by the milk processors are noted with the red words (PRODUCER NOTIFIED)

 

0.85ppl milk price reduction for Arla direct contracted suppliers – from 1st September   (24th July 2015)                                                                       

This takes producers standard litre price to 20.15ppl. (www.milkprices.com)

 

 

0.8ppl milk price reduction for Arla members (Arla Amba) from 3rd August   (24th July 2015)

This takes producers standard litre price, before to 23.01ppl. (www.milkprices.com)

 

 

United Dairy Farmers stand on for May deliveries (24th July 2015)

Co-operative United Dairy Farmers of Northern Ireland held their May peak production at 21.4ppl which produced a standard litre price of 21.9ppl. (www.milkprices.com)

 

United Dairy Farmers Kendal milk price was unchanged at 24.39ppl

 

 

Some farmers try to switch from “Compete to Grow” to “Shrink to Survive  (24th July 2015)

Regrettably the market sentiment across the world is worryingly negative with all respected analysts having written of any possibility of any sort of ex farmgate price recovery in 2015 and some even questioning whether a glimmer of light will be seen until the second half of 2016 and one or two privately talking into 2017. 

 

Holland’s milk production is up 10% in June and Ireland is reported to be up 12.5% in April and May.

 

There appears to be two alternatives.  A Natural disaster/weather event pops up to cut production or producers cut production.

 

Those in the UK planning to milk cows out and then cull them could be in for a shock when it comes to booking cull cows in this autumn.

 

It’s almost two years to the day that the NFU launched its strategy “Compete to Grow” and two years later some of those who decided to push on are in a financial stranglehold and are now facing the need to shrink to survive.  Some farmers are in serious financial trouble and there is not even a glimmer of light at the end of a very long tunnel.

 

 

Lithuania SMP is first to head for Intervention  (24th July 2015)

Lithuania is the first member state to request the placement of close to 200 tonnes of SMP into public intervention storage but they certainly won’t be the last.

 

 

Graham’s The Family Dairy drops 7ppl B price bombshell on…Scotland’s family dairies   (21st July 2015)

Robert Graham, MD of Graham’s “The Family Dairy”, from Stirling, Scotland wrote a letter on the 9th July to the firm’s 100 or so family dairies, which in one fell swoop savaged the incomes of around 60 farms.

                            

Graham’s were one of the first UK processors to introduce A&B pricing, and grabbed the headlines last week by being the first to impose a B price of between 6 to 7ppl (estimated for August and will soon be closer to 6 than 7ppl) for unwanted surplus litres.

                         

In the letter Robert Graham states “to this end we must reduce the price paid on the ingredient litres (aka the B litres) to 50% of AMPE”. In addition there was a 1.5ppl cut to the firm’s A price, which probably can’t be argued with given the state of the market and is still a healthy liquid standard litre price.

 

Under the Graham’s formula for August producers will receive 23.75ppl on the A litres (based on 90% of a farm’s 1st September 2013 to 30th August 2014 production) and the B litre price will be paid on the rest. This will affect at least 60 of the 100 or so Grahams producers, and will reduce their income by an estimated £180,000 each month, or equivalent to £3000 per farm per month for those affected.

                                                                   

The NFUS believe that Graham’s will be the only GB milk buyer paying 10ppl or less for any of their milk.

 

Emails to Ian show the main bone of contention is that producers spent time providing the company with  2015 production forecasts, which they believe have proved to be accurate. If that is true then they believe Graham’s should have anticipated the milk they have received and managed their pool better. But according to Robert Graham some of the 60 B milk producers are 30% to almost 50% above their 100% allocation.

 

In addition, during 2015, Graham’s have supposedly had new producers start to supply them and others are in the pipeline and due to start to supply soon. However Ian has verified that the agreement to take on four farmers goes back a year or more, so while this is unpalatable it is not untoward and is a case of Grahams honouring their commitment and not dumping anyone.

 

Farmers believe that as part of the Graham’s “family” the B price move warranted a producer meeting to discuss the issues and agree a way forward rather than receive the bombshell letter. With hindsight the indication is that Grahams agree they could have handled the situation better. Their letter came out of the blue and rocked the industry and resulted in serious heartache on the farms affected.

 

However whilst a producer meeting to transparently explain the problem would have been preferable the outcome would not have been different. Basically Grahams producers are sending the Company in excess of 1.5 million litres of milk each month which the firm are having to sell into a very weak spot market, mainly in England & Wales, for under10ppl delivered at present and weakening.

 

One producer commented “I remember your father’s words when I joined Graham’s: We are only looking for young ambitious men who want to expand their businesses in a similar way to us.”

 

He agreed it’s those same ambitious farmers who have been hit hard with this short notice price B price annihilation.

So Graham’s have created a PR problem and next month, they have a planning meeting for a new dairy where they may need some friends in high places.

 

On further examination the basic problem is Grahams have 11% (1.5 million litres surplus) more milk each month than they have customers for. Options available to them were as follows:-

 

a.     Give notice to some producers. That is harsh and takes months to affect total milk intake and how are they selected? Presumably starting with those who produce the highest percentage of B litres.

 

b.     Cut the A price by more but that penalises the 40 who have not expanded and kept within the limits and appears unfair.

 

c.     Reduce the A volume from 90% to say 80 or 85% - that penalises the wrong farmers i.e; those who have not expanded.

 

d.     Do nothing and dig a financial black hole- not an option

 

e.     Penalise the farmers who are producing the extra milk by halving the B price.

 

Its harsh for those who have expanded believing they could spread their fixed costs receiving the AMPE price on their B litres at 14.8ppl (June price).  Note the Grahams B price is transparent and takes AMPE less 2ppl haulage less 5% processer margin and from August 1st less 50%.  This price is independently calculated by Stephen Bradley www.milkprices.com.  So it might be a low price but it is still very transparent.

 

Whilst there is no volume limit for Grahams farmers the move has instantly affected production with one producer switching from x3 to x2 day milking.

 

The dilemma faced by Grahams is unfortunately not unique and partly attributable to aggressive retail discounting of milk together with one or more predating processors attempting to undercut the existing liquid supplier.

In some cases it’s a case of either cut the price you charge us for the milk or risk loosing some volume.

 

Spotted on the Graham’s Family Dairy website  (21st July 2015)

 

As a family we’re all used to mucking in. And mucking out.” As one farmer quipped: “There’s enough shit flying around Scotland now to keep them busy for a while.”

 

Please can we draw your attention to the letter at the bottom of this report from Dairy UK’s Farmers Forum on generic promotion and protection of dairy products.

 

 It is an important subject and replying will only take a few seconds. Send your reply to us if you prefer as we are more than happy to receive it.

 

Let’s get a lot of responses in so we can really debate this subject!

 

 

Letter from The Farmers Forum:

 

Dear fellow producer,

 

The Farmer’s Forum has been debating whether in the current climate, we as an Industry are making the best of promotional and educational opportunities. The end of quotas, for example, does pose the question that if more milk is being produced, are we doing everything we should be doing to maximise the understanding of dairy foods and drive up demand?

 

We your fellow producers on the Farmers’ Forum believe it is important to gather as much valuable information on this issue from you directly. We have accumulated much anecdotal evidence already that you would like to see more investment in promotion to, and education of, the consumer.

 

In order for us to play an active role in addressing this issue we need your help in answering the following two questions.

 

1.     Do you support financial investment in the generic protection and promotion of all dairy products and the education of consumers with professionally-researched activity such as promotion, marketing or sponsorship? 

2.     If the answer is yes, how do you think such industry-wide activity could be funded?

Rest assured your answers count. They will be treated in confidence and will be used to take this issue forward, hopefully stimulating constructive dialogue across all sectors within the industry.

 

We need your help in answering these questions and would ask you to send your replies either to us at farmersforum@dairyuk.org or reply to the email sent to you, preferably by the end of July.

 

 

Alternatively reply to this bulletin with a “Yes” or a “No” in the subject and your comments.

 

TWO CARS FOR SALE

Ian’s wife’s Audi A5 TDI Quattro Cabriolet S Line 3.0 litre automatic diesel.  In brilliant red, new July 2009, only 32,000 miles.  On Ebay ends 10pm Sunday 26th July …. http://www.ebay.co.uk/itm/271931842592?ssPageName=STRK:MESELX:IT&_trksid=p3984.m1555.l2649

 

ALSO                                                     

 

Carole’s late father’s Silver Ford Mondeo Zetec TDI, new 2002, he had it from new.  On Ebay ends 10pm Sunday 26th July ….. http://www.ebay.co.uk/itm/271931843618?ssPageName=STRK:MESELX:IT&_trksid=p3984.m1555.l2649

 

0.169ppl Dairy Crest formula contract deduction – from August 1st   (17th July 2015)

This results in a standard litre price of 27.788ppl (www.milkprices.com).  This gives a 4.578ppl price differential between milk supplied under the formula contract to that supplied under the standard DC contact (23.21ppl).

 

0.5ppl milk price reduction for suppliers to South Caernarfon Creameries – from August 1st  (17th July 2015)

Plus a further 0.5ppl reduction from September 1st

 

Disaster as GDT crashes a further 10.7%(17th July 2015)

This week’s GDT result could not have been worse with the average price down 10.7% as the 9th consecutive fall was recorded.

 

This is now seriously desperate and world wide cows will surely be culled en mass to cut production and expenses.  In the case of SMP the average price of $1702 tonne equates to under £1100 a tonne or €1550 tonne, which is €148 below the intervention price of €1698 tonne.

 

Readers might ask why a processor would sell product at €148 per tonne below the intervention price? The reason is the intervention payment terms are 120 days and processors need the cash flow now. Having said that EU product is expected to go into intervention within the next 2 weeks.

 

For weeks we have said it couldn’t get worse but it is and the next auction on August 4th sees volumes on offer go vertical with 60% more product on offer. 

 

Within this figure WMP volumes will increase by a staggering 88% from this weeks 15,575 tonnes to 29,550 tonnes and SMP product to increase by 39% - ouch.  The likely outcome can only be more price pain.

 

Key auction results from today were:

 

Cheddar                        down                 13.9%   to average $2613 tonne (£1680)

WMP                            down                 13.1%   to average $1848 tonne (£1190)

SMP                             down                 10.1%   to average $1702 tonne (£1095)

Butter                           down                 9.5%     to average $2460 tonne (£1585)

 

Most of the product sold was on one bid by each buyer at the opening/reserve price which is not good news.

 

At next week’s Royal Welsh Show the European Commissioner, Phil Hogan will surely be challenged on his stance that the EU dairy industry is not in crisis. Surely this is a CRISIS!

 

Houston we have a very serious and big problem.

 

Graham’s The Family Dairy drops 7ppl B price bombshell on…Scotland’s family dairies (17th July 2015)

Ian’s take on the above headline will be posted on our website on Monday and feature in next weeks bulletin, following detailed conversations with both Grahams producers and Robert Graham Snr. 

 

35% of Gigha’s cows go in one hit (17th July 2015)

The four remaining dairy farmers on the Scottish island of Gigha, who supply First Milk, will be down to only 3 following Dan Jackson’s decision to quit at the end of this month.

 

This will leave three producers with around 180 cows in total, making the viability of dairying on the island very finely balanced.

 

 

Letter from The Farmers Forum:

 

Dear fellow producer,

 

The Farmer’s Forum has been debating whether in the current climate, we as an Industry are making the best of promotional and educational opportunities. The end of quotas, for example, does pose the question that if more milk is being produced, are we doing everything we should be doing to maximise the understanding of dairy foods and drive up demand?

 

We your fellow producers on the Farmers’ Forum believe it is important to gather as much valuable information on this issue from you directly. We have accumulated much anecdotal evidence already that you would like to see more investment in promotion to, and education of, the consumer.

 

In order for us to play an active role in addressing this issue we need your help in answering the following two questions.

 

2.     Do you support financial investment in the generic protection and promotion of all dairy products and the education of consumers with professionally-researched activity such as promotion, marketing or sponsorship? 

3.     If the answer is yes, how do you think such industry-wide activity could be funded?

Rest assured your answers count. They will be treated in confidence and will be used to take this issue forward, hopefully stimulating constructive dialogue across all sectors within the industry.

 

We need your help in answering these questions and would ask you to send your replies either to us at farmersforum@dairyuk.org or reply to the email sent to you, preferably by the end of July.

 

Alternatively reply to this bulletin with a “Yes” or a “No” in the subject and your comments.

 

 

 

Last week’s cheap milk at The Livestock Event  (17th July 2015)

Thank you to all the code crackers who confirmed that last week’s cheap milk on sale at the NEC for 25ppl, which was an increase from the 16ppl the same milk was on sale the previous week came, from Wells Farm Dairy.

 

 

 

TWO CARS FOR SALE

Ian’s wife’s Audi A5 TDI Quattro Cabriolet S Line 3.0 litre automatic diesel.  In brilliant red, new July 2009, only 32,000 miles.  On Ebay ends 10pm Sunday 26th July …. http://www.ebay.co.uk/itm/271931842592?ssPageName=STRK:MESELX:IT&_trksid=p3984.m1555.l2649

 

 

ALSO                                                     

 

Carole’s late father’s Silver Ford Mondeo Zetec TDI, new 2002, he had it from new.  On Ebay ends 10pm Sunday 26th July ….. http://www.ebay.co.uk/itm/271931843618?ssPageName=STRK:MESELX:IT&_trksid=p3984.m1555.l2649

 

 

Disaster at GDT crashes a further 10.7%   (15th July 2015)

Today’s GDT result could not have been worse with the average price down 10.7% as the 9th consecutive fall was recorded.

 

At next week’s Royal Welsh Show the European Commissioner, Phil Hogan will surely be challenged on his stance that the EU dairy industry is not in crisis. Surely this is a CRISIS!

 

This is now seriously desperate and world wide cows will surely be culled en mass to cut production and expenses.  In the case of the SMP the average price of $1702 tonne equates to under £1100 a tonne or €1550 tonne, which is €148 below the intervention price of €1698 tonne.

 

For weeks we have said it couldn’t get worse but it is and the next auction on August 4th sees volumes on offer go vertical with 60% more product on offer. 

 

Within this figure WMP volumes will increase by a staggering 88% and SMP by 39% - ouch.  The likely outcome can only be more price pain.

 

Key auction results from today were:

 

Cheddar                        down                 13.9%   to average $2613 tonne (£1680)

WMP                            down                 13.1%   to average $1848 tonne (£1190)

SMP                             down                 10.1%   to average $1702 tonne (£1095)

Butter                           down                 9.5%     to average $2460 tonne (£1585)

 

Houston we have a very serious and big problem.

 

1.5ppl milk price reduction for suppliers to Paynes Dairies - with immediate effect from July 1st    (10th July 2015) 

This takes producers standard litre price down to 21.7ppl (www.milkprices.com).  This is the shortest notice cut we have heard of and it’s by far the biggest July 1st price cut.

 

1.5ppl milk price reduction for suppliers to Fayrefield Foods – from July 22nd   (10th July 2015)

This takes producers standard litre price down to 19.5ppl (www.milkprices.com).  Note, this is a “clean price” with no seasonality, transport charge, capital retention or retrospective balancing charge.

 

1.15ppl milk price reduction for suppliers to Belton Cheese - from August 1st    (10th July 2015)

This takes producers standard litre price down to 23ppl (www.milkprices.com)

 

1ppl milk price reduction for suppliers to Joseph Heler Cheese – from 1st August    (10th July 2015)

 

1ppl milk price reduction for suppliers to Barbers Farmhouse Cheese – from 1st July    (10th July 2015)

This takes producers standard litre price down to 24.64ppl (www.milkprices.com).  Note, there is also a further 1ppl reduction from 4th August.

 

1ppl milk price reduction for suppliers to Meadow Foods – from August 1st    (10th July 2015)

This takes producers standard litre price down to 20ppl (www.milkprices.com)

 

0.75ppl milk price reduction for suppliers to Pensworth Dairy – from August 1st   (10th July 2015)

This takes producers standard litre price down to 22.65ppl (www.milkprices.com)

 

0.75ppl milk price reduction for suppliers to Yew Tree Dairy (AKA Woodcocks) –from August 1st    (10th July 2015)

This takes producers standard litre price down to 23.75ppl (www.milkprices.com)

 

0.37ppl milk price reduction for suppliers to the Co-operative Group (CDG) via Muller Wiseman – from August 1st    (10th July 2015)

This takes producers standard litre price down to 28.32ppl (www.milkprices.com)

 

Tesco announce a comprehensive review of TSDG – The status quo is not an option    (10th July 2015)

Tesco aligned producers have been put on notice that Tesco have started an in depth comprehensive review of the Tesco Sustainable Dairy Group (TSDG), which has run for close to 8 years.

 

The review will cover everything and some of the key phrases from the letter for farmers to focus on are as follows:

 

  1. The letter is from Tesco’s Commercial Director of Fresh Food & Commodities and not from the Tesco Dairy Agriculture Manager.

 

  1. ….. allows us to adapt the TSDG to the industry changes we have seen, and make it sustainable into the future.” This means sustainable for Tesco as well as the farmers.

 

 

  1. Fairness – we want to pay a fair price for our milk and reward farmers who are driving performance, efficiency and standards” This means the current model is almost certain to change by the next price review date of November 1st.

 

  1. 96% of you told us (Tesco) that you have benefitted from being a member (of TSDG).  It’s a pity the other 4% didn’t top it up to 100%.

 

 

  1. “We want you (the supplying farmers) to be part of this process.  Your views and opinions really matter to us.”

 

Whilst Tesco will listen to producers opinions I suggest you forget it if your opinion is simply stating we need the money.  All Tesco core farmers will have to get involved in this review or face the consequences if they simply leave it to their respective processors committee members and then scream when the outcome is not to their satisfaction. 

 

I asked one Tesco committee member how many times he had been thanked for his efforts and he said “once with dozens of criticisms”.  Comments welcome but for Tesco suppliers it’s time to be on the pitch in attack and defence not on the side lines chanting and hurling abuse!

 

Defending the status quo is, in my opinion, indefensible and not an option.  There will be change and it’s best done by negotiation and consent.

 

The outlook for 2015 is grim   (10th July 2015)

Regrettably both the EU and world dairy outlook for the second half of 2015 is nothing short of very grim. There are even signs that some European processors are on the brink of supplying product into intervention, which now seems to be inevitable by August at the latest.

 

Next Wednesday will be the next fortnightly GDT auction and already analysts are anticipating another 10% fall in the key product auction price of WMP with more falls expected in August as the quantity of product on offer rockets up.

 

1500 jobs to go   (10th July 2015)

Fonterra is expected to cut around 1500 jobs as part of a wholesale restructure and streamlining.

 

Cheap milk at NEC Livestock Event at 25ppl   (10th July 2015)

There is nothing like rubbing dairy farmers’ noses in it. Several eagle eyed farmers were quick to alert Ian to the fact Eden Fresh Milk was on offer at the NEC for 25ppl.

 

At least it was going up in price because they claimed that last week it was selling at the NEC for 16ppl or 6 litres for £1.  Perhaps the RABDF suggested the price should be increased for the duration of the event.

 

Could one of our readers please confirm who processes and packs Eden milk?

 

Grim GDT auction results with WMP down 10.8%!!   (3rd July 2015)

Wednesday’s GDT auction results were grim with the all products average down 5.9% with the biggest hit coming in the form of a brutal 10.8% drop in WMP prices leaving them only just above $2,000 (US) a tonne averaging $2,054.

 

This hurts because both in New Zealand and globally the WMP price is a huge influencer in determining farm gate milk prices.  Such low prices were last seen 6 years ago in July 2009.

 

Note, in exactly 12 months the auction value of SMP has more than halved to what it was in July 2014 when prices started to tumble big time and it’s not ended yet.

 

Note, the volume on offer at this week’s auction was more than 40% up on the volume put forward only two weeks ago with 30,000 tonnes forward.

 

There is only one question everyone is asking:

 

How long will global dairy prices continue to drop before they bottom out?

 

Despite the continued downward spiral the EU’s Agriculture Commissioner Phil Hogan maintains “there is no crisis in the dairy sector”.  Well it looks like a crisis to Ian.

 

Key prices from the auction

WMP                            down                 10.8%   to average         $2054/tonne

SMP                             down                 5.8%     to average         $1875/tonne

SMP Arla Westbury                                                                   None on offer

Cheddar                        down                 4.9%     to average         $3060/tonne

Butter                           down                 0.3%     to average         $2694/tonne

 

1ppl milk price reduction for Muller Wiseman non-aligned producers – from 1st August   (3rd July 2015)

This takes producers standard litre price down to 23.15ppl (www.milkprices.com)

 

1ppl milk price reduction for Glanbia Cheese suppliers – from 1st August    (3rd July 2015)

This takes producers standard litre price down to 22.91ppl (www.milkprices.com)

 

1.5ppl milk price reduction for Grahams Dairies (Scotland) suppliers – from 15th July    (3rd July 2015)

This takes producers standard litre price down to 23.75ppl (www.milkprices.com)

 

1ppl milk price reduction for Crediton Dairies suppliers – from 1st August     (3rd July 2015)

This takes producers standard litre price down to 25.36ppl (www.milkprices.com)

 

0.25ppl milk price increase for Dairy Crest Direct Davidstow suppliers – from 1st August    (3rd July 2015)

This increase is in recognition of the new production standards farmers have to adhere to and comply with in preparation for DC’s exciting infant formula production facility.

 

It’s the first increase the farmers have had since November 2013 and increases producers standard litre price to 25.34ppl (www.milkprices.com)

 

Stand on for August milk prices for Dairy Crest liquid suppliers    (3rd July 2015)

This will bring the Dairy Crest liquid and Muller Wiseman non-aligned standard litre prices almost on parity, which will help oil the wheels for the buyout of Dairy Crest’s liquid business when it is given the green light later this year.

 

Dairy Crest liquid standard litre price 23.09ppl v Muller Wismans 23.15ppl.

 

Stand on for Dairy Crest’s organic milk price for August – standard litre price 38.43ppl.    (3rd July 2015)

 

95.3% of Dairy Crest Direct farmers sign up to DPO   (3rd July 2015)

Dairy Crest Direct (DCD) have signed up 95.3% of their 1050 supplying members to their DPO (Dairy Producer Organisation).

 

A key feature of the DPO status is it will ensure future contractual term variations and price changes will be by negotiation and not at Dairy Crest’s discretion.

 

The wonder is why only 95.3% have signed up and not 100% unless the remaining 4.7% who haven’t signed are planning to exit the industry.  On that score if only 4.7% hang the clusters up in the next 12 months that could be a fantastic result.

 

1ppl milk price reduction for First Milk  A price milk – from 1st July  (30th June 2015)

The reduction is across the board with the exception of those in the Midlands balancing pool whose reduction will be 0.7ppl.

 

The resulting new www.milkprices.com standard litre prices will be as follows:

 

The Midlands & East Wales balancing pool 18.6ppl

Mainland Scotland 19.3ppl

North of England 19.5ppl

Haverfordwest  20.17ppl

Lake District 20.2ppl

 

After deduction of the 2ppl capital retention plus the 80:20 mix of A and B prices means at least an estimated 3ppl will be deducted from producers delayed payments to the bank and that’s before any adjustments are made in respect of individual profiles.

 

This effectively gives a standard litre paid into the bank of between 15.8ppl and 17.2ppl.

 

Note, First Milk’s forecast July B milk price is between 14ppl to 17ppl, however, it’s a certainty if will be closer to 14ppl than 17ppl.

 

Finally, in making the announcement with only a week’s notice of the price change to members First Milk has, on this occasion, abandoned the Voluntary Code of Practice.

 

I don’t think anyone will criticise them for that move on two counts.

 

One is why should they subscribe to the code when it comes to price changes, when others clearly don’t?

 

Secondly, they have to do what they have to do to ensure they stop the barmy practice of paying members more money for milk then they can obtain from the market place. Simple.

 

1.18ppl milk price reduction for Arla AMBA members - from 6th July   (30th June 2015)

This is made up of a 1 Euro Cent across the board price reduction (0.77ppl) on a UK standard litre plus 0.41ppl reduction as a result of the currency smoothing mechanism adjustment

.

This takes producers standard litre price to 23.81ppl (www.milkprices.com)

 

1ppl milk price reduction for Arla Directs - from 1st August  (30th June 2015)

This takes producers standard litre price down to 21ppl (www.milkprices.com)

 

EU milk production is a problem   (30th June 2015)

An estimated 5% increase in May milk production is estimated as recorded and more seriously it equates to the need to increase exports by a whopping 40% in order to shift the additional product from this extra milk.

 

Individual countries positions are as follows:

 

Southern Ireland production in April +14.5%

Italy production in April + 9.7%

Holland production in May + 7.5%

Poland production in April + 4.1%

In the case of the USA, production for May was +1.4%

 

Little wonder no one is predicting that ex-farm gate milk prices may have bottomed out.

 

Sir Jim Paice to stand down as Chairman of First Milk  (30th June 2015)

Following on from his comments as to the need for commercial and business skills on the board of First Milk, Sir Jim has announced he is to stand down as soon as a replacement is agreed.

 

Two or three points spring to mind connected to this announcement. Firstly, he is sure to shortly be followed by others who will step down from the board of First Milk as it re-groups to execute Gallacher’s turnaround plan.

 

Second, there was minimal, if indeed, any recognition in the NFU’s press release/NFU reaction bulletin in terms of normal protocol, which many had expected would have included a line suggesting Sir Jim had done a good job. Not a word along these lines from either the President of the NFU or its Dairy Board Chairman, both of whom were quoted. The situation was even worse in the Scottish NFU’s press release of the same date.

 

New Chairman of Muller Wiseman Milk Group Board   (30th June 2015)

Philip Rowney takes over as Chairman of the group from Roddy Catto and in doing so represents 1200 dairy farmers who supply MW.

 

The press release paid tribute and thanks to the work of the outgoing Chairman.

 

“Roddy deserves enormous credit for the hard work, commitment and energy he has shown as Chairman of the MWMG board”

 

More than half of UK consumers are willing to pay more for milk - according to Mintel   (30th June 2015)

One of the leading market intelligence research companies, Mintel, have found that over 50% of consumers surveyed would be willing to pay more than £1 for 4 pints of milk.

 

So as retailers battle to sell the lowest price milk at 89p or less for 4 pints, in a bid to get customers through the door, Mintel is asking the key question.

 

“Whether that level of price cutting is needed?”

 

Pinpointpal    (30th June 2015)

Do you want to keep tabs on your vehicles, or equipment or people? Well allow us to point out the merits of Pinpointpal GPS tracking devices. Ian used one on his charity Classic Mini Trip from the tip of the North to the tip of the South of New Zealand and was so impressed IPA has become the main agricultural selling agents for the technology.

 

The trackers are simple to fit with just two wires (one live and one earth) and you can start monitoring movements and vehicle location straight away via the website or a smartphone app.

 

Ian is impressed with the fact that as sales grow the nice (British) people at Pinpointpal are investing more money in enhancing and introducing new features to the trackers for both existing and new users. They have now asked that we contact everyone who has purchased a tracker through us to find out whether there are any features they would like on their wish list. So if you’ve got any ideas please email sales@ipaquotas.co.uk.

 

There are many benefits of using a Pinpointpal tracker including:

 

  • Tracking stolen vehicles and machinery - including pressure washers and generators;
  • Reducing insurance discounts;
  • Tracking vehicle movements outside of working hours;
  • Health and safety to keep an eye on workers in upland or hill areas on ATV’s;
  • British made and supported.

 

Alerts can be delivered to mobiles, iPad, laptops, desktops, and these can tell the user as little or as much information as is required. For example, an alert can be sent if a vehicle moves outside of a pre-set distance from the farm or base.

 

We are selling the devices at an unbeatable price of £150 + VAT which includes two years tracking. After that it’s £25 year, which makes it by far the best value tracker on the market.

 

Please call Lydia on 01335 324594 or email her on sales@ipaquotas.co.uk to order, or for more information.

 

First Milk announce eye-watering losses of £22m  (19th June 2015)

 

First Milk have informed members that its losses for the financial year ended March 2015 will be around £22m equal to £61,000/day or nearly £2m/month. At least that has got the bad news out early, Tesco style, but the big question for its members will surley be by how much have these loses slowed down in April and May of 2015 and in what month do they budget to breakeven?

 

First Milk have consistently paid one of the lowest, if not the lowest, ex-farm gate milk prices, yet still they paid out more than they could afford to pay and have consequently returned to members for money to bridge the gap.

 

Several First Milk members who emailed Ian today seem to have come to the conclusion that all the blame sticks with the former CEO, Kate Allum. That may be a convenient place to hide but its unlikely to be the whole story.

 

The First Milk board have to accept responsibility for the part they have played in achieving these appauling results because they have a clear remit and it appears they have failed.

 

In today’s letter to members, Chairman Sir Jim Paice, has commented “Personally, I believe a business of this size needs a board with substantial commercial experience.” Apologies to all involved at First Milk but translating this means very few farmers will sit on the main board of First Milk.

 

On that statement Ian feels Sir Jim is bang on. But First Milk is a business, which is currently shrinking or at best holding its own in dirty water and it needs that commercial expertise asap. Ian is not sure whether those on the board at the moment know they have to leave, but for those who do realise they might be wise to move on prior to completion of the review.

 

The review of its governance cannot come soon enough because if Gallacher is to stand any chance of succeeding with his turnaround policy he needs more professionals on his board and not, with respect, enthusiastic amateurs who have played their part in todays financial announcement. But at the end of the day it’s up to the members to influence who is in and out of the board and, to express any dissatisfaction.

 

One of the options open to Muller is discounted  (19th June 2015)

 

Earlier this week Ian suggested one of the options open to Muller was to withdraw its £80m offer to buy Dairy Crest’s liquid business and walk away.

 

Ian is reliably informed that the deal was signed by both parties and will be concluded subject to Competition Authority (CMA) approval.

 

That means there are only two options available to Muller with one a near certainty namely that the deal is subject to an in depth scrutiny from the CMA under phase 2.  Quite why phase 2 has to take 6 months conclude to leaving 4,000 plus employees in limbo is beyond comprehension but I guess the CMA simply have rules, procedures & timelines.

 

However, for the retailer(s) or others who have already thrown spanners in the works with the CMA it’s time to produce the objections and evidence.

 

It’s put up or shut up time, because if I were Muller I would be seeking to settle for nothing less than unconditional approval.

 

Shore Capital suggested the complainant retailer could be ASDA, which is surely the least likely.  Let’s face it ASDA source all their GB liquid milk from one sole supplier Arla and don’t appear to experience any regional problems.  They surely have no grounds to raise any issues with the CMA.

 

European and world view   (19th June 2015)

The general view is that GDT Auction prices are unlikely to have stabilised or bottomed out this week.  Most, if not all, respected analysts are now of the opinion that it will be at least 12 months before we see signs of any substantial price increases.

 

UK, EU and world milk production is still increasing and this is not matched by increased demand.

 

In the case of the UK May production is estimated, by DairyCo, to be +2.5% at 1.37 billion litres compared to that recorded in 2014 and is record.

 

Whilst the average decline at this week’s GDT was small it has to be balanced with the fact the volume of available product amounted to only 21,800 tonnes and in two weeks time the tonnage will increase by 44% to 31,300 tonnes.  That will be a real test for the market.

 

Note, the Arla Westbury SMP sold at this week’s GDT actually sold for 95% of the current EU intervention price so it cannot really fall any lower.

 

New Chairman at Belton Cheese    (19th June 2015)

William Neville, former senior partner at solicitors Burges Salmon and the man considered the UK dairy industries legal guru and Rottweiler, is the new Non-Executive Chairman at Belton Cheese, Shropshire.

 

GDT average continues to head south – but  (16th June 2015)

Today's GDT all products average fell for the 7th consecutive time this time by the smaller margin of 1.3% to average US $ 2409 compared to the average achieved two weeks ago.

 

The positives, other than the fact the fall was smaller than recorded in recent months, was the fact many key products were either close to a stand on price or saw their average price improve.

 

Also the number of registered bidders continues to increase and today totalled 649 compared to 642 at the last auction and similarly the number of winning bidders increased from 115 to 125 which is encouraging

 

Key movers of interest:

Cheddar                        + 2.4% to average          $3128 tonne

Butter                           +3.3% to average           $2707 tonne

WMP                            0.1% to average             $2327 tonne

SMP                             0.2% to average             $1978 tonne

Westbury SMP              2.1% to average             $1875 tonne which is the lowest recorded average

 

0.661ppl milk price reduction for Dairy Crest Formula producers  (16th June 2015)

This is from 1st July and means the gap between the standard Dairy Crest price and the formula price is 4.747ppl.  The adjustment is predominantly as a result of a 20% plus fall in cream prices.

 

The resulting formula standard litre price will be 27.957ppl.

 

0.11ppl milk price reduction for Sainsburys (SDDG) – from 1st July   (16th June 2015)

This is a quarterly review and will result in the following standard litre prices:

 

Muller               30.87ppl

Dairy Crest        30.81ppl

Arla                  30.75ppl

 

Bottled it!  Muller-Wiseman merger goes to phase 2   (16th June 2015)

This was a very appropriate headline from Shore Capital’s dairy analyst Clive Black as he reported on The Competition & Markets Authority (CMA) press release, which was bizarrely issued at 17:30 hours last Friday.

 

The £80 million bid by Muller to acquire the liquid business of Dairy Crest will now move to an in depth investigation under phase 2 “unless acceptable undertakings are offered by Muller to the CMA by this Friday, 19th.”

 

Throughout the press release there is no acknowledgement from the CMA that this deal simply has to take place because no business can continue to lose circa £15 million a year as Dairy Crest did last year in its liquid division.

 

Instead it’s obvious from the press release that one or more of our big retailers has objected to the deal on the grounds that there will be:

“a realistic prospect of a substantial lessening of competition in the supply of fresh milk to major grocery retailers with national scope (national multiples) in certain regions in Great Britain” commented the CMA in their press release.

 

In Ian’s opinion this points to one region with up to two national retailers who are the most likely to have objected.

 

The region is most likely to be the South West and the short odds are on a complaint from Sainsburys followed possibly by Morrisons.

 

The CMA has confirmed to Ian that the identity of objectors in phase 1 and/or the substance of their objection will not be publically disclosed.

 

In its press release the CMA goes on to state:

 “The CMA considers that the merger may lead to higher prices in the supply of fresh milk to national multiples and, in turn, for consumers.”

 

Clive Black accurately comments that “no one seriously believes that the Big Four (supermarkets) will charge more to customers for milk in Plymouth, Swansea and Taunton that the rest of the country.  Using an old fashioned milk industry term, therefore, has the CMA bottled it?”

 

He is spot on they have bottled it and completely ignored the farmer impact of the deal and have hidden behind one or more of our big 4 retailers – wimps.

 

Speculation over what the Muller team might do next   (16th June 2015)

As Ian sees it Muller have three options:

 

  1. They could simply say let’s go to phase 2 and let it run its 6 month course to Xmas.  They can do this in the full knowledge that the deal is almost certain to be approved at the end of phase 2.

 

  1. Assuming the South West is the region in question; Muller could offer to sell its Bridgwater liquid factory.  There must be more chance of Ian becoming an Olympic synchronised swimming gold medallist than that happening.  That’s a scary thought!

 

 

  1. Muller say to hell with it, we don’t need the aggro.  We will immediately withdraw the offer and let Dairy Crest’s liquid business bleed to death.

 

Option 3 looks tempting to Ian followed by option 1, however, given the deal is right for both parties and right for the UK dairy industry I suspect Muller will be determined that option 1 is the right avenue to pursue.

 

Arla Tesco farmers are 6ppl apart but for how much longer?   (16th June 2015)

The difference in the milk price received by Arla AMCO co-op members on a Tesco aligned contract and the Arla Tesco directs is almost 6ppl and must surely be at its widest point.

 

By 1st November Tesco are sure to reduce the price by at least the change in the cost of production if not more which will narrow the gap by a sizeable percentage.

 

As part of a costings review Arla have examined the 0.2ppl livestock Code of Practice enhancement paid to Arla AMCO members who supply Tesco and the result is the true cost is 0.48ppl.  Note, this premium is not paid to the Arla Tesco directs.

 

From 1st July the premium paid will increase from 0.2ppl to 0.48ppl.  In addition, a back payment of 0.6ppl to cover the top up from 1st January 2014 to 30th June 2015 will be paid to all Arla AMCO Tesco suppliers who are members at 31st December 2015.

 

There will be some who question why there is a delay in paying the top up payment.  We can only come up with one real reason and that is the delay is an attempt to persuade any Arla AMCO Tesco farmers contemplating serving 3 months notice to become Arla Tesco direct suppliers to not make that move.

 

In addition, by the time the 0.6ppl is paid the gap and the situation is likely to have changed, which coupled with the 0.6ppl top up is likely to influence some AMCO members.

 

Arla 0.5ppl levy is suspended again   (16th June 2015)

Arla AMCO members will not be paying the 0.5ppl levy for the three month period starting 1st July.  The holiday from the levy was in place from January to March then re-introduced from April to June.

 

Cheap Milk   (16th June 2015)

4 litres (7 pints) for £1.  Spotted in Premier Lea Village Convenience Store, Kitts Green Road, Birmingham – Milk from Paynes Dairies.

 

Morrisons have cut the price of 4 pints to 89p and in doing so have followed ASDA and Aldi.

 

Morrisons commented that the reduction will not affect the price they pay their dairy suppliers.  Yeah, yeah and all in the dairy industry believe them!

 

 

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England V Estonia Football Tickets – 8th September 2015 – 19:45 pm    (16th June 2015)

If anyone is interested in 2, 3 or 4 tickets in any section of Wembley, please email lydia@ipaquotas.co.uk as soon as possible.

 

0.75ppl milk price reduction for suppliers to Glanbia Cheese – from 1st July  (5th June 2015)

This takes producers standard litre price to 23.94ppl

 

0.5ppl milk price reduction for suppliers to Woodcocks Dairy - from July 1st (5th June 2015)

This takes producers standard litre price to 24.5ppl

 

Dairy Crest hold milk prices for July  (5th June 2015)

Dairy Crest has joined Muller in announcing to hold farm gate milk prices until at least August 1st.

 

Spot Prices back down to 12ppl – Need we say anymore? (5th June 2015)

 

GDT falls for the 6th consecutive time both the number of registered and successful bidders fell to those recorded two weeks earlier  (5th June 2015)

 

Further grim news from this week’s GDT auction with the overall average falling 4.3% to average $2412 with virtually all products recording falls.

 

Butter was hit hardest falling 10% and its auction value has plummeted by 32% in just three months.

 

 

Notable prices were:

Butter               down     10%      to average         $2619/t

WMP                down     3.1%     to average         $2309/t – 7th consecutive fall

SMP                 down     1.3%     to average         $1982/t

Arla Westbury   down     2.8%     to average         $1915/t

Cheddar            up         11.3%   to average         $3055/t

 

Caffe Nero – The Villains or The Victims  (5th June 2015)

One of the main talking points at the excellent Cornwall Show was, inevitably, Caffe Nero allegedly banning milk from coming from the two badger cull areas. It’s fair to say that farmers are seething about this, and so too was I. Note the word was. The past tense. That’s until I had spoken to Nero at length and in-depth and thought a bit more about what it has done. My views will be diametrically opposed to most farmers, but there’s a lynch mob out there, right now. Some in the Dairy Industry refer to me as a leader (!)  If that’s the case I contest that few if any leaders would follow or condone a lynch mob. I hope what I have to say now tempers some of the industry’s (entirely understandable) vitriol against the company.

First, yes, the chain seems to have panicked in making its decision. But I genuinely believe that it had received credible, malicious and very nasty threats to its staff. And remember many (most in fact) of its public-facing staff are young and female. 80% of its staff are aged between 18 and 30, in fact. They are wholly untrained in dealing with nasty, malicious people hell bent on being as unpleasant and intimidating as they can be. Why should they be trained in that? Or put in that position? I have a daughter aged 23 and I wouldn’t want her to face such a frightening scene. Having said that she works in the office with me and she would say that’s frightening and scary.  Many farmers will have daughters and sons of the same or similar age to those working in Nero, and who are starting out in perhaps their first job. I am sure they share my view. Some of the small shops in London have as few as two people working in them.  So that’s two youngish girls potentially under threat. For that reason I can wholly empathise as to why Nero wanted to, in fact had to put their staff first on this issue. I know the same applies to farmers too. They should not be threatened either, but that is the nature of the people we are dealing with.

Nero were a soft target for the food terrorists who embarked on a nasty social media campaign which included sending at least one threatening email direct to one of its Senior people aimed at him and his family. In addition the terrorists posted up a map of the route of a planned austerity march on June 20th which marked every Nero coffee store on it. Note Nero have 100 London stores.

Second, Nero has had a thorough thumping from farmers, journalist and commentators. But Nero are not the Villains or the enemy. The enemy are the same bast-rds that intimidate the farmers in the cull zones. We are on the same side as Nero. As an industry we should be standing by our customers in such times, not condemning them and fighting among ourselves. We have to throw a protective, unified arm around them and send out the message that the antis won’t divide and rule us. Unless we do this then it will be another company next, and then another one after that.

Despite press claims to the contrary having spoken to Nero on several occasions at Board level I can confirm the Police are heavily involved and have taken the threats very seriously. Nero have not actually refused to apologise to dairy farmers but they simply can’t at the moment under these circumstances.

Third, every hour that passes when farmers are screaming at Nero is another hour where the antis are laughing at our expense, and rejoicing in all the publicity they have generated, and that we continue to generate on their behalf. They secured an early PR victory, but we are helping to drag it out. It has to stop.

Nero doesn’t have a position for or against the badger cull which they say is a matter for the Government to deal with. However they certainly have the utmost sympathy for dairy farmers who are caught up in this situation. They do have a duty of care to protect their staff and customers from the threats of violence, intimidation and business disruption.

With hindsight Nero could certainly have handled the situation different and better but at the end of the day they simply sell coffee and from my conversations with them Nero plan to continue to use British milk from British dairy farmers and have no appetite to take a position on the badger cull.

In my opinion the time for giving Nero a thump is over. It is now time to hold out the hand of co-operation and to start helping it to get back to where it was, and to send a message out that the industry will help and support other customers faced with similar intimidation. Its Nero today and you can be sure other targets will already be on the terrorists’ radar. Its time to stand united.

First Milk’s Chairman Sir Jim Paice's £90k salary is slammed by politicians  (5th June 2015)

The Scottish Rural Affairs Committee enquiry singled out First Milk’s Sir Jim Paice's salary of £90,000 a year for 50 days work for some robust scrutiny.

 

MSP asked whether the payment of £1800 a day was fair remuneration given the difficulties faced by the farmer members of the troubled co-op.

 

Sir Jim’s response was “I'm not going to deny that I'm being paid very reasonably for it, but that's not the primary objective"

 

There was also criticism of the fact the salaries of the rest of the board are "shrouded under secrecy".

 

That's surprising because if it's true then clearly some of the members presumably feel the salary they receive is unjustified.

 

One thing is for certain if the ongoing independent report into the governance of First Milk is as hard hitting as it should be a number of its board will surely be replaced this year with better qualified professional members who can help the new CEO as opposed to what some have called enthusiastic members.

 

Arla UK TV campaign promotes dairy farming and ownership  (5th June 2015)

This Monday, during the Coronation Street adverts, Arla will have the first showing of its new advert, which focuses on both Arla’s range of dairy products and the fact the co-op is owned by its farmer members.

 

The advert is eye catching to both farmers and families and follows Arla farmer, Joe Delves, during his morning with the cows whilst the rest of the world is waking up.

 

The best cheddar cheese is Belton’s Traditional Organic  (5th June 2015)

Farmhouse cheesemakers Belton Cheese were crowned Best Cheddar Cheese with its Traditional Organic Cheddar at the British Cheese Awards. Belton Cheese went on to win 17 awards in total.  With 177 cheesemakers and more than 1000 cheeses competing, the competition was tough.

 

Scottish farmers to share £12.2m of CAP refund  (5th June 2015)

Around 14,600 Scottish farmers will receive a share of £12.2m into their bank accounts next week, which is basically a refund of the unspent CAP financial discipline fund for 2013 SFP payments.

 

The average farmer payout is expected to be just under £850 per farmer.

 

At 39p for two litres we thought we had found Britain’s cheapest milk but ……  (5th June 2015)

Yes, last Friday Paynes Dairies supplied milk at 79p for 3 litres was very quickly ousted for the number one spot as Britain’s cheapest milk.  In fact, it lasted 3 minutes at the number one spot until pictures cam through showing 2 litres of both Country Life milk and 2 litres of Muller Wiseman branded milk for 39p.

 

Then along came 2 litres of Goodness from Eden Milk supplied by Wells Dairies for 35ppl.  Yes, sold at 17.5ppl.  Clear evidence that all hell has broken out again in the Midlands with, one would assume, processors simply battling on price to gain a shilling on milk rather than balance it into commodities.

 

Thanks to the eagle-eyed readers who sent us the evidence of the deals.  I hope no one can top trip this latest deal.

 

0.84ppl (1 Euro Cent) milk price reduction for Arla members it could have been worse  (29th May 2015)

The latest Arla member milk price reduction of 0.84ppl from 25th May is unwelcome but could have been worse, given the continual decline in world dairy prices. 

 

This latest reduction takes producers standard litre price to 24.99ppl for non aligned suppliers and 25.69ppl for aligned Tesco suppliers (www.milkprices.com)

 

1.45ppl milk price reduction for M&S aligned producers – from June 1st   (29th May 2015)

This takes producers standard litre price down to 32.79ppl (www.milkprices.com)

 

1.5 Euro Cents milk price reduction for Friesland Campina suppliers – from June    (29th May 2015)

This takes producers UK equivalent standard litre price down to 21ppl (www.milkprices.com)

 

Muller to hold its July milk price   (29th May 2015)

Unconfirmed reports and strong rumours indicate that Muller will confirm to its suppliers very early next week that they will hold producer milk prices for July.  This is a move which was nowhere near the bookies favourite for a July milk price cut.

 

Congratulations to all involved in this decision.  What happens to the August farm gate milk price and beyond is down to producers and production levels. 

 

Peak production was 44.8million litres on 26th April  (29th May 2015)

According to DairyCo peak daily production peaked on April 26th at 44.8m litres, up 1 million litres (+2.2%) on the 43.8m peak achieved in 2014.  Production continues to run 1 million litres a day ahead of last year post the peak production day.  During the first 13 weeks of 2015 we produced an additional 21 million litres of milk and there lies a big problem.

 

In summary, if production continues as these levels farm gate milk prices will be subject to further downward pressure.  Farm gate supplies cannot continue at current levels and not affect the milk price.  Less = more.

 

Fonterra prices pile more pressure on New Zealand dairy farmers  (29th May 2015)

Fonterra has announced a further drop of 10 cents to NZ $4.40 per kg of milk solids as its latest forecast payout for the 2014/15 season, which ends this week.

 

If this becomes the final price for the year it will be close to half of the NZ $8.40 paid out a year earlier.

 

At the same time Fonterra has announced its opening 1st June 2015/16 farm gate milk price at NZ $5.25.

 

New Zealand’s second largest dairy co-operative, Westland, has also announced its opening price bracket for next season as $5.60 to $6.00 kg.

 

Dairy Crest’s year end profits drop 60%   (29th May 2015)

DC’s end of year financials show a 60% drop in profit before tax falling from £54.2million (2014) to £22.1m (2015).  The drop in profits is predominantly attributable to one off exceptional costs totalling £36m and includes the closure totalling of sites and costs associated with the sale of its liquid business to Muller Wiseman for £80m.

 

Dairy Crest shares closed at £5.13 yesterday the mid point range in trading values seen during the last twelve months which have ranged between £5.05 and £5.20.

 

ScotGov step forward to help Bute & Campbeltown  (29th May 2015)

The Scottish Government has allocated £465,000 of aid to help its struggling Highlands and Islands dairy industry.  Of the money £65,000 will provide subsidised ferry transport assistance for First Milk to haul milk by ferry from 13 farms producing around 15 million litres on the Isle of Bute.  The remaining £400,000 has been allocated to First Milk’s Campbeltown Creamery, where 32 producers supply milk to produce Mull of Kintyre cheddar.

 

What’s the problem with the Island of Gigha’s struggling milk producers?  (29th May 2015)

Whilst the Scottish Government is to be congratulated for offering financial assistance for the transport of milk from Bute, it is jaw dropping for the four remaining milk producers from the tiny island of Gigha to be ignored.  Why have ScotGov excluded Gigha?  Do they want to accelerate the ending of milk production in Gigha?

 

There are only four remaining milk producers on Gigha and one of those plans to exit as soon as possible.

 

GDT auction  (29th May 2015)

The next auction will be on Tuesday next, 2nd.  WMP volumes on offer will be up 15% to those offered two weeks ago, however, the volume of NZ SMP on offer will be 14% less.  Fingers crossed for the previous 5 consecutive auction average price drops not turning into a run of six.

 

DCD is the UK’s first DPO  (29th May 2015)

For the past 11 years Dairy Crest Direct (DCD) has represented its English & Welsh supplying farmers.

 

Following a successful application to the RDPE £5 million dairy fund of which DCD received £110,000 they are now the first UK government approved Dairy Producer Organisation (DPO).

 

The move formalises the ability for DCD to negotiate milk prices and contract terms on behalf of its 1050 farmers and their 1.5 billion litres (or 12% of GB milk output) of milk production.

 

For the Dairy Crest suppliers who are not members of DCD the situation remains the same in so far DC can change prices on a discretionary basis.

 

Arla Chairman is re-elected (29th May 2015)

No surprises to learn that Swedish farmer and business man Ake Hantoft has been re-elected to continue as Chairman of Arla AMBA representing 13,500 farmer members.  Note, the Arla board has been trimmed by three for the next term 2015-2017 – a point others in GB should take note of.

 

The two Arla board directors from GB are Jonathan Ovens and Johnnie Russell.

 

79p for 3 litres – Is this Britain’s cheapest milk?  (29th May 2015)

3 litres of whole or semi-skimmed milk on sale at Best Buy Cash & Carry, 31 London Street, Leicester (Tel. 0116 2765550) for only 79p (26.3ppl).  Milk from Paynes Dairies, Yorkshire

 

Thanks to the two eagle eyed readers who alerted us to the deal.  Who is funding the deal?  Is there cheap B quota milk swishing around at ridiculously low prices chapping the legs from under other processors?

              

Ian’s Classic Mini Adventure to New Zealand  (29th May 2015)

 

Carole (my long suffering wife) and I returned from New Zealand a month ago, and what a fantastic experience we had.

 

During the six days we drove 2,500km and made lots of friends whom we aim to stay in contact with.

 

We always had a trip to New Zealand on our bucket list and the opportunity to participate in the Pork Pie Mini Run from the tip of the North Island at Cape Reinga to the opposite tip on the South Island at Bluff was just the push we needed.

 

Neither of us have previously done a charity challenge, but it sounded like a great idea. It would also be a good opportunity to tease a few brass farthings out of the weekly recipients of this free bulletin for two good causes.

 

Our efforts and the generosity of 219 donors has, to date, raised £6,600. This was split £5,800 to The Rainbow Trust, which supports British families of children with life threatening illnesses, and £800 to The Kids Can Charity, supporting New Zealand children. The Kids Can giving page has now closed.

 

We self funded our trip so 100% of every donation has gone to the relevant charity and to those it was intended.  Nobody contributed a single penny to our adventure.

 

We exceeded our initial target and enjoyed an unforgettable and incredible experience and brought back indescribable memories. Oh, and yes – we saw a lot of dairy cows!

 

We also (understandably) scooped a prize as one of the furthest travelled participants, as our fuel and airfare bill will testify to.

 

Most charity challenges result in the participants losing weight, however, a combination of mutton and possum pies and homemade icecream killed that for us!

 

For details of our six day blog click on this link https://iansminiadventure.wordpress.com/daily-updates/ and daily updates for photos and a brief diary.  If you are desperate for more after that you can then click on the gallery where you will see more photographs from our trip https://iansminiadventure.wordpress.com/gallery/

 

Finally, in addition to thanking all of the 219 generous bulletin readers Carole and I must thank pinpointpal for their support.

 

We have been selling their vehicle tracking devices for several months now and they came up with the great idea to track our movements in New Zealand.  (Click on the live location map link.)

 

It was brilliant, and in addition they provided daily updates and photographs on the website and blog.

 

So a big thank you to them, and if you are interested in knowing about the trackers to keep tabs on your cars, or equipment (not THAT equipment [although some wives have been known to buy one to keep track of their husband’s, if you know what I mean!]) or members of your family, call or email Lydia in the office on (01335) 324594 or lydia@ipaquotas.co.uk who is the tracking expert.

 

Many thanks again,

 

 

 

Ian & Carole

 

P.S.  (and in another hand twist) - The Rainbow Trust Giving Website will close next weekend in case anyone feels the need to make a contribution to a worthy cause in recognition of the effort Ian puts into this bulletin.  https://www.justgiving.com/ianandcarolepotter

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GDT Auction continues to fall(19th May 2015)

Global dairy commodity prices continue to decline on account of unprecedented global production which is proving extremely difficult for some European processors to accommodate and process.

 

Today’s auction produced more disappointing news with the average price down a further 2.2% to average US $2472 compared to the $2515 average recorded only two weeks ago. Note, Arla Westbury powder average was up $20 a tonne.

 

Notable movers were:

 

Cheddar down 7.1% to average $2745

SMP down 3.6% to average $1992

Butter down 3.2% to average $2911 per tonne

WMP down 0.5% to average $2390 per tonne

Arla Westbury SMP up 1% to average $1970 per tonne.

 

Unfortunately, excess to the GDT historical data was denied as we wrote this news. More detail commentary on today’s auction results will follow tomorrow.

Put simply it’s getting tougher.

 

The UK has passed its peak production day  (19th May 2015)

Milk purchasers have confirmed that on a daily basis milk production is declining having peaked in late April.  Spot milk is trading at around 16ppl to 17ppl not withstanding this weekend’s Bank Holiday, which will inevitably cause a blip and exert short term pressure on spot prices.

 

0.03ppl price decrease for DC/DCD formula contracted producers – from June 1st  (19th May 2015)

This takes producers standard litre price to 28.618ppl, which gives a positive 5.113ppl price advantage over the Dairy Crest non-aligned standard litre price of 23.5ppl.

 

The main contributor to the small price correction is a £100 tonne decrease in cream values equivalent to 0.56ppl.

 

RPA stop producing UK milk production figure      (19th May 2015)

With the ending of quotas has come the news that the RPA will no longer collate UK monthly milk production figures.

 

Tesco Tom is no more   (19th May 2015)

Tom Hind (AKA Tesco Tom) will be leaving the retailer in a few days time following a relatively short 20 month employment as Tesco’s Director of Agriculture.

 

At the time if his appointment we suggested he could be a gamekeeper turned poacher.  All eyes will be on where he next turns up.  Perhaps he will be back at the NFU!

 

Entitlement Trading Update   (8th May 2015)

The Entitlement/Basic Area trading is not anything like as exciting as trading milk quota but it is certainly volatile.  One day you have 120 Entitlements and in comes a buyer for 110 and you have next to nothing.  The above lots are all we have available as we go to print but the situation is changing daily.  For more information contact Jacquey at the office on 01335 324594 or email Jacquey@ipaquotas.co.uk

 

AMPE   (8th May 2015)

Using the GDT average price for butter and Arla SMP at today’s exchange rate gives a current AMPE price of only 17.4ppl.

 

1.08ppl milk price reduction for Joseph Heler suppliers  -  from June 1st    (8th May 2015)

 

1ppl milk price reduction for Meadow Foods suppliers  -  from June 1st   (8th May 2015)

This takes producers standard litre price down to 21ppl (www.milkprices.com)

 

March DEFRA average farmgate milk price  -  24.99ppl    (8th May 2015)

Down 26% on the 33.71ppl recorded in March 2014

 

Russian EU dairy product ban likely to be extended    (8th May 2015)

The expectation is that Russia will extend its complete ban of EU dairy products beyond its 7th August birthday and initial period.  More unwelcome news.

 

England V Switzerland Euro 2016 Qualifier    (8th May 2015)

Up to three tickets available for any area in the stadium at cost.

 

If you are interested in 1, 2 or 3 tickets, please email lydia@ipaquotas.co.uk for details and a stadium plan.

 

england_flag_02[1]      v    SwissFlag[1]

 

 

More grim results from GDT   (6th May 2015

Yesterday’s GDT auction saw average prices fall a further 3.5% to average US$2515, which is half the February 2014 average price.  SMP recorded its lowest auction average at US$2048 tonne, less than half its value 13 months earlier.

 

The only slightly positive news from the auction was that the quantity sold totalled 27,369 tonnes (+1773 tonnes/+7%)  compared to the quantity sold three weeks earlier.  In addition  an extra nine new companies successfully bought at the auction taking the total companies who purchased at this auction to a healthy 117, which is encouraging.  In addition, cheddar prices increased by 9.1%, which helped boost the overall average to what it might have been.

 

Key movers were:

 

WMP                            down 1.8% to average US$2386 tonne

SMP                                         down 7.5% to average US$2048 tonne

Arla Westbury SMP                   averaged US$1950 tonne (£1290!)

BMP                                         down 14% to average US$1748 tonne

Butter                                       down 0.8% to average US$3005 tonne

Cheddar                                    up 9.1% to average US$3012 tonne

 

Analysts are now stating there are no signs  of prices improving and the expectation is that low prices could continue for the rest of 2015.  However, prices are dropping very close to EU intervention levels, which should provide a bottom in the market.

 

0.52ppl milk price reduction for Waitrose suppliers - from May 11th  (1st May 2015)

This takes producers standard litre down from 33ppl to 32.48ppl (www.milkprices.com)

 

1.4ppl milk price reduction for Arla non aligned directs - from June 1st   (1st May 2015)

This takes producers standard litre price to 22ppl compared to the May Arla full members price of 25.83ppl.  Note, the quantity of milk supplied direct on the 22ppl standard litre price is around 40 million litres.

 

March milk price held for United Dairy Farmers at 21.94ppl  (1st May 2015)

Members of Northern Ireland’s milk co-op United Dairy Farmers will receive a standard litre price for March deliveries of 21.94ppl (www.milkprices.com), which means producers milk price ends the year 36% (-12.23ppl) down in 12 months from 34.17ppl to 21.94ppl.

 

For United Milk’s Kendall suppliers their March liquid standard litre price is 24.89ppl (www.milkprices.com)

 

First Milk’s CEO Mike Gallacher cuts deep  (1st May 2015)

Today Mike Gallacher having been at the helm of First Milk for six weeks has made his first big move and cut deep with a raft of measures designed to turnaround the fortunes of the co-operative and its members but for many the changes are painful.

 

  1. Around 70 jobs to be axed predominantly at the Glasgow HQ with some departments cut in half. The expectation is that these cuts should add up to around 0.5ppl.
  2. Pricing based on the end destination for individual producer’ milk starting June 1st.

 

This effectively means farmers will be designated to either a cheese/manufacturing pool or a balancing pool.

 

The manufacturing pools will be close to the cheese factories at Haverfordwest, The Lake District, Campeltown and Arran.

Farms located outside if these catchments will be in the balancing pool e.g. Scottish Mainland, Midlands, North of England, East Wales etc.

 

  1. Further June milk price cuts for producers A quota production (80% of total)

 

So lots of prices depending on the milks final destination and for those on the balancing pool where the milk goes into Westbury it’s going to be even more painful.

 

First Milk April B price is 16.1ppl  (1st May 2015)

This is the first month the co-op has paid out on a B price and is at the low end of its initial forecast of 16 to 18ppl.  The expectation for June is 15 to 17ppl with the expectation that the May B price range will be 14 to 17ppl rather than 15 to 18ppl first rumbled.

 

First Milk milk price reductions – from June 1st    (1st May 2015)

Today’s press release mentions £3.3m reduction in milk prices from June 1st averaging a 0.33ppl reduction across the piste. Within the average come the following adjustments.

 

1.2ppl milk price reduction for First Milk balancing producers - from June 1st  (1st May 2015)

This takes producers standard litre price down to 19.3ppl and in addition there is a 2ppl capital investment deduction to nett 17.3ppl excluding the B milk price for the remaining 20%.

 

0.3ppl milk price increase for First Milk Haverfordwest producers - from June 1st   (1st May 2015)

Another Fonterra milk price cut = 16.87ppl  (1st May 2015)

Fonterra has announced its fourth forecast milk pay-out cut for this season reducing the pay-out from NZ $4.70 per kg to NZ $4.50. This converts to a standard UK litre at today’s exchange rate to 16.87ppl. Its opening forecast was NZ $7.00 in May 2014, which was at the start of the season, which runs from June 1st to 31st May. In addition, there is a forecast dividend, which once added to the milk price gives a total pay-out of 18ppl.

 

Cash flows are tightening by the month and budgets are under revision as this latest forecast pay-out is heading towards 50% of the previous years record pay-out and the lowest pay-out for eight years.

 

Also New Zealand’s second largest dairy co-op Westland has also revised its forecast seasons milk pay-out down from NZ $5.10 to $4.90 per kg.

 

Amongst the list of reasons for the need to cut farm gate prices in New Zealand is the allegation that there is aggressive undercutting of dairy prices by EU processors quoting European SMP on offer at US $2,100 tonne compared to New Zealand’s US $2,600. Next week all eyes will be on the GDT auction results.

 

Friesland Campina milk price reduction of 1.25 Euro Cents  (1st May 2015)

European giant Friesland Campina have reduced their May milk price by 1.25 Euro Cents to 32 Euro Cents KG. This is equivalent to 22.65ppl based on the UK standard litre at today’s exchange rate.

 

In general  (1st May 2015)

Market reports and analysts predictions across the US, New Zealand and EU are that plenty of product is around and that prices are likely to weaken further during the next three months or more. Most major buyers are buying only what they immediately require in the expectation that product prices will fall further. Given the spot prices seen in the UK at 10ppl delivered in or less the odds are firmly stacked in their favour.

 

TV Documentary on dairy next week  (1st May 2015)

A new behind the scenes look at how some of our favourite foods are produced starts next week with a look at dairy farming.

 

The three part series is “How Our Favourite Foods Are Made” and hosted by Greg Wallace and Cherry Healy and the dairy episode will be shown at 8pm on Election Day Thursday next 7th May.

 

The episode will feature Arla co-operative suppliers and employees taking a behind the scenes look at dairy farming, especially at the production of retail milk, cheese and butter.

 

Arla holds members milk price for May (24th April 2015)

Arla has announced a  stand on milk price for May which, together with a 0.03ppl currency smoothing adjustment makes a 1st May standard litre price of 25.83ppl for members and 26.53ppl for TSDG suppliers.

                                        

For Ian this is a result given the way markets have moved and the embarrassing amount of milk UK farmers are producing with spot prices ranging between 10ppl to 13ppl and we haven’t reached peak production.

 

1.1ppl milk price reduction for Fayrefield suppliers- from 1st May  (24th April 2015)

It would appear a handful of Fayrefield suppliers have alerted several industry commentators including Steven Bradley and myself to the fact price cuts from Fayrefield go unreported.

 

That has been corrected and Ian will be in touch with the Company requesting notification of future price movements.

The latest 1.1ppl cut takes their liquid standard litre price down to 21ppl (www.milkprices.com)

 

Eyebrows and questions raised over the latest DairyCo Campaign  (24th April 2015)

A handful of levy paying producers have contacted Ian expressing their surprise at the latest Dairy Co Consumer Campaign “Hands on”.

 

Basically DairyCo state that dairy farmers “hands tell an emotive unique story”. They want farmers to photograph or video close-ups of their hands at work and to send them to DairyCo who will use the shots at public facing events like the Milk Race next month.

 

The farmers who have contacted Ian question whether Consumers will appreciate the hard working, gritty and often engrained hands of dairy farmers or will they think it’s these hands which are helping produce the clean wholesale nutritious milk I drink.

 

As one stated “we are food producers and my hands show how hard I work but to be honest I am almost ashamed of how they look when I go out amongst non farming friends. I don’t feel my hands should be associated with milk in a bottle. It’s not good PR”.

 

BIG Milk launch from Arla (24th April 2015)

Arla have launched new child friendly branded enriched milk called ‘Big Milk’ with a higher butterfat than standard whole milk plus added calcium, iron and vitamins.

 

RRP is £2.25 for 2 litres (£1.12 litres) and will be launched as part of a £2 million promotion.

The milk is targeted at age under 6 children and is a UK brand.

 

The Dairy Council/Dairy UK responds to another anti milk publication (24th April 2015)

A book has been published this week which is yet another US anti dairy book and we don’t want to assist its promotion by stating its name. The book has already been published and sold in other languages.

 

The Dairy Council/ Dairy UK read the book and are coordinating an industry response based on nutritional and scientific facts

.

It was described by Judith Bryans of Dairy UK as shocking and opens with a disclaimer followed by unbalanced opinion.

Verdict - Save your £11.00 and don’t waste your time researching the name of the publication or reading the tosh. 

 

GDT auction results fall a further 3.6%  (16th April 2015)

Last night’s GDT auction saw the recent trend of falling prices continue although not to the brutal extent witnessed in the previous two auctions, which saw around 20% wiped of the average price in two weeks!

 

Yesterday's auction results saw the average all products index fall by 3.6% to average $2620 tonne.

 

Notable movers were:

 

SMP down 7.8% to average $2253 tonne

Butter down 6% to average $3026 tonne

WMP down 4.3% to average $2446 tonne

Cheddar up 2.7 % to average $2888 tonne

 

The further fall made the second top news story on New Zealand's National TV breakfast news this morning with questions whether Fonterra can hold its current forecast producer price of $4.70. Note, its record pay-out was fairly recently as high as $8.40.

 

One positive from the auction was the fact the number or auction bidders increased by over 20% to those participating two weeks earlier.

 

As the EU approaches its peak production the product will be inevitably sold on a weak global market.

 

Analysts predicted a further fall in the auctions prices especially given the fact an additional 3,400 tonnes were sold taking the total to 25,500 tonnes

 

1.25ppl milk price increase for members of South Caernarfon Creameries  - from May 1st   (16th April 2015)

This takes producers manufacturing/cheese standard litre price to 23.57ppl (www.milkprices.com)

 

0.5ppl milk price increase for United Dairy Farmers Northern Ireland members - for February delivered milk   (16th April 2015)

This takes producers standard litre price to 21.94ppl (www.milkprices.com)

 

1.15ppl milk price reduction for Muller Wisemans CTDG (Co-Op stores) aligned suppliers - from 1st May (16th April 2015)

This takes liquid producers standard litre price to 28.69ppl (www.milkprices.com)

   

2.25ppl milk price reduction for Muller Wiseman formula contracted suppliers - from 1st April (16th April 2015)

This is a tracker price, which reflects a combination of the prices paid by a basket of competitors, liquid and cheese, plus changes in both AMPE and MCVE.  This takes liquid producers standard litre price to 20.70ppl (www.milkprices.com)

 

0.001ppl price increase for Dairy Crest/DCD formula contracted suppliers - from 1st May   (16th April 2015)

Whilst this is a tiny positive adjustment the really important figure is that producers new standard litre price is 28.648ppl (www.milkprices.com).  This represents a 5.43ppl premium advantage over the Dairy Crest standard litre price.

 

First Milk former members pass go but don't collect their £   (16th April 2015)

Ian has been emailed by a number of former First Milk members who have either retired or resigned, who are clearly aggrieved at a recent letter they have received from Chairman, Sir Jim Paice.

 

Whilst Ian has not spoken to First Milk or been briefed on the letter it would appear that those who are entitled to capital repayments, having finished supplying milk five years earlier, will have the repayment they are entitled to deferred by one year and split over three years. So anyone due capital on the 31st March 2015 will not receive it all until 31st March 2019, if all goes to plan and for some of these producers it appears they also believe in the tooth fairy. Perhaps First Milk’s new CEO is the tooth fairy or perhaps he is a magician.

 

Numerous emails are asking Ian's opinion whether this is legal. Ian suspects First Milk would not be so stupid as to make such a move without having taken legal advice.  However, if anything to the contrary comes to light please email Ian especially if any of the real legal eagles or rottweilers have any thoughts on or off the record.

 

The basic problem is the First Milk collection box is empty and both existing and former members all want to take out quicker than it’s going in. So fingers and legs crossed for both existing and former members that the good ship First Milk pays out to all involved quicker going forward. 

 

GDT auction prices were very grim and down 10.8%  (3rd April 2015)
It was April 1st and many had hoped this week’s disastrous GDT auction results were an April Fool but sadly they weren't.

The average auction price fell 10.8% with the key product whole milk powder down an eye watering 13.3%.  The reduction was anticipated but not to that extent and comes on the back of a similar average price fall of 8.8% only two weeks earlier and is the biggest fall in more than four years.

The news is grim and across the world dairy farmers realise if this trend continues in two weeks time the likelihood is that farm gate prices for most dairy farmers will be further cut and it will hurt.


There is no one to blame it's the market yet interestingly over here in New Zealand there is a lot of talk about the ending of European milk quotas and the anticipated extra production that is likely to come on stream from now on.


The feeling amongst buyers is that there is and will be plenty of product around in the months to come.

 

Main movers were:

 

Butter              down   7.6% to average              $3663

Cheddar            down   10.5% to average             $2787

SMP                 down   9.9% to average              $2467

WMP                down   13.3% to average             $2538

 

What's happening in the UK and Europe?  (3rd April 2015)

 

Well the news is equally worrying.  Over the Easter period GB spot prices always tumble but they are down at 15ppl or less now.

 

Add to that the reports that Glanbia had by far its biggest intake of milk in one day at one of its Southern Ireland plants and you do just start to think it's certainly time to buckle up. The plants record one day intake was previously 5.3 m litres and on the 1st April it was 7.4m.  Let's hope it was all milk held over into the first non milk quota day and that normal deliveries resumed on the 2nd April.

0.75ppl price cut from Friesland Campina from May 1st  (3rd April 2015)
Having lead the way in Europe with two consecutive producer milk price increases, Campina have announced a milk price reduction of 0.75 Euro Cents, which www.milkprices.com calculates to be an equivalent drop of 0.38ppl and gives an equivalent UK standard litre price of 21.95ppl for April deliveries.


1.01ppl milk price cut for The Fresh Milk Company (AKA Lactalis ) from May 1st  (3rd April 2015)
This takes producers standard litre prices for May down to 22.44ppl for the standard contract and 22.77ppl for the GDT linked contract (www.milkprices.com)


Wyke Farms defer 1ppl April milk price cut  (3rd April 2015)
Wyke announced a month ago a 1st April producer price cut of 1ppl, which they have now postponed until May 1st. This means producers standard litre price for April deliveries will be 24.89ppl (www.milkprices.com)

 

 

 

IAN’S BIG MINI ADVENTURE – PORK PIE CHARITY RUN APRIL 2015

Click https://www.pinpointpal.com/consumer/miniadventure

 

 

Please give generously – a Mini plea for maximum cause   (27th March 2015

 

You can also donate via text message, just text PORK91 with the amount you want to donate (e.g. £5) to 70070

 

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 one weeks time on Good Friday Ian and a co-driver/navigator/backseat driver 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 6 days from Kaitaia to Invercargill, following the route of the classic film Goodbye Pork Pie in a roadworthy classic Mini. 

 

Ian and his pal are paying all 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:


Rainbow Trust Just Giving           https://www.justgiving.com/ianandcarolepotter

 

KidsCan Charity (NB  $NZ)         http://givealittle.co.nz/fundraiser/porkpiecharityrunenglishbulldogsontour

 

The simplest and quickest way to donate is either online, note when donating ignore any validation notice and simply click on the blue box labelled proceed to page or via text.  Just text PORK91 to 70070.

 

Please give what you can and what you’d like to.  If anyone would prefer to send a cheque please make it payable to either “Rainbow Trust” or in the case of KidsCan make payable to “Ian Potter” and Ian will convert it at 2 $2 New Zealand to £1 and post the donation online. Please post the cheques to:

 

Lydia Clare

IPMS Ltd

Sallyfield Lane

Stanton

Ashbourne 

DE6 2DA

 

A very big thank you  (27th March 2015)

To the 61 readers of this bulletin who have donated to one or both charities a big thank you. You have all been very generous and for the ones that are not down as anonymous I will be in contact. Many thanks, Ian.

 

You can also donate quickly via text message, just text PORK91 with the amount you want to donate (e.g. £5) to 70070.

 

1.08ppl milk price reduction for Tesco (TSDG) producers  (25th March 2015)

From May 1st the Tesco aligned producers (TSDG) milk price will reduce by 1.08ppl to a 30.43ppl (today it’s 31.51ppl) standard litre price.  For the 50% plus of TSDG producers who initially signed up to the Promar costings there is a 0.5ppl additional payment, which takes their new standard litre price to 30.93ppl.

 

The price covers all liquid contracts viz: Arla directs, Arla AMCO, Muller Wiseman and the 28 producers supplying milk to Parkham Farms who produce quality mature and extra mature cheddar for Tesco.

 

There will be few, if any grumbles, from TSDG producers other than perhaps the odd Arla AMCO member who is not really co-operatively wired up.

 

The downward adjustment reduction is attributed mainly to a reduction if feed costs as well as pressure from increasing milk volumes from TSDG dedicated farms.  At 30.43ppl expansion is likely to continue.

 

0.83ppl nett milk price increase for Arla Amba UK producers – from 30th March    (25th March 2015)

This will be very welcome news for the 3,000 Arla GB members and it is derived from a 1.5 Euro Cents increase for all 13,500 European members of Arla less the currency fluctuation/smoothing adjustment.

 

It reflects both Arla’s earnings from the global dairy market place as well as the fact its main European rival Friesland Campina have increased their producer prices for the last two consecutive months.

 

The price increase gives a new standard litre price of 25.80ppl.  Note, the increase does not apply to Arla directs.

 

Dairy Crest’s sale to Muller Wiseman is referred to the UK Competition Authorities  (25th March 2015)

Dairy Crest’s sale of its troubled liquids division to Muller Wiseman for £80 million has been referred to the UK Competition Markets Authority (CMA) by the European Commission, which is a positive and anticipated development.

 

There seems little doubt that the UK CMA will have to give the deal the green light and hopefully that light will come with few, if any, conditions.

 

The sale includes Dairy Crest’s Severnside, Chadwell Heath and Foston milk processing plants as well as over 70 depots and a bottling plant.

 

Very disappointing GDT results – 8.8%  (20th March 2015)

Tuesday’s GDT auction was a bit of a bombshell as average prices plunged down 8.8% to average $3136/tonne compared to that recorded two weeks ago.

 

Notable movers were:

 

  • BMP – 11.6% to average $2635
  • WMP – 9.6% to average $2928
  • Butter – 9.4% to average $3555
  • Cheddar – 7.4% to average $3130
  • SMP – 5.5% to average $2731
  • Arla Westbury SMP - $2150

 

The quantity of product sold was down 8.3% to 20,258 tonnes compared to the 22,094 tonnes sold two weeks ago.

 

Note, a year ago the quantity sold was almost double at 39,008 tonnes and averaged $4563

 

Up until this auction it had been a case of six consecutive average increases in a row starting in December but this has certainly dampened the enthusiasm that a full recovery is in sight.  The mood of optimism has almost changed overnight.

 

EU production and superlevy  (20th March 2015)

In total 12 member states face an estimated final years combined superlevy bill of between €800 million to €1 billion.

 

The Commission have given the option for farmers to pay superlevy over a three year period to assist cash flow.  This allows farmers to spread levy bills and to pay in October 2015, 2016 and 2017.  The move has triggered strong rumours in a number of countries that the affected farmers intend to use the money they had ear-marked to be instantly deducted from their milk cheques as money to invest in more equipment and cows with the intention of increasing production.

 

None of this is helping to boost EU prices because the signal to buyers across the world is that milk will be plentiful leading some analysts to doubt earlier predictions that in quarter 3 (July 1st onwards) world prices will recover, especially with claims that Chinese imports will be down between 50% to 60% in the first six months of 2015.  One analyst with Greenmark Dairy commented “The only way to get supply and demand balanced again is less milk, which will only be accomplished by lower prices.”

 

Several analysts and commentators who follow the GDT auction are already predicting further falls on the back of buyer confidence that supplies are set to increase.

 

Looking at this week’s official Dutch quoted dairy prices it’s clear that this week butter and SMP prices are down.

 

RPA pull the plug on 2015 compulsory online BPS Claims  (20th March 2015)

The RPA have thrown the towel in for 2015 BPS claims to all be submitted online. Basically the new IT will not be ready in time.

 

In addition, the Commission have confirmed a 1 month extension of the application deadline from the 15th May to the 15th June. This is an option which is available to all member states who have to make an election to the Commission for the extension. Whilst it is not a certainty it is assumed that under the circumstances DEFRA and the RPA will request the extension.

 

We have made several calls to the RPA today in an attempt to ascertain the position for registering BPS entitlement transfers to check whether these will still be online or will there be a paper version. No one at the RPA could answer this question with the standard answer “we haven’t a clue”.

 

Meanwhile, we continue to trade English Entitlements using our successful verbal contracts, following which we will submit each deal to the RPA in whatever format they eventually instruct us to do so on.  (Please see above for our available English entitlements.)

 

Fonterra wants to expand its organic milk intake  (20th March 2015)

Global dairy giant Fonterra wants to expand its organic milk intake and has increased its farmgate price by 45 cents to $1.50 per kg of milk solids.

 

New Zealand’s organic milk production has fallen by 40% in the past 5 years and the aim is to reverse this trend but it’s debatable whether a 45 cents increase will be sufficient to reverse the tide.

 

Evidently, organic dairy demand from China and South East Asia is rising, especially for organic baby powders and fortified powders.

 

Please give generously – a Mini plea for maximum cause  (20th March 2015)

 

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 two weeks time on Good Friday he and a co-driver/navigator/backseat driver 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 6 days from Kaitaia to Invercargill, following the route of the classic film Pork Pie. 

 

Ian and his pal are paying all 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:


Rainbow Trust Just Giving            https://www.justgiving.com/ianandcarolepotter

 

KidsCan Charity (NB  $NZ)            http://givealittle.co.nz/fundraiser/porkpiecharityrunenglishbulldogsontour

 

The simplest and quickest way to donate is online, 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 either “Rainbow Trust” or in the case of KidsCan make payable to “Ian Potter” and Ian will convert it at 2 $2 New Zealand to £1 and post the donation online. Please post the cheques to:

 

Lydia Clare

IPMS Ltd

Sallyfield Lane

Stanton

Ashbourne 

DE6 2DA

 

A very big thank you  (20th March 2015)

To the 29 readers of this bulletin who have donated to one or both charities a big thank you. You have all been very generous and for the ones that are not down as anonymous I will be in contact. Many thanks, Ian

 

Very disappointing GDT results – 8.8%  (17th March 2015)

Todays GDT Auction was a bit of a bombshell recording on average down 8.8% to average $3136/tonne compared to that recorded two weeks ago.

 

Notable movers were:

 

·         BMP – 11.6% to average $2635.

·         WMP – 9.6% to average $2928.

·         Butter – 9.4% to average $3555.

·         Cheddar – 7.4% to average $3130.

·         SMP – 5.5% to average $2731.

·         Arla Westbury SMP - $2150

The quantity of product sold was down 8.3% to 20,258 tonnes compared to the 22,094 tonnes sold two weeks ago.

 

A year ago the quantity sold was almost double at 39,008 tonnes and average $4563.

 

Up until this auction it had been a case of six consecutive average increases in a row by starting in December but this has certainly dampened the enthusiasm that a full recovery is in sight.

         

1.42ppl milk price cut for Joseph Heler cheese suppliers – from 1st April  (13th March 2015)

This comes on top of the 1.75ppl cut on the 1st February, which slipped by us unnoticed until one of our readers alerted us to both price drops.  Total price cut this year 3.17ppl.

 

1.25ppl milk price cut for Grahams (Scotland) – from 1st April  (13th March 2015)

This takes producers standard litre price down to 25.25ppl.  (www.milkprices.com)

 

0.006ppl milk price increase for Dairy Crest/DCD formula contracts  (13th March 2015)

A small but positive move which takes producers standard litre price to 28.647ppl.  It is the first increase since July 2014 and delivers a 5.4ppl plus premium above the DC/DCD April standard litre price.

 

Spot prices under pressure  (13th March 2015)

Spot prices are holding up well at around 22p with the odd report of 24p but as production increases its clear there is more supply than there is demand and that is not be helped with an early Easter period.  The sooner any flush is over the better because it’s certainly a weak spot market.

 

On the plus side EU prices for powders, butter and cheddar continue to move up.

 

February Milk Production  (13th March 2015)

February production weighed in at 1.077 billion litres down 21.5 million litres (-2%) compared to that recorded in February 2014.

 

Cumulative production for the first 11 months of the year is 13.1 billion litres and by the end of the year is likely to clock up in excess of 14.3 billion litres, which will be a chart topping production year.

 

Cumulative butterfats stand at 3.99% compared to 4.01% a year ago.

 

New CEO takes the helm at First Milk (13th March 2015)

After a six year spell Kate Allum has been replaced by Mike Gallacher as CEO of troubled co-op First Milk with effect from 18th March.  It’s taken some considerable time for head hunters to secure her replacement but that’s understandable given the situation.

 

It’s an interesting appointment, especially given Mike’s non-dairy background and there is little doubt he will be in at the deep end so far as member expectation is concerned.

 

Kate has almost been in hibernation during the winter months and the decision to leave her position has been a reasonably well kept secret for around four months.  It is rumoured that she was particularly unhappy following the Board’s decision to delay member milk cheque payments.

 

Poison threat to baby powder  (13th March 2015)

For the past month New Zealand police have been investigating a blackmail threat to contaminate New Zealand baby powder with 1080 (Sodium Monofluoroacetate), which is applied by air to control possums, which are blamed for the spread of bovine TB in New Zealand just as badgers are blamed in GB.

 

Those licensed to use 1080 have publically stated its business as usual with the aim of controlling and, if possible, eradicating BTB.  However, the authorities have recently tightened up control on the distribution and use of 1080.

 

The threat came in the form of blackmail letters sent to two of New Zealand’s main infant formula processors Fonterra and Federated Farmers in November 2014.  The threat was to contaminate baby powders unless New Zealand ends its use of the 1080 poison by the end of this month.  Included with the letters the criminals provided samples of baby powder, which tested positive for a concentrated form of 1080 poison.

 

Since the threat was received 45,000 product samples have tested negative for 1080 going back to September 2014 baby powders manufactured prior to the blackmail letters.

 

The protest has done nothing to help improve the price of New Zealand infant formula, especially when orders from the world’s biggest importer of New Zealand baby powder China, plummeted overnight.  China is now demanding certificates with every shipment guaranteeing the consignment is 1080 free.

 

This is the third New Zealand dairy product safety/contamination scare in as many years.

 

In 2013 there was the DCD residue contamination found in Fonterra products followed by late 2013 the Botulism false alarm forcing a product recall by Fonterra

 

PRICE WATCH – FREE MILK  (13th March 2015)

Last week's Buxton Advertiser had a coupon offering a FREE 4 pint carton of milk from Tesco's store at Whaley Bridge

 

FOR SALE  (13th March 2015)

29 bales of double wrapped quality haylage ideal for sheep or horses.  Located near Ashbourne, Derbyshire DE6.  Email lydia@ipaquotas.co.uk

 

Pinpointpal GPS Tracker Offer  (13th March 2015)

A few weeks ago we held a competition for 10 lucky readers to win one of 10 Pinpointpal trackers, which we knew would be an instant success as a new technology applicable for farming. 

Ian Potter Associates has partnered with a British manufacturer Pinpointpal to bring you a fantastic discounted reader offer full details of which will be emailed out to email recipients on Monday.

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 40 remaining on a special offer of £150 + VAT. To take advantage of this great offer just mail us at Lydia@ipaquotas.co.uk or call 01335 324594, normal price £250 inc. vat and includes 2 years free monitoring. There are no hidden cost extras!

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.

 (www.milkprices.com)

 

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:

 

 

  • 20.5ppl for the balancing contract (this was formerly known as the liquid pool)

 

  • 20.87ppl for the manufacturing contract (cheese)

 

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:

 

  • Cheese                         20.0ppl
  • Balancing                      19.8ppl

 

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.

Notable movers

                        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:


Rainbow Trust Just Giving           https://www.justgiving.com/ianandcarolepotter

 

KidsCan Charity (NB  $NZ)         http://givealittle.co.nz/fundraiser/porkpiecharityrunenglishbulldogsontour

 

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.

 

Notable movers:

 

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 midlandsmilkpool@yahoo.co.uk

 

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 ianpotter@ipaquotas.co.uk

 

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.

 

Notable movers:

 

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

 

Liquid                            21.2ppl

Cheese                         21.57ppl

 

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:

             Nigel Evans:

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.

Graeme Dey (MSP):

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?

Nigel Evans:

Do you mean in terms of our price relative to that of our competitors?

Graeme Dey (MSP):

Yes.

Nigel Evans:

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?”

 

 

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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 gayle@ipaquotas.co.uk.  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:

 

 

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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