Dairy Industry news and features

This page was last updated at 3.25pm 29th August 2014 (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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1.8ppl milk price reduction for Muller Wiseman non aligned farmers –from 1st October-(29th August 2014)

This takes producers standard litre price down to 29ppl (www.milkprices.com)

 

1.75ppl milk price reduction for Dairy Crest non aligned farmers –from 1st October - (29th August 2014)

This is yet to be confirmed and is the word on the street!

 

1.03ppl milk price reduction for United Dairy Farmers Co-op members –for July deliveries -(29th August 2014)

This takes producers standard litre price to 29.34ppl (www.milkprices.com)

 

European Commison (EC) step forward with emergency measures-(29th August 2014)

The EC will open up Private Storage Aid for butter, SMP and some exported cheeses in an attempt to cushion the fall out from the Russian import ban. The storage aid will cover the storage costs for between three to seven months.

In addition intervention for butter and SMP will continue until at least the end of 2014.

Commissioner Ciolos commented

            “Where material risks of market destabilisation appear, I will continue to use the new CAP to act pre-emptively to stabilise the market.”

Note the Commission has already agreed emergency support measures for peaches and nectarines and perishable fruit and vegetables.  

Lets hope the scheme covers cheddar.

 

Dairy SOS 2014 targets DEFRA/Government- (29th August 2014)

The deepening dairy crisis, which has been escalated as a result of the Russian ban on all major EU dairy products, has triggered a change of focus by FFA. Dairy markets were already falling and the Russian ban means they are now set to collapse, and FFA is adamant that hard working dairy farmers should NOT pay the price for this politically orientated market collapse.

High stock levels put into storage are a short term solution and inevitably get released back on the market when any crisis is over. This invariably delays price recovery. Perhaps for months or a year!

FFA says is now time for the UK Government to step forward and support dairy, so it has organised an online petition calling on DEFRA ministers and the Government to step forward and buy some of the surplus cheese and butter with a view to distributing it free via food banks, thus preventing stock-piling that will only affect you several months down the line, and short-term large-scale price falls.

It is believed that this along with a buy British Campaign is almost certain to receive widespread public support and backing.

The idea was put to FFA on Tuesday  morning and its Chairman David Handley seized the opportunity with both hands realising the Government hold the keys to helping to solve two problems – food surpluses caused by Russia and food poverty. How Cameron’s popularity would rise before the election!

Questions will be asked by a few as to why the NFU’s, RABDF or Dairy Co etc did not think of the idea, or were not offered it. Answers on an email.

This is about a few people in this industry making things happen. Forget a 2020 strategy and vision, we need a 2014 and 2015 solution NOW! We don’t need a ‘leading the way’ (with no leader) document, nor a “compete to grow” document where dairy farmers are encouraged to churn out more milk (when we’ve no processing and now fewer markets), no “White paper”, no similar do-good strategy documents. Further details of other ideas under consideration will be posted on this website this week. Fingers crossed that grass roots farmers will persuade all their friends, neighbours, suppliers and contacts to sign up and there will be media support.

Other ideas are in the pipeline require some investment. There lies another problem in so far as those who take subscriptions and levies from Dairy Farmers tend to have a “can’t do” mentality, regularly placing obstacles in front of ideas as to why they can’t get involved because it is outside of their so called remit.

Remember: There are those who make things happen. Those who watch things happen and those who wonder what happened.

It’s your industry. Things need to happen now. Quickly. Let’s make things happen.

For details of the petition log on to http://www.farmersforaction.org/4.html 

 

Email comments on the food bank idea to ianpotter@ipaquotas.co.uk and I’ll pass them on.

Fonterra to build 1.6 billion litre/year drier (29th August 2014)

Fonterra is set to invest around £208 million in its domestic processing capacity including a new high capacity drier in the North Island capable of processing 4.4 million litres/day or 1.6 billion litres a year and producing 30 tonnes of WMP per hour. The Co-ops investment includes a new drier at one of its South Island plants.

 

GDT results are mixed but still grim  (22nd August 2014)

This Tuesday’s GDT auction results on the face of it looked encouraging; however, the devil is in the detail.

 

Overall, the average was down only 0.6% to the auction price recorded two weeks ago.  Notable price moves were as follows:

 

Butter                          +4.9%                          to $2940 tonne or £1770 tonne

WMP                           +3.4%                          to $2804 tonne or £1688 tonne

Cheese                       -7.9%                           to $3453 tonne or £2079 tonne

Arla Westbury SMP    -12.0%             to $2995 tonne or £1800 tonne

Average                       -0.6%                           to $3000 tonne and the lowest for two years

 

If you take the GDT average auction butter price @ £1770 and the GDT Arla UK SMP average auction price @ £1800 and plug both into the 2014 AMPE calculation it gives you a tearful 21ppl AMPE.

 

If you take the current average Dutch butter price (€3200 tonne) and the average Dutch food grade SMP price (€2150) the AMPE comes out at just over 24ppl (24.1p).

 

It doesn’t matter whose figures you use the result is bleak.

 

Queen and “Under Pressure” as Russian ban bites  (22nd August 2014)

The Russian ban on EU dairy products is starting to bite very hard, particularly, for cheese which is dropping in value almost daily.

 

Current EU quotes suggest values of only €2800 tonne (£2250 = to circa 22.5ppl).  Latest figures to June 2014 confirm that Russian imported 110,000 tonnes (28.7%) of cheese directly from the EU in the first six months of 2014 but this excludes cheese EU member states sold to countries like Belarus, Ukraine and Lithuania, which is exported to Russia.

 

One trader and commentator believes finding alternative markets for this tonnage of cheese is close to mission impossible as opposed to a challenge.  So anyone with unsold average to low quality cheese in stock maturing is in for a big does of medicine. Going forward it seems inevitable that milk will be switched out of cheese into powder, which will do nothing to stop the downward spiral in SMP, WMP and butter prices.

 

As the Queen group song goes it’s:  “Under Pressure”

 

1.2ppl price reduction for Arla AMCO members    from September 1st  (22nd August 2014)

This takes members www.milkprices.com standard litre price down to 30.38ppl, which excluding the butterfat adjustment/fat tax (0.6ppl) and the estimated 13th payment (0.81ppl) gives a standard litre paid out price of 28.97ppl.  For Arla Milk Link members it will be 30.38 with the 13th payment (0.81ppl) coming in March 2015 so the monthly money to bank for them for September milk will be 29.57ppl.

 

Milk protests are likely to start as soon as next week  (22nd August 2014)

Farmers For Action (FFA) have posted a dairy crisis news item on their website warning of 25p or less milk prices.

 

The proposal is for peaceful protests to kick in presumably targeted mainly at those involved in the domestic market, particularly liquid milk processors and retail distribution outlets etc.

 

For the full press release click on http://www.farmersforaction.org/4.html

 

Roger Evans to leave First Milk – Why?  (22nd August 2014)

The Scottish Farmer has this week released the secret known to many that Roger Evans, Shropshire dairy farmer, Dairy Farmer columnist, former First Milk Chairman and (at one time) anti anything Arla or Muller-Wiseman is to leave the co-op to supply Muller-Wiseman.

 

First Milk have commented they are disappointed to see any member leave, however, what’s surprising about this is zero comment from Roger by way of any explanation to The Scottish Farmer journalist who contacted him this week. This is the man, remember, who has written hundreds of thousands of words over the past 25 years plus in Dairy Farmer and other magazines, plus books, giving us his view on virtually everything to do with dairying. He has enlightened readers on all that happens on his farm, so it is strange that he could not even find a single sentence to explain his decision to leave, especially given that leaving First Milk must be one of the biggest decisions he has ever taken relating to his farm.

 

On that score we will no doubt have to wait for his next Dairy Farmer article, when all will presumably be revealed!

 

First Milk change milk cheque payment dates  (22nd August 2014)

The co-op have given members three months notice that milk cheque payments will change from paying for all milk delivered in a month on the 17th of the month following to paying 50% on the 10th and the remaining 50% on the 24th.

 

The co-op state this is to help member clash flows.

 

The change will commence in November when the October deliveries will be made in two equal instalments.

 

UEFA Euro 2016 Qualifying Tickets  (22nd August 2014)

Ian has access to early bird tickets for the following England football matches at Wembley with a discount of £5.00 per ticket of up to four tickets for each match with more available without the discount, if required.

 

England v San Marino 9th October 2014

England v Slovenia     15th November 2014

England v Lithuania     27th March 2015

 

If interested please email Lydia@ipaquotas.co.uk before Tuesday 26th to ensure the pick of the areas to sit.

 

0.55ppl milk price reduction for Paynes Dairies suppliers – from August 1st   (18th August 2014)

This comes on the back of an un-reported 1.2ppl reduction in June.  This takes producers standard litre price down to a level 30ppl (www.milkprices.com).

 

0.053ppl milk price reduction for Dairy Crest formula contracted producers – from September 1st   (18th August 2014)

This is the third consecutive minor price change of less than 0.1ppl.

 

The new standard litre price will be 31.93ppl for the DC liquid core formula and 31.73ppl for the simplified liquid contract (www.milkprices.com).  This means the differential between the standard DC liquid price (30.09ppl) and the formula is more than 1.6ppl.

 

Russian import ban crashes cream market   (18th August 2014)

It was a certainty that the 12 month EU dairy product import ban from Russia would mean we all catch a cold.

 

This week commodity prices have crashed notably, cream prices have crashed back to £1100 tonne from £1380.  To put this into ppl terms it’s a drop equivalent to 1.6ppl for a liquid processor to which they are all instantly exposed.

 

The Southern Irish milk price is down to 34 Euro Cents litre (27ppl).  It looks like the EU dairy industry is heading down the drain as everyone gets sucked into the plug hole vortex.  There is even talk that EU prices are heading towards intervention levels.  Traders are allegedly cutting each others throats and prices to win orders and replace lost Russian business.

 

Tomorrow’s GDT auction must surely see another significant price drop.  As one ingredients buyer commented:

 

“A mixture of fear and hope will be greeting next week’s GDT event.”

 

Unfortunate timing from one of First Milk’s Scottish Taliban   (18th August 2014)

Willie Lamont, Area Representative for First Milk, must have cringed when he saw his letter appear in this weekend’s Scottish Farmer on the same day The Grocer headlined First Milk’s retailer de-listings.

 

Basically, Mr Lamont lambasted David Handley for his earlier call to sack the First Milk Board and its Chairman Jim Paice. To some extent he has a point in terms of only First Milk’s members have the right to demand any change of management.  Unfortunately he then went on to extol the virtues of  First Milk’s

 

“decision to invest in innovative new food products and to seek greater added value from existing products.”

 

Turn to Fridays edition of The  Grocer and a headline, which included First Milk dairy drinks, loose listings, which explained how First Milk have revealed that its Lake District dairy brands Frumoo and Caffe Latte drinks have lost  all their supermarket listings.  Both are still in production and “sold through some retailers” and First Milk have stated that they have learned a lot from its first venture in dairy drinks and that it has used that experience when working on the launch of its Team Sky high protein breakfast smoothies, which are incidentally made in Austria.

 

Rob Newbery to leave his NFU Chief Dairy Advisor position   (18th August 2014)

Rob Newbery is to leave his position as NFU Chief Dairy Advisor to take on the role as Director for the West Midlands NFU region.  So in the space of six months the two NFU people who pushed the introduction of the Voluntary Code of Practice have both departed just ahead of the codes so called independent review.  Will the new crew push it as hard post the review in the new world of cooling dairy prices?

 

The European Puzzle  (8th August 2014)

In a week of bad news leading European milk processor Friesland Campina (FC) has stunned many with a price increase announcement to its suppliers.  Given the fact Arla spend a lot of time watching what FC do it will be interesting to see whether Arla widen the gap further between the FC and Arla AMCO price at the end of August.

 

Russian ban of EU dairy products adds to the problem  (8th August 2014)

The announcement that Russia has banned dairy product imports for one year, in response to sanctions imposed on Russia as a result of the Ukranian crisis, is a bitter blow to an industry heading south at speed.  All of the EU powder, cheese and butter destined for Russia will have to find new homes and that will put further pressure on what is a weakening market.  The ban came into force on the 7th August but does not include infant formulas.  Other areas included in the Russian ban include the USA, Australia, Canada and Norway. 

 

One milk processor described as “nothing short of a disaster given the EU exports 300,000 tonnes of cheese to Russia each year.”

 

0.65ppl milk price reduction for First Milk liquid contracted members – from 1st September  (6th August 2014)

This takes producers standard litre price down to 28.1ppl.  During the past four months the total price reduction amounts to 4.4ppl.

 

0.5ppl milk price reduction for First Milk cheese/manufacturing contracted members – from 1st September  (6th August 2014)

 

This takes producers standard litre price down to 29.1ppl (www.milkprices.com) and is the 4th consecutive monthly price reduction, totalling 3.4ppl

 

1ppl milk price reduction for South Caernarfon Creameries suppliers – from 1st September (6th August 2014)

 

This takes producers standard litre price down to 30.01ppl.

 

Wyke Farms launch £1.2 million promotion  (6th August 2014)

 

Wyke Farms have announced plans to invest £1.2 million to support and promote its branded cheese, in particular, its Provenance and Somerset countryside roots.

 

The campaign goes live on 1st September with national TV adverts, including a 30 second slot during the Coronation Street break as well as Breakfast TV.

 

GDT prices crash 8.4% again  (5th August 2014)

That sinking feeling Ian had three weeks ago came again at 16:30 today with the outcome of today’s GDT auction results.

 

Basically, the average was back 8.4% on that recorded only three weeks ago, which in itself was down 8.9%.

 

So overall close to a 50% drop in only 6 months since February.

 

This is not volatility it’s extreme volatility and it comes less than 8 months before the European quota regime ends.

 

It’s time a batten down the hatches and buckle up for farmers and processors who are in for a very rocky ride.

 

Don’t shoot the messenger but for some a farm gate standard litre price of 25p or less now seems on the cards before Xmas, and the only question is how low world prices will drop before they level and more importantly when will the U-turn happen.

 

Main movers in today’s auction:

 

Cheddar down  10.2%

WMP down        11.5%

SMP down          6.5%

 

It’s simple world and EU milk production is up and Chinese demand has cooled down. This is a lethal combination for dairy farmers in the UK who will shortly have the cows on winter rations whilst they are on bread and water.

 

1.2ppl milk price reduction for direct suppliers to Arla – from 1st September  (1st August 2014)

This takes producers standard litre price to 30.8ppl (www.milkprices.com)

 

1ppl milk price reduction for suppliers to Wyke Farms – from 1st September  (1st August 2014)

This takes producers standard litre price to 30.05ppl (www.milkprices.com)

 

1ppl milk price reduction for suppliers to Crediton Dairy – from 1st September (1st August 2014)

This takes producers standard litre price to 32.36ppl (www.milkprices.com)

 

0.85ppl milk price reduction for suppliers to Belton Cheese – from 1st September  (1st August 2014)

This takes producers standard litre price to 30.15ppl (www.milkprices.com)

 

Muller Wiseman hold firm on September milk prices  (1st August 2014)

The suggestion that if Arla sneeze everyone catches a cold is true unless you are Ronald Kerrs and involved in price negotiations with Muller.

 

Full credit to Muller Wiseman and its farmer board for deciding to hold its September producer price at a time when Arla, Dairy Crest, First Milk and a heap of liquid milk and cheese processors have announced price drops.  This is certainly not willy-waving and will silence critics of both MW and its farmer board.  No doubt NFUS wish they had written their press release post this announcement.

 

Adams Foods buy Foodtech business from Dairy Crest  (1st August 2014)

Adams Foods, based in Leek, have acquired the Crewe based Foodtech specialist ingredients business from Dairy Crest for £1.2 million.

 

Colston Basset Stilton Cheese wins Supreme Award  (1st August 2014)

The Supreme Champion cheese out of 4,500 entries at this week’s Nantwich International Cheese Show was awarded to a Stilton from Colston Basset.

 

Commonwealth games, sun, and supping something strong befuddles NFUS' brains!   (30th July 2014)

Ian had a double take on the latest NFU Scotland dairy press release whose lead caption was:

 

 “Milk price cuts must reflect market place reality – Union calls on processors to pay based on performance."

 

To put the markets into perspective, globally there has been a 40% drop in GDT auction prices in less than five months and yet, during the same period, UK prices are down 10%! That's the reality. Thus, on the basis of these figures the price cuts, to date, appear to be fully justifiable and do, in fact, “reflect market place reality.”

 

Further down the NFUS' press release Ian's eyes rolled to the back of his sockets and round again with the statement that “the Union believes paying a price that reflects company performance will pay dividends.”

 

It is wholly naive and frankly outrageous to suggest farm gate milk prices should be linked to milk purchaser/processor performance! Whilst co-ops like Arla and First Milk aim to pay out the most they can to members on a monthly basis NFUS simply cannot put forward a legitimate reason as to why any successful processor should pay its farmers more than competitors, some of whom are less competent! In addition, even if this theory had any merit at all, Ian suggests NFUS looks down the other end of the telescope, because the theory also means a poor performing company would be justified in dropping prices further!

 

Remember back in 2012, when UK processor's financial results were disastrous and deteriorated further when protesting farmers succeeded in lifting farm gate milk prices? Under the NFUS' idea of "performance payments" farm gate milk prices would have dropped in 2012, not gone up.

 

Markets simply do not work in the way NFUS suggests, and even if they did feed merchants should immediately demand more money for dairy cake from farmers whose financial performance is currently good!

 

Sorry NFUS but this idea is bonkers! Get out the sun, off the pop, and get back to the drawing board!

 

1.2ppl price reduction for suppliers to Glanbia Cheese – from 1st September  (29th July 2014)

This takes producers www.milkprices.com standard litre price to 30.11ppl.

 

1.1ppl milk price reduction for Dairy Crest Suppliers- from 1st September (25th July 2014)

The resulting standard litre prices will be

Davidstow (cheese)    32.09ppl

Liquid                           30.09ppl

 

This is the first Davidstow price change in 10 months

 

0.94ppl price reduction for Arla Ambo Co-op members – from 4th August  (25th July 2014)

This takes producers headline standard litre price to 31.58ppl.

 

The 0.94ppl net reduction is basically 1.25 euro cents converted to sterling to give a decrease of 0.98ppl in the account price plus 0.04 increase in the 13th payment.

 

Tesco continue to hold firm on TSDG farmgate milk price  (25th July 2014)

Tesco continue to hold firm on both their Muller Wiseman and Arla directs milk price for August and into September with no price change for September 1st.

This puts the TSDG Arla directs price at 34.2ppl and Muller Wiseman price at 34.3ppl (These figures include the base price plus 0.2ppl welfare code premium and 0.5ppl Promar costing’s).

This should put a smile on the faces of TSDG dairy farmers given the way all other prices are heading.

 

Spot Price is sliding big time  (25th July 2014)

Having rapidly rocketed to 35ppl (June 20th) spot prices have crashed back to under 26ppl and the immediate outlook is not encouraging.

 

GDT Auction  (25th July 2014)

Prices having crashed by almost 9% at the last auction 10 days ago mean all eyes will be on next Tuesdays auction results with most praying for prices to level.

 

Lurpak butter is top of two leagues  (25th July 2014)

According to the latest figures from A.C. Nielsen, Lurpak is now the UK’s No1 butter brand both in volume and value.

The brand is worth around £300m outperforming its closest rival by 500 tonnes a year.

 

CLA Game Fair goes from strength to strength  (25th July 2014)

he CLA game fair clocked up 143,500 visitors in 3 ay at Blenheim Palace in what was a fantastic celebration of all that is great about our countryside.

Politically one of the highlights was the head to head between UKIP leader Nigel Farage and CLA deputy president Ross Murray where a large crowd jostled for position outside a crammed Theatre to hear a debate as to whether the UK should remain in the EU.

 

Whether you agree with UKIPS plan to remove the UK from Europe and the CAP is a hotly debated point but for certain Farage pulls a crowd and puts on a good show and performance.

 

So 143,000 plus people attended the Game Fair within days of the RASE auctioning over £400,000 of its valuables to pay off some of its debts.

In days gone by the Royal Show eclipsed the Game Fair however since the first Game Fair in 1958 the Event has been well directed and gone from strength to strength.

 

Ian’s first Game Fair was as a boy in shorts at Raby Castle in 1972. Next year’s event will be Harewood House, Leeds.

 

1ppl milk price reduction for suppliers to Yew Tree Dairy – from 15th August  (18th July 2014)

This takes their standard litre price to 30.75ppl

 

0.75ppl milk price reduction for suppliers to Grahams Dairies (Scotland) – from 1st August  (18th July 2014)

This takes their standard litre price to 30.75ppl (www.milkprices.com)

 

0.044ppl milk price reduction for Dairy Crest’s Formula contracts – from 1st August  (18th July 2014)

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

 

Core liquid formula                  31.98ppl

Simplified liquid formula                      31.79ppl

 

A tiny reduction of less than -0.1p/l, which is making the DC/DCD formula price look attractive compared to the current competitive set.

 

Meadow Foods have signed up 19 out of the 22 producers from Rock Farm – following the recent decision to close the plant by Cool Milk’s Jon Thornes and his associates.  (18th July 2014)

 

WANTED by Ian – HOWARD TRACTOR MOUNTED ROTAVATOR (Selectatilth E-type model) Operators/Maintenance Manual  (18th July 2014)

If any reader wants to sell a copy or can take a photocopy of one please email Lydia@ipaquotas.co.uk.  Thanks

 

Global Dairy Auction prices crash back a further 8.9%  (16th July 2014)

Tuesday’s GDT auction was a disaster with the average price for all products dropping 8.9% in only two weeks to average $3309/tonne and an index price, which was last seen in late 2012.

 

Notable movers were:

 

Whole Milk Powder down 10.9% to average $3088/tonne

Skim Milk Powder down 7.1% to average £3516/tonne

 

1.2ppl milk price reduction for Muller Wiseman non aligned producersfrom August 3rd (7th July 2014)

This will take producers www.milkprices.com standard litre price to 30.8ppl

 

1ppl milk price reduction for Meadow Foods suppliers – from August 1st  (7th July 2014)

This will take producers www.milkprices.com standard litre price to a level 30ppl.

 

1ppl milk price reduction for Wyke Farm suppliers – from August 1st   (7th July 2014)

This takes producers www.milkprices.com standard litre price down to 31.05ppl.

1.75ppl milk price drop for First Milk liquid contracted farmers - from August 1st  (7th July 2014)

1.25ppl milk price drop for First Milk manufacturing/cheese contracted farmers - from August 1st   (7th July 2014)

Initial emails to Ian which arrived within the first 15 minutes of the First Milk price announcements included:

“Jesus that is brutal”

“last to take the price above 30ppl first to take it under”

“That’s not a spoonful of medicine it’s a ladle”

 

With a manufacturing standard litre price of 29.1ppl and a so-called liquid contract price of 28.25ppl both after capital levy deductions it was a bit of a surprise to read that in the letter to members from First Milk’s Chairman Jim Paice notifying them of the price reduction, he concluded by stating:

“As you may have seen Arla have reduced their price from this week, almost a month earlier than us, citing the negative trend in global markets. Our analysis of their price and the deductions which they apply means that our actual price paid will still be more than Arla AMCo price for most of our producers.”

Ian has investigated this statement further with First Milk in order to establish what evidence they hold to substantiate the claim.  Without going into detail the claim should have been better researched before it was communicated to members. In the detail there were some rogue figures and wild assumptions. If the facts had been better researched the statement would have been along the lines that the Arla AMCO headline price is not what is paid out to farmers and there are sizeable deductions, which significantly narrow the perceived gap between the First Milk and Arla AMCO headline prices.  On that point we agree. 

 

No doubt First Milk suicide bombers will beat their chests and complain loudly that Ian is once again having a pop at First Milk and bigging up Arla, but on this story as with others First Milk only have themselves to blame as they have once again had a dig at Arla, which is a fellow farmer-owned company and is one that really should be one of its major strategic partners.

 

So after First Milk’s suicide bomber members have read this story, and before they pen another angry email to Ian perhaps they should consider writing to First Milk alternatively put some mittens on so they can’t use the keys on their keyboards.

 

CORRECTION

0.75ppl milk price reduction for suppliers to Barbers Farmhouse Cheese – from September 1st   (7th July 2014)

This will result in a standard litre price of 31.39ppl (www.milkprices.com)

 

Global Dairy option prices down almost 5%   (7th July 2014)

Just when everyone was starting to think there was a glimmer of light that the value of dairy commodities was beginning to stabilise comes the grim news that this weeks GDT auction has seen the average price drop by 4.9%.

 

Notable movers were as follows:

 

Butter down 13.6% to average $3,181 per tonne

Whole milk powder down 5.4% to average $3,459 per tonne

Cheddar down 2.9% to average $4,226 per tonne

Skimmed milk powder down 0.9% to average $3,810 per tonne

 

These prices, in many cases, have wiped out recent gains and more with the largest hit taken on butter prices.

 

Dairy Crest announce partnership with Fonterra to sell DWP   (7th July 2014)

Dairy Crest have confirmed that it’s demineralised whey powder (DWP), which will be produced from its new £45 million facility at Davidstow, will be sold on a commission basis by Fonterra. The DWP will be used by Fonterra as a base ingredient for infant formula powders and the agreement will run for a minimum of 5 years with production expected to commence in the spring of next year.

 

In addition, Dairy Crest have announced a further £20 million investment at Davidstow to manufacture GOS, which is a lactose based pre-biotic used in infant formulas. Dairy Crest will partner Fayrefield Foods Limited of Chester in a joint venture in the GOS project. Fonterra will be responsible for all marketing and selling of the GOS, which is likely to be produced in 2015.

 

Tesco Young Farmer Scheme opens its doors   (7th July 2014)

Earlier this year Tesco launched the Future Farmer Foundation to help get young farmers off to a great start in their farming careers.  The programme is open to both new entrants and next generation farmers aged 20 to 35 years old from all sectors, offering business planning workshops, supply chain experience, mentoring and training. Already 50 Future Farmers are currently experiencing the programme, and Tesco have opened applications for the next intake, who will join the programme in September.  If you know of any bright ambitious young farmers or farming entrepreneurs they can find out more and apply by visiting -  www.tescofuturefarmerfoundation.com or calling 0800 977 4639.

 

FOR SALE    (27th June 2014)

Ifor Williams High Roof Livestock Trailer

Ian’s trailer, which he has owned from new, it’s:

 

  1. A double horsebox to carry two fast Lone Ranger getaway horses or ponies
  2. A sheep and pig trailer with decks
  3. Cattle trailer

 

It’s on eBay, item number 271532712957 or click on this link

http://cgi.ebay.co.uk/ws/eBayISAPI.dll?ViewItem&item=271532712957&ssPageName=ADME:X:RTQ:GB:1123

 

Ends next Sunday evening, 6th July 2014 at 20:00 hours.

 

Dairy Crest milk prices held for August   (26th June 2014)

Dairy Crest Direct (DCD) and Dairy Crest (DC) have agreed to stand on with both the (DC) liquid and cheese (Davidstow) farm gate milk prices for August.

 

This is good news and once again demonstrates that DC do not simply catch a cold when Arla sneeze.

 

Dairy Crest’s market leading Cathedral City branded cheese is undoubtedly the corner stone of the Davidstow cheese price and as stated in the latest DCD newsletter “This pence per litre return built upon the less volatile and successful branded cheddar.”

 

The current DC standard litre prices are therefore as follows:

 

Core & simplified formula                               31.829ppl

Standard liquid                                                31.19ppl

Manufacturing/Davidstow cheese                  33.19ppl

 

All eyes are now firmly fixed on what Muller Wiseman and First Milk do on Monday/Tuesday of next week ahead of the NEC Livestock Event. 

 

Muller Wiseman are a GB liquid milk business.

 

First Milk have towards half of their milk going into cheese with almost all of the cheese sold by Adams/IDB on a basket formula, leaving the remaining member milk to go into other ventures it has invested in, including Westbury.  Many of these should be delivering a boost to members milk price, including milk brokering whose future looks good with spot prices at 35ppl in June as well as the fact that commodity prices have bottomed.

 

1.23ppl (1.5 Euro Cents) milk price reduction for Arla (AMCO) members - from July 7th  (25th June 2014)

This should take member standard litre to 32.52ppl before deductions.  In addition, the anticipated 13th payment has been increased by 0.04ppl.

 

Whilst this is unwelcome news for Arla members it has to be remembered it is a European price and just because the mighty Arla sneeze does not mean every GB dairy farmer has to catch a cold.

 

With GB milk suddenly in very short supply and spot prices continuing to raise almost daily, now trading at 35p, there are some processors questioning whether they will need to follow Arla’s lead.

 

For those who believe they have a good case to follow Arla with further price reductions from 1st August (under the Voluntary Code) they will have to be mindful to at least maintain their standard litre price at a minimum of 30ppl or risk serious cross examination as to how competent their sales people are.

 

0.028ppl milk price rise for Dairy Crest formula contracts – from July 1st  (20th June 2014)

It’s a small but positive increase which takes producers standard litre price to 32.02ppl for the liquid core formula and 31.83ppl for the simplified liquid contract. (www.milkprices.com)

 

Auction prices up 1% (20th June 2014)

This weeks GDT auction saw average prices increase by 1%.

Notable movers were:

Butter + 1% to average $3699

Cheddar + 2.4% to average $4381

WMP + 2.4% to average $3658

SMP – 0.2% to average $3855

Note later SMP contracts for September/October delivery showed price increase.

 

Spot milk continues to head North at 35ppl (20th June 2014)

Spot milk is desperately short and this week trading at 34 to 35ppl.

The strong prices have seen cheese processors exit the market as buyers with some on the brink of turning to spot milk sellers as a more profitable outlet than turning their milk into cheese. 

 

Friesland Campina (FC) price increase is very significant (corrected story from last weeks) (20th June 2014)

The news that FC has increased their June milk price by 1.75 Euro Cents to 42 Euro Cents/kg is significant. This converts to a UK standard litre price equivalent of 39.43euro cents (31.45ppl). The move significantly narrowed the price differential between Arla and FC.  The FC move could be the first sign that continental Europe farm gate milk prices will only drop by a tiny amount if at all in the coming months.  It’s a very positive market indicator.

 

West Country Milk anticipate milk prices falling all year (20th June 2014) - text  temporarily removed 

 

Muller Wiseman- Grocer Brand of the Year Gold Award winners (20th June 2014)

Muller took the Grocers Gold Award beating stiff blue chip competition from brands like Pepsi, Heinekien, Cadbury and even Arla.

 

Rocky Rock Farm Close its Dairy (20th June 2014)

Durham based Rock Farm Dairy has had a chequered history and has now closed with the loss of at least 80 jobs.

 

Rock packed its last milk last Thursday 12th and deliveries to customers stopped on Friday 13th- unlucky for some. Rock recently lost some key liquid customers who have indicated they experienced problems, with consistency of quality product and service resulting in a estimated 60% of Rocks business migrating to Paynes Daires with the remaining business to be packed or taken on by Lancaster Dairies as part of a deal with Rock.

 

On the positive side it appears Rocks small band of 24 farmer suppliers have been given a reasonable deal in so far as most if not all have been given three months notice to find a new milk buyer.

During this period the bulk of their milk will be traded on the spot market/short term contracts with two traders where fortunately prices are firming almost daily. (see above)

 

Finding a new milk buyer will not be easy for some of these farmers who are very much out on a limb. Several have previously blotted their copy book with either Arla or Meadow both of whom are now cautious they don’t get another whipping as the 4th emergency service. Note Meadow came to the rescue when some of the Rock farmers were left high and dry by the collapse of Fresh Pastures only to find Meadow were dumped after a couple of weeks supply.

With some of the Rock Farm farmers on a tasty 1 year fixed price milk contract at 34.5ppl they look like having to take a bath with any new milk buyer.

Rock Farm was taken on from the Administrators by Cool Milks John Thornes two years ago on what at the time was reported to be a 20 year lease of the processing site with a 10 year break clause.

 

£5 million nose award (20th June 2014)

Nigel Pooley received a Long Service Award at the Bath & West Show from the Duchess of Cornwall after more than 50 years in the dairy industry.  Nigel is Wyke Farms master cheese grader and has graded in excess of 1.4 million tonnes of cheddar whilst working for Wyke Farms and his nose is valued at £5 million by Wyke.

 

Have the European and GB markets turned north? (11th June 2014)

One swallow does not make a summer but with Friesland Campina’s price up for June (see above) and spot prices increasing across the piste it could be a case of the only way is up for baby.

 

GB spot prices now 28/29ppl.

Italian spot prices up to 40 Euro Cents (32.4ppl)

Dutch spot prices up to 36 Euro Cents (29ppl)

 

Lactalis give notice to outlying Cumbria producers (11th June 2014)

Lactalis are the latest milk purchaser to give notice to producers who are not within their core catchment area having given 12 months notice to farmers in Cumbria, who are now on the hunt for a new milk buyer.

 

May production (11th June 2014)

Provisional May production was up 98.7 million litres on May 2013 (+8%) with peak daily production coming almost 3 weeks earlier than is normal around the 3rd May (43.7m litres/day).  Cumulative production for the first 2 months stands at + 266 million litres or + 11.33%.  Cumulative butterfat is down 5 points to 3.95%.

 

Ippl milk price reduction for Wensleydale Creamery suppliers – from 1st July (9th June 2014)

This produces a standard litre price of 31.35ppl (www.milkprices.com)

 

0.5ppl milk price reduction for Glanbia Cheese suppliers – from 1st July  (9th June 2014)

This produces a standard litre price of 31.30 (consistent contract) and 31.40ppl (base schedule contract) (www.milkprices.com) 

 

GDT auction prices drop on average by a further 4.2%  (5th June 2014)

Another mixed bag of results at Tuesdays Auction which saw the average all products index fall by 4.2% to average $3,756 tonne which is the 8th consecutive fall in the average products auction price.

 

Notable movers to the auction prices achieved only two weeks ago were:

 

WMP down 8.5% to average $3594 tonne

SMP up 2.1% to average $3863 tonne

Cheddar up 8% to average $4236 tonne

Arla Westbury SMP up 1.5% to average $3830 tonne

 

SMP increase were for contracts delivered during the next three months.

 

1ppl milk price reduction for suppliers to Belton Cheese - from July 1st (5th June 2014)

This takes producers standard litre price down to 31ppl

 

0.13ppl price reduction for Sainsbury’s contracted producers  (5th June 2014)

This produces the following standard litre prices:

 

Muller Wiseman  33.03ppl

Dairy Crest          32.97ppl

Arla                      32.91ppl

 

1.59ppl reduction in the Muller Wiseman formula price - from July 1st  (5th June 2014)

This produces a standard litre price of 31.41ppl which will be reviewed again in three months time

 

1.15ppl milk price reduction for First Milk Cheese contracted members - from July 1st (5th June 2014)

This will take producers standard litre price for cheese down to 30.85ppl. No change to its Liquid price which reduced by 2ppl a month earlier from June 1st to produce a standard litre price of 30.5ppl

 

1.5ppl milk price reduction for South Caernarfon Creameries suppliers/members - from July 1st   (3rd June 2014)

This takes producers standard litre price down to 31.01ppl

 

1ppl milk price reduction for Grahams Dairies - from June 1st  (3rd June 2014)

This takes producers standard litre price down to 31.5ppl

 

Tesco hold firm again on Arla TSDG price for July  (3rd June 2014)

The 1st July Arla directs price reduction should have instantly triggered an adjustment in the Arla Tesco price paid to Arla directs who are contracted to supply Tesco.

 

Tesco have decided to hold the price for July at 34.2ppl which is a base price of 33.5ppl plus 0.2ppl premium to cover the welfare code plus 0.5ppl for Promar  costings.  The situation is under review monthly

 

Correction to last weeks posting under Dairy Crest Price reduction  (3rd June 2014)

We incorrectly quoted the Muller Wiseman standard litre price on Friday when comparing the big 3.

 

Here are the correct numbers:

 

Dairy Crest 31.19ppl from July 1st

 

Muller Wiseman 32ppl from June 1st

 

Arla members 33.74ppl from May 1st - before the various deductions

 

First Milk Liquid 30.5ppl from June 1st

 

1.5ppl milk price reduction for Arla directs – from July 1st  (30th May 2014)

This reduces producer’s standard litres price to 32ppl. 

 

1.25ppl milk price drop for Dairy Crest liquid contracts  -  from July 1st  (30th May 2014)

Dairy Crest (DC) have dropped their liquid milk price by 1.25ppl to give a 31.19ppl standard litre price from July 1st. 

 

In view of the fact DC have stood on with their Davidstow (Cheese) contracted milk price at 33.19ppl the July 1st gap between the two will be the largest recorded at 2ppl.

 

Today’s position is that the July Muller Wiseman standard litre price stands at 33.6ppl and Arla members at 33.74ppl.  On that basis it’s clear DC continue to be off the pace.  No surprises there given their annual results, which showed a very unsatisfactory underlying profit from its liquid division (excluding £18.2 million derived from property sales) of just £600,000.

 

FFA are back protesting (30th May 2014)

Today’s price drops plus strong rumours of more to follow on Monday has resulted in calls for FFA to help man the barricades as members and non members feel the need to protest.

 

A hit list was been drawn up as we went to print and the indication is that protests could come thick and fast and the push is so great they will take place even is FFA decline to be involved.  The gloves are off and the targets fairly obvious.

 

Dairy Crest’s price drop triggers supplier health concerns  (30th May 2014)

DC are certain to attract a number of its liquid contracted producers to its stand at next week’s Royal Cornwall Show where DC are keen to check farmers blood pressure following today’s price cut announcement.

 

In today’s newsletter it DCD comment:

 

"Whilst on the stand, in addition to finding out the latest news on pricing, contracts and progress with the new exciting whey investment at Davidstow, why not also avail yourself of the free Dairy Crest funded opportunity to have your cholesterol and blood pressure tested? 

 

In our busy lives we seldom make time to ‘take stock’ of our own health, so this provides an excellent opportunity to do just that."

 

Perhaps DC/DCD should run a blood pressure league showing its liquid and cheese contracted producers.

 

Former Dairy Crest Head of Milk Procurement to be new CEO of Lactalis  (27th May 2014)

The Lactalis head hunters have been stamping around the dairy industry for months seeking a CEO, the result is that former Dairy Crest Head of Procurement Mark Taylor will replace Andy Smith.

 

Taylor left Dairy Crest late 2011 having achieved a great deal, in particular, Taylor cemented a good relationship between Dairy Crest’s farmers and the company during his term.

 

It’s unlikely he will receive many good luck in your new job wishes from the head honchos at Dairy Crest, especially given the multitude of special deals with farmers they took to on his departure, which mushroomed out of control. 

 

One of the Lactalis head hunters alleged “nice to have requirements” was involvement with the Dairy Crest board on which Taylor ticked more boxes than most.  It’s a very big job for Taylor and all eyes will be on him as to whether he can catapult Lactalis GB out of what’s perceived to be a plodding along mode to run alongside DC, Arla and MW.

 

Arla stand on for June member milk price  (27th May 2014)

The news that Arla’s member milk price will remain unchanged for June milk will be a relief to some and the cause of head scratching for others.  The position re the July Arla Directs milk price will be confirmed this week.

 

GDT auction prices continue to head south  (23rd May 2014)

This week’s Fonterra GDT auction saw the average price index down 1.8% despite a 12% drop in the volume of product on offer.

 

Within the numbers:

Butter              was down 3.8% (average $3667)

SMP                was down 3.5% (average $3733)

Cheddar          was down 2.1% (average $4108)

WMP               was down 1.1% (average $3877)

 

During the past year the auction has seen more than 1 million tonnes of dairy products sold to buyers in 90 countries.

 

Spot prices show signs of improving  (23rd May 2014)

In the UK spot prices appear to have improved from around 17ppl to anywhere between 18 to 22ppl with cheese makers in the market.

 

In Holland there are also signs spot prices have levelled at just a shade under 24ppl.

 

European Milk Market Observatory figures  (23rd May 2014)

Latest figures from the observatory indicate milk production across the EU28 is up 5.8% in the first 3 months of the year.

 

Leading the pack of countries churning out more milk is Romania +12.5% and in no. 2 slot is the UK + 12.3%.

 

Also worthy of note is the observatory’s figure stating UK cheese production is up an eye watering 12.2% (11,100 tonnes) in just 3 months.

 

Arla offer investment bonds  (23rd May 2014)

Arla is offering professional investors the chance to acquire five year investment bonds to an initial maximum of £135 million equivalent.  Bonds with fixed and variable interest rates are on offer and will be listed on the Irish Stock Exchange.

 

The bonds will not change the fact Arla is 100% farmer owned.

 

Dairy Crest release its 31st March 2014 results  (23rd May 2014)

Dairy Crest’s financial highlights were a mixed bag the result of which saw its share value fall from £4.60 to £4.27 before a slight recovery to £4.36 today.

 

Key points were:

Year end debt up from £60 million last year to £142m.

Profits from its cheese business +19% to £39.3 million.

Profits from is liquid milk business +92%, which sounds great but it’s only to £18.8 million.

Cathedral City sales +12%.

Adjusted profit before tax £65.3 million (+31%), however, within this figure is included £18.2 million profits from one of property sales.

The next three years pension contributions have reduced from £20 million per annum to £13 million for the next two years followed by a £16 million contribution.

 

Paynes profits take a haircut  (23rd May 2014)

Paynes Dairies’ profits for the year end 31st March 2013 amounted to only £11,000, which is 1% of the £1.1m declared a year earlier.

 

There is no doubt that Paynes results mirror those of others in the middle ground for the same financial period where competition is tough.  At least no producers can claim Paynes didn’t pay as much as they could for the milk in this period.

 

Paynes have confirmed that the provisional figures for the year ended March 2014 are a lot healthier, very much in line with budget and without doubt back on track.

 

0.324ppl price cut to the Dairy Crest formula price – 1st June      (16th May 2014)                        

A further fall in cream values is the main culprit, which takes the standard litre price down to 31.99 (core formula) and 31.80ppl (simplified contract) www.milkprices.com.  In comparison, the Dairy Crest standard liquid contract standard litre price is 32.56ppl.

 

Arla agree merger with 795 Walhorn co-operative farmers  (16th May 2014)

This will take the Arla family to 13,500 members and adds another country to the list of seven European supplying farmer members.  The list is GB, Denmark, Sweden, Germany, Belgium, Luxembourg and Holland.  The merger is subject to competition authority approval.

 

Milk production heads north in New Zealand and USA (16th May 2014)

Fonterra report production in New Zealand up 8% in the past 11 months.

 

Production in the USA is up 2.4% and forecast to be up a further 2.9% in 2015.

 

April production figures up a whopping 14.85%   (9th May 2014)

Provisional figures from the RPA have resulted in incredibly strong April production figures, which are up 14.85% on those of April 2013.  Total production for the month amounted to 1,277.1 m litres compared to production a year earlier of 1,111.9 m litres, a difference of 165.2 m litres of milk.

 

This is an incredible start to the first month of the new and final quota year.  Whether it will continue at this rate is debateable and realistically highly unlikely but there is no doubt that with the country needing to achieve around a 12% month on month increase to what was produced a year ago in order to fill quota this is a start which will be of concern.

 

In terms of the quota market 2014-2015 is said to be volatile and unlikely to settle down for several weeks.  In terms of milk production there are some signs that production may have peaked and plateaued early and certainly spot milk prices, whilst disappointingly low at around 17/18ppl, do appear to have stabilised and are no longer heading south on a daily basis.

 

The 4 day milk price reduction league table   (2nd May 2014)

 

2ppl top trumps reduction for First Milk liquid members – from June 1st   (2nd May 2014)

 

1.6ppl milk price reduction for Muller Wiseman (MW) suppliers – from June 1st  (2nd May 2014)

In a press statement MW simply refer to two forces in terms of significant supply increases and weaker demand for commodities both of which pull in the same direction – down.

 

1.6ppl milk price reduction for Lanchester Dairies suppliers – from May 1st  (2nd May 2014)

 

1.55ppl price reduction fro Meadow Foods suppliers – from June 1st  (2nd May 2014)

 

1.5ppl milk price reduction for Jacksons Dairies suppliers – from May 1st  (2nd May 2014)

 

1.25ppl milk price reduction for Barbers suppliers – from June 1st  (2nd May 2014)

 

1ppl milk price reduction for Yew Tree Dairy (Woodcocks) suppliers – from June 1st  (2nd May 2014)

 

1.0ppl milk price reduction for Glanbia Cheese suppliers – from June 1st  (2nd May 2014)

 

1ppl milk price reduction for Belton Cheese suppliers – from June 1st  (2nd May 2014)

 

0.8ppl milk price reduction for Payne’s Dairies suppliers - from May 1st  (2nd May 2014)

 

0.5ppl milk price reduction for Wyke Farms suppliers - from June 1st  (2nd May 2014)

 

0.5ppl price reduction for First Milk cheese/manufacturing members – from June 1st  (2nd May 2014)

 

Tesco hold its May and June price for Muller Wiseman suppliers to TSDG  (2nd May 2014)

The Muller Wiseman (MW) 1.6ppl reduction (see above) should have automatically resulted in the  MW TSDG milk price reducing  by the same amount, which would have taken the standard litre price down to 32ppl, which would have been a fraction above the latest TSDG cost of production at 31.93ppl.  Note, in addition to the 32ppl there are the 0.7ppl Tesco additions.

 

However, Tesco have written to all MW TSDG suppliers to say the price will be held at 34.3ppl (33.6ppl plus 0.7ppl additions) for May and June following which the  position will be reviewed monthly.

 

The Arla TSDG price remains at 34.2ppl as a result of Arla’s decision to hold the milk price paid to its directs.  Note, the Tesco milk price is not aligned to the AMCO/Arla members price.

 

Parkham Farms will hold their milk price until end of June  (2nd May 2014)

The fact that 28 out of 28 of Parkham Farms long term contracted producers have signed up to the Tesco cheese trial means that their milk price will also remain unchanged for at least May & June.  In addition, all 28 receive the 0.7ppl TSDG premium to cover Promar costings (+0.5ppl) plus compliance with the welfare code (+0.2ppl).  The move to Tesco looks to be a smart move.

 

Crediton Dairy will hold their milk price for May and June  (2nd May 2014)

 

Dairy Crest to hold its milk prices for May & June  (2nd May 2014)

This is the case for its Davidstow, liquid and organic suppliers, following an agreement reached with DCD, which celebrates its 10th birthday.

 

Production shows no signs of backing off  (2nd May 2014)

The latest DairyCo figures for the two weeks ending 19th April show daily production at 41.5 million litres a day.

 

This represents a whopping 13.0% plus increase (+4.8 million) on the same period in 2013.  All processors must now be praying production peaks ahead of its traditional mid May spike.  Let’s hope the peak is with us now.  Until then it’s a fact that some of this week’s price reductions could have been harsher.

 

French production is +10%, Germany +6% and Britain is not exactly flavour of the month in Southern Ireland where our distress milk is crashing their market at 17ppl or less delivered with Irish factories now bursting at the seams with Irish production up an eye watering 15%.  The Irish Dairy Boards CEO Aaron Forde commented that the importation of milk from Britain was “the result of long term under investment in the (dairy) business in the UK”.

 

Should farmers picket Holyhead to stop Irish milk coming into GB  (2nd May 2014)

That was the idea from one joker who was under the impression it was Irish imported milk, which is at the heart of this week’s milk price reductions.

 

Well, if any farmers do decide to picket Holyhead or Stranraer please do not stop the loaded lorries getting on the ferry or the empty ones getting off.  Better still stay at home where you can do less damage.

 

Farmers and processors are paying the cost of 4 pints for £1  (2nd May 2014)

The middle ground liquid market is in total turmoil and any suggestion that convenience stores, corner shops, garages, processors and farmers are not footing the bill is frankly niave.

 

Sales to the stores and shops are down, in many cases by 10% or more, which means more milk for middle ground processors to find a home for and delivery lorries covering the same distance but delivering less milk.  So far as BMB’s are concerned they have been hit even harder and need to find new ways to bridge the gap from lost customers in order to stay in business.

 

Arla target Chinese cheese market  (2nd May 2014)

Arla are targeting the Chinese cheese market with the opening of a new laboratory in Beijing with a view to ensuring Chinese cheese preferences are refined and explored.  The idea is for Arla to launch new cheese products targeted at Chinese consumers and their specific tastes.

 

On the flip side UK cheese exports to China have been suspended due to our failure to satisfy Chinese food safety regulations introduced on May 1st.  It is hoped the ban will be lifted once the re-inspections are completed.

 

Top table change at Arla  (2nd May 2014)

Peter Lauritzen will be replaced by Peter Gioertz-Carlsen in August when Lauritzen steps down as the head of the UK arm of Arla when he will take on a new global Arla Denmark role for a year until he retires. 

 

Lauritzen will be a hard act to follow having steered Arla UK into a postion where most of its competitors wondered how it came to be and now simply watch and follow.  It has indeed been a very successful 44 years for him with Arla.

 

1.6ppl milk price reduction for Muller Wiseman (MW) suppliers from June 1st  (30th April 2014)

The price reduction has been communicated to producers with  30 days notice as permitted under The Voluntary Code of Practice.

 

In a press statement MW simply refer to two  forces in terms of significant supply increases and weaker demand for commodities both of which pull in the same direction – down.

 

This takes its www.milkprices.com standard litre price from 33.6ppl to 32ppl.

 

Tesco hold its May and June price for Muller Wiseman suppliers to TSDG  (30th April 2014)

The  Muller Wiseman (MW) 1.6ppl reduction (see above) should have automatically resulted in the  MW TSDG milk price reducing  by the same amount, which would have taken the MW TSDG standard litre price down to 32ppl plus 0.7ppl additions, which would have been a fraction above the latest TSDG cost of production at 31.93ppl.

 

However, Tesco have today written to all MW TSDG suppliers to say the price will be held at 34.3ppl (33.6ppl plus 0.7ppl additions) for May and June following which the  position will be reviewed monthly.

 

Note the Arla TSDG price remains at 34.2ppl as a result of Arla’s decision to hold the milk price paid to its directs.  Note, the Tesco milk price is not aligned to the AMCO/Arla members price.

 

0.5ppl milk price reduction for Wyke Farms suppliers - from 1st June  (30th April 2014)

This takes its www.milkprices.com standard litre price down to 32.05ppl.

 

0.8ppl milk price reduction for Payne’s Dairies suppliers - from May 1st  (29th April 2014)

 

1.27ppl milk price reduction for Arla members – from 28th April  (25th April 2014)

It was always the case that all major GB milk purchasers would wait for Arla to be the Dam Busters and it’s happened with a 1.5 Euro Cents reduction, which converts to 1.27ppl taking producers standard litre to 33.74ppl.

 

No surprises other than perhaps it didn’t come a month earlier.  Lots of similar announcements expected next week as other milk purchasers fall into line and form an orderly queue with price corrections.  Despite this unwelcome news there is still a very strong case for claiming that Arla are holding milk prices up.

 

What about The Voluntary Code?  (25th April 2014)

Arla’s announcement of a producer price drop with less than 3 days notice must surely be the final nail in the coffin for some milk purchasers who have signed up to the Code and its 30 day milk price notice period.  The likes of Muller Wiseman and Dairy Crest may decide to follow Arla with a price drop but under the Code they can’t implement any cut until June 1st at the earliest by which time Arla will have had the opportunity to implement a further price adjustment.

 

There is no chance Arla will change the way it operates its milk pricing across 5 plus countries so the only option for those signed up to it who are under the 3 month rule is to live with it or bin that rule.

 

0.435ppl milk price reduction for Dairy Crest formula producers – from 1st May  (25th April 2014)

This takes producers standard litre prices to 32.125ppl for the DC simplified formula and 32.315ppl for the core formula.  Cream value and retail milk price reductions are the reasons for the reduction.

 

Spot prices in free fall as distress milk is hawked  (25th April 2014)

Spot prices are simply crashing with one major milk processor claiming to have been offered one load of distress milk for this weekend at 12ppl.  This is the lowest Ian has head of, however, others are certainly trading at under 20ppl typically between 17 to 19ppl.

 

It’s a disaster.  We don’t have the processing capacity to handle all this milk or the European outlets for the concentrate and those with insufficient or no processing (especially, the brokers) with extra milk are bleeding. 

 

Milk purchasers are under pressure and some farmers appear to be oblivious to what’s happening at the processors coal face. I recently heard of one farmer who was selling liquid milk on a 3 month contract who refused to accept a 1st May 1ppl price drop believing it should be a price increase. He decided to change milk buyer convinced his new buyer is immune from the market place.  He believes this new milk buyer will hold his price at the current level until the autumn when prices will increase again. He and I guess many others who are thinking along the same lines  are in for a reality check.

 

As intimated by Ian in December this year is heading towards a financial disaster for one or more processors and when the proverbial hits the fan its to be hoped that the supplying farmers don’t cop for around 7 weeks of unpaid milk.

 

Arla to sell more Westbury product on GDT auction  (25th April 2014)

The next GDT auction on May 6th will see Arla increase its product offering putting Westbury butter milk powder up for auction.

 

The lunatics have indeed taken over the asylum  (25th April 2014)

Please click on this incredible story from The Daily Mail.  The story headline is “YEW must be joking?  Staff blast BBC chiefs who changed milk supplier to Yew Tree Dairy because it sounds like Jimmy Saville police probe name.”

 

Yes, staff at BBC’s Manchester media centre have complained to their managers that stocking milk from Yew Tree Dairy shows “a lack of sensitivity” because Operation Yew Tree is the name used by the police for the Jimmy Saville investigation.

 

The online comments clearly show readers believe the BBC is “staffed by idiots”.  The rumour is that anyone called Jimmy who works for the BBC has had to change their name by deed poll.

 

Click on http://www.dailymail.co.uk/news/article-2608782/Yew-joking-Staff-blast-BBC-chiefs-changed-milk-supplier-Yew-Tree-Dairy-sounds-like-Jimmy-Savile-police-probe-name.html?ITO=1490&ns_mchannel=rss&ns_campaign=1490

 

Promars comments in The Grocer have rattled some dairy farmers  (25th April 2014)

The weekly Grocer magazine is indeed in a league of its own and from a dairy farming point was where the first famous interview (rant) with the then new chairman of First Milk Jim Paice appeared.

 

It might not be as well read by dairy farmers as this bulletin but nevertheless three dairy farmers certainly received it and contacted Ian.  Please click on this article:  http://www.thegrocer.co.uk/fmcg/fresh/uk-to-produce-an-extra-14bn-litres-of-milk-a-year/356398.article

 

The headline is “UK to produce an extra 1.4billion litres of milk a year”.  The farmers gripe was that Promar are effectively telling retailers via The Grocer that there will be heaps of milk around for the next 4 or 5 years and by default why should they pay more or even the same price as they do today.

 

 

MIDLANDS HERD SALE

 

FRIDAY 9TH MAY 2014 - Norbury Farm, Norbury, Ashbourne, Derbyshire. DE6 2ED

Herd Dispersal of the Entire Lambwell & Dovebridge Herd (275 Head) -  On behalf of A D Robinson.

 

Exceptional Herd  5 EX   21VG & 50 GP with all Milkers averaging 82 points.

 

Herd  Average  9264kg    4.10%F   3.17%P   cc193. Cubicles & Herringbone,    Lepto, BVD, IBR & Johnes Free.

 

For Further Details & Catalogues Contact Meg Elliott on 07967 007049 Or visit www.bagshaws.com

 

March milk production weighs in at a hefty + 12.1% excluding butterfat adjustment (11th April)

Oh dear, Oh dear March milk production has been provisionally calculated by the RPA to be 1.246 billion litres representing an increase of 135 million litres (+12.1%) on that recorded in March 2013.

 

If that wasn’t enough Dairy Co’s weekly UK production figures for the two weeks ending 29th March 2014 averaged 14.8% more or 5.3m litres a day above the same period in 2013.  Note, to put this into perspective production was hit by the late dump of snow in late March 2013.

 

Taking GB on its own the daily increase recorded is an eye watering + 15.6% and these figures are calculated to a date 7 to 8 weeks before we hit the GB peak daily production.

 

The provisional 2013/14 end of year UK production stands at 13.67 billion litres up 5.4% on 2012/13.

 

With total UK wholesale quota for 2014/15 standing at 15.293 billion it means to hit quota and trigger a super levy we have to produce on average 11.87% more milk this year to fill the 1.62 billion litre shortfall.

 

The only certainty is that April production will make a hole in that 11.87% trigger with production for the month well above the March 12.1% uplift and could even be 15% plus up on April 2013 production.

 

Note, all of these figures completely ignore butterfat adjustment which has gone off the radar, however, given at 31st March 2014 the UK was 5 points over its national butterfat of 3.97% a trigger has to be factored in.  For 5 points this would take a further 137.6 million litres of the National Quota of 15,293 billion litres.

 

Time to get the calculators out and carefully follow the numbers but no need to get the prayer mats out just yet.

 

Understandably, producers who have little or no quota are in the market fearing their milk producer will withhold their milk cheque once they exceed any quota.  Others believe it’s too close to call and intend to take quota as insurance. 

 

The super levy for 2014/2015 quota year is 27.83 Euro cents per 100kg (approx. 23ppl).

 

0.49ppl milk price increase for Tesco/Parkham Farms cheese suppliers – from 1st May   (11th April)

At a time when production is rocketing the news that Tesco is to pay an extra 0.49ppl to its cheese supplying farmers is be very welcome news and should put a sunny smile on all Parkham Farms Tesco suppliers’ faces.

 

This takes their www.milkprices.com standard price to a healthy 34.25ppl and includes the additional 0.2ppl for the Tesco Welfare Code cost plus 0.5ppl for involvement in the Promar costing’s.  If you factor the price into www.milkprices.com’s manufacturing standard litre it comes out at 35.74ppl.

 

Correction to last week’s Tesco TSDG price adjustment (11th April)

Last week we reported that the new Tesco TSDG Cost of Production had reduced by 0.88ppl to a 31.93ppl plus 0.5ppl for the Promar costing’s.  Having examined the 1st November 2013 Tesco TSDG COP it is clear it was 33.29ppl plus the Promar 0.5ppl so the reduction is actually 1.36ppl not 0.88ppl.

 

Prices continue to weaken(11th April)

Figures from Holland confirm that Dutch WMP and SMP powder prices have fallen for the past seven consecutive weeks.

 

During this period WMP prices have dropped by 8.5% and SMP prices by 11.6%, however, butter prices have more or less been a stand on for the past three consecutive weeks.

 

All eyes will be on the results of next Tuesday’s GDT auction where more SMP tonnage will be on offer than two weeks earlier.

 

Meanwhile, spot prices for milk with no home has weakened to between 22-24ppl.

 

Dairy Crest formula contracts uptake (11th April)

Dairy Crest has two liquid formula contracts on offer this year and 160 producers with 110 million litres of milk have signed up part or all of their production.  This compares to 175 producers with 120 million litres that were attracted to the original DC contract a year ago.

 

Of the 160 who have signed up, 35 are new to formula contracts.   The new simplified contract attracted 30 producers with the rest going for the improved core formula contract. 

 

One interesting change introduced by DC this year is from one April formula contract start date to four during the year in April, July, October or January.

 

The core formula liquid contract standard litre price is 32.75ppl (www.milkprices.com)

The simplified formula liquid contract standard litre price is 32.56ppl (www.milkprices.com)

 

DC suppliers have the opportunity to sign up to one of these contracts during 2014/15 as indeed do any new recruits.  The next window runs until 1st July commencement date.

 

50% increase in the Fat Tax (11th April)

Arla Foods have announced a 50% increase in its butterfat reconciliation for its GB AMCO co-operative members from 1st May increasing from its current 0.5ppl to 0.75ppl.

 

The reconciliation (AKA the Arla Fat Tax) is an across the board deduction as Arla progress down the route to one common Arla EU payment model.

 

The estimated value of the 0.75ppl reconciliation based on 3 billion litres is £22.5 million, which farmers are losing until butterfats are improved.

 

No more gardening or full time farming for Peter Kendall (11th April)

It was possibly one of the worst kept secrets in agriculture but now it is official that Peter Kendall is the new Chairman of the AHDB from 1st April for a three year term.

 

So it took him less than 5 weeks from leaving his successful NFU Presidency role to the new appointment.  Not very long to be at home in Cambridge farming or gardening.

 

All eyes will now be on who will be appointed to succeed Tim Bennett as DairyCo Chairman with short odds on Englishman taking the position this time around.

 

Lots of unanswered questions as cow fixing issue is closed (11th April)

The Great Yorkshire show issued a statement this week, as follows:

The outstanding issue relating to allegations of tampering with dairy cattle at the 2013 Great Yorkshire Show has been resolved. The Exhibitors concerned have withdrawn their Appeals. By mutual consent, they will not be exhibiting at any future Great Yorkshire Shows.”

The statement ends a nine month investigation involving the Great Yorkshire Show, two exhibitors, lawyers, a Holstein cow and a Jersey cow following allegations of fixing at last year’s show, which were exposed by vets attending the show.

Ian emailed the show requesting answers to the following questions:

“I have received and studied your brief statement in relation to what happened at last years show.

 

I have a few questions I hope you will be able to respond to fully.

 

When you state the exhibitors will not be exhibiting at future GY Shows do you mean the cattle owners and/or the handlers?

I would just like to be sure who will not be exhibiting and given the fact one of the cows involved was allegedly in multiple ownership its looks complicated.

Having said that it was the owners who took legal opinion and embarked on a lengthy legal exchange of correspondence with the GYS so I guess it could be them who will not be showing in future.

 

Whilst the press release does state Exhibitors can you confirm the incident’s at the 2013 GY Show were confined to two dairy cow Exhibitors one of whom showed Jerseys the other showed Holsteins.

 

Finally what has happened to the prizes and prize money these animals won in the ring at the show. Have they been stripped of both or allowed to retain them.

 

Hope to hear from you and I am pleased to see the GYS did not back down

 

Regards”

 

Unfortunately the Yorkshire Show refused to answer any of the questions, which one presumes is a term of the deal and the legal truce.

 

So the show and its gritty show Director Bill Cowling have done a deal whereby the litigious exhibitors accused of fixing have withdrawn their actions and effectively conceded.  In addition it looks like the exhibitors involved have been banned from future Great Yorkshire Shows.  No names mentioned but given how talked about the issue has been they may as well have hung all the washing on the line.

 

I guess the policing for the 2014 show season and beyond falls entirely to the breed societies to mark the pitch and referee the games.

 

 

Global Dairy Auction crashes 8.9% in 2 weeks  (4th April 2014)

Tuesdays Global Dairy Auction (GDT) saw prices continue to head south with the average all products realisation price down to US$4,124, equivalent to an 8.9% fall. As the Irish Farmers Association commented “The GDT auction is undoubtedly a very important indicator of global market developments, watched by all in the sector.”

 

In the past eight weeks the average auction price has fallen by $918/tonne or 18.2% from a top of $5,042/tonne on the 4th February.

 

Key movers of interest were:

 

Butter milk powder down 15% to average $4,211 tonne

Butter                     down 11% to average $4,040 tonne

SMP                      down 9.6% to average $4,126 tonne

WMP                     down 8.4% to average $4,033 tonne

Cheddar                down 3.5% to average $4,438 tonne

 

The only glimmer of light appears to be the fact that the tonnage on offer at today’s auction was a peak at 41,902 tonnes and from here on will decline along with milk production in the Southern Hemisphere.  In addition the fact the Arla Westbury SMP is only down on average a shade over 10% in the same eight week period is better that it could have been.

 

Arla Westbury low heat SMP down $345 (7.8%) to average $4060 tonne. 

Arla Westbury medium heat SMP down $255 (5.7%) to average $4150 tonne.

 

Farm gate milk prices – the vortex is coming fast  (4th April 2014)

The latest GDT auction results, coupled with phenomenal UK daily production, in Ian’s opinion completely kills off any thoughts that the milk price will hold. (The first price cuts are already happening in fact - see Rock Dairies story later).

It will be close to a miracle if 13,000 Arla non-organic members don’t experience a price correction from early May of towards 1ppl if not more and if things continue to slide a further price correction could easily follow in early June. This will trigger a vortex and few, if any, will avoid being sucked into it.

 

UK milk production is disastrously good. We are still between 5 to 6 weeks away from peak daily production and already you can’t hire or buy a milk tanker for love nor money and spot price is 25ppl and falling, with 20ppl or less looming, bar another miracle. We simply don’t have the processing capacity and those with insufficient processing and brokers are squealing and so are some bankers who it’s likely will, in some instances, step forward and insist on a price cut from some buyers.

 

It’s fine for DairyCo in this week’s Datum publication to talk about Easter demand for cream supporting prices and Mexico, Brazil, Russia, India and China set to freshen up EU dairy exports but the elephant in the room is current production, that for May and beyond, and how we can haul and process the extra milk.

 

Quota surge as producers fear withheld milk cheques  (4th April 2014)

Suddenly there is serious talk that at least two UK milk processors are suggesting they intend to withhold milk cheques once a producer’s quota is filled until the levy position is crystal clear.

 

This week quota has flipped through the 1ppl barrier with ease and Monday’s national production figures for March are almost certain to fuel more enquiries.  The UK paying super levy in 2014/15 is, in Ian’s opinion, a big call but milk buyers unwilling to take any risk is logical and quickly coming to the surface.

 

TSDG prices tip over 34ppl but it’s an each way bet  (4th April 2014)

Tesco and Promar have completed their six monthly cost of production (COP) cost tracker analysis and the result is that the COP has reduced by 0.88ppl to standard litre price of 31.93ppl, plus 0.5ppl for the Promar costing’s.

 

The 0.88ppl is predominantly as a result of significant increases in on farm production, which spreads some of the costs across more litres as well as a decline in feed costs.

 

The result is the TSDG contract clause is triggered, which means TSDG producers will receive the higher milk price paid to non-aligned Muller Wiseman producers or Arla directs plus 0.5ppl if they are involved in the Promar costing’s and 0.2ppl to cover Tesco’s Health & Welfare requirements – total additions 0.7ppl.  It’s effectively an each way bet for Tesco farmers in so far as they receive the higher of the two prices.

 

The TSDG producer prices are as follows:

 

Muller Wiseman          +0.51ppl from 1st April to 34.3ppl (33.6ppl non aligned + 0.7ppl additions)

 

Arla                              +0.50ppl from 1st March to 34.2ppl (33.5ppl non aligned directs + 0.7ppl additions)

 

Whilst the TSDG/COP cost tracker will not be reviewed and analysed for a further six months these milk prices are live and will simply track the two non aligned prices on a monthly basis, unless during the next six months the two processors’ non aligned prices drop to the 31.93ppl COP level.

 

So, if Arla and/or Muller Wiseman make a price correction to their directs/non aligned producer price Tesco will immediately make a corresponding reduction on a like for like basis having regard to the Voluntary Code of Practice and respecting a 30 day notice period.

 

2ppl price drop from Rock Farm Dairy warrants answers to questions  (4th April 2014)

Rock Farm and its liquid dairy processing has had its fair share of troubles in recent years and has once again hit the radar today with news it will drop producer prices by a whopping 2ppl from 1st May. This will take producers standard litre price down from 33ppl to only 31ppl. Note they have confirmed that they do have seasonality payments 

 

Rock Farm claim to be “Pride of the North” but this unwelcome news will dilute that pride amongst its direct suppliers as they digest the grim news.  

 

The news and the background to the cut will be of huge concern to its producers.

 

At one time only one direct supplier stuck with Rock but now it is believed they have recruited 26 direct suppliers across Durham, Cumbria and Northumberland. Someone was always going to be the dam buster but at 2ppl it smacks of 2012 if others follow the Rock farm lead

 

First Milk Welsh Tesco farmers have their contracts re-instated  (4th April 2014)

Back in September 70 First Milk Welsh members, who supply Tesco via Muller Wiseman (MW) with liquid milk, were served 12 months notice on their contract to end 1st October 2014 by Muller Wiseman.

At the time First Milk commented “We would hope at some point in the future to be able to withdraw this notice.”  It has happened and the contract has been re-instated for an estimated 50 million litres.

 

A spokesman for Müller Wiseman Dairies said:

“We are pleased to confirm that agreement has been reached with First Milk to supply us with milk from Welsh farms for our customer, Tesco.

 

“Under the agreement, First Milk dairy farmers who currently supply this contract and are part of the Tesco Sustainable Dairy Group (TSDG) can continue with their current supply arrangements.”

Arla to merge with EGM Walhorn Co-operative  (4th April 2014)

Arla and EGM Walhorn have announced their plans to merge, which, if approved, will add a further 800 Belgian, German, and Dutch dairy farmers to the Arla family plus in excess of 500 million litres of milk.  A decision will be reached on the 14th May.

Arla secure half of its 2014 recruitment target in a month  (4th April 2014)

Arla have exceeded 150 million litres of signed up milk in a month, which is half of its 2014 target of 300 million litres.

It could well be a case of line up lads and form an orderly queue for the rest, but we’ll have to wait and see what happens to its milk price from now on.

 

MF500cc Automatic Quad for Sale on EBay – exceptionally tidy and has never been rallied or raced!

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 Or simply look up EBay Item number 271443639833.  Ends Sunday 12th April

 

TSDG prices tip over 34ppl but it’s an each way bet  (3rd April 2014)

Tesco and Promar have completed their six monthly cost of production (COP) cost tracker analysis and the result is that the COP has reduced by 0.88ppl to standard litre price of 31.93ppl plus 0.5ppl for the Promar costings.

 

The 0.88ppl is predominantly as a result of significant increases in on farm production, which spreads some of the costs across more litres as well as a decline in feed costs.

 

The result is the TSDG contract clause is triggered, which means TSDG producers will receive the higher milk price paid to non-aligned Muller Wiseman producers or Arla directs plus 0.5ppl if they are involved in the Promar costings and 0.2ppl to cover Tesco’s Health & Welfare requirements – total additions 0.7ppl.  It’s effectively an each way bet for Tesco farmers in so far as they receive the higher of the two prices.

 

The TSDG producer prices are as follows:

 

Muller Wiseman          +0.51ppl from 1st April to 34.3ppl (33.6ppl non aligned + 0.7ppl additions)

 

Arla                              +0.50ppl from 1st March to 34.2ppl (33.5ppl non aligned directs + 0.7ppl additions)

 

Whilst the TSDG/COP cost tracker will not be reviewed and analysed for a further six months these milk prices are live and will simply track the two non aligned prices, on a monthly basis, unless during the next 6 months the two processors non aligned prices drop to the 31.93ppl COP level.

 

So, if Arla and/or Muller Wiseman make a price correction to their directs/non aligned producer price Tesco will immediately make a corresponding reduction on a like for like basis having regard to the Voluntary Code of Practice and respecting a 30 day notice period.

 

           

Iceland offer 8 pints for £1.80  (28th March 2014)

Only hours before The One Show debate comes the news that Iceland are selling 8 pints for £1.80.  That’s less than 40p a litre.  Congratulations Iceland for going to the top of the league as the retailer who has devalued milk the most.  Fortunately, Mrs Potter never shops at Iceland and never will.

 

Dairy Crest hold suppliers April milk price  (28th March 2014)

The headline appears to be identical to the Arla one but the reality is that Dairy Crest are unable to move any closer to its major rivals non-aligned milk price viz Arla members (35.01ppl), Arla directs (33.5ppl) or Muller (33.6ppl).

 

In Dairy Crest Direct’s latest newsletter they state Dairy Crest is “unable to meet this competitor milk price challenge at present”.  Is this because Dairy Crest cannot afford to pay producers more money or is the fact they signed up to the Voluntary Code Best Practice?  The likely answer is that it’s a combination of the two.

 

The last time Dairy Crest moved on milk price was from 1st November. The Dairy Crest producer standard litre prices from 1st April are as follows:

 

DC Davidstow 33.31ppl

DC’s standard liquid and its simplified contract both at 32.56ppl.

 

Meanwhile, Dairy Crest share value had been dented trading at £4.80 today down 80p in 11 weeks from £5.60 (7th January).

 

Spot milk prices head south at 26ppl  (28th March 2014)

During the week traders have been trading numerous loads of spot milk at 26ppl and the signs are that this will weaken further between now and the middle of May, when the country reaches peak daily production. 

 

The good news is that Westbury’s second drier is now up and running but given the amount of milk that’s been produced there is a limit to how much impact this will have, but for sure First Milk and Arla will have it sweating and running flat out easily into June and possibly beyond.

 

Wyke Farms Cheese secures international listing  (28th March 2014)

Wyke Farms has secured shelf space in 1200 Carrefour Hypermarkets and supermarkets for four of its branded farmhouse cheddars throughout France as well as its stores in the rest of Europe, Asian and The Middle East.  Carrefour is recognized as one of the world’s largest hypermarket chains.

 

Richard Clothier commented “Carrefour is our biggest export listing to date and we are enormously proud of our export business.”  This is indeed a fantastic achievement by Wyke.

 

Wyke produce around 14,000 tonnes of cheddar annually and is the third largest UK cheddar brand.

 

Crediton Dairy take on 25 Torridge Vale supply contracts  (28th March 2014)

Twenty five farmers supplying around 35 million litres of milk have had their milk supply contracts assigned from Devon based co-op Torridge Vale to Crediton Dairy from Tuesday 1st April.

 

Torridge Vale will continue to facilitate the milk collection and testing.

 

On further investigation it has been revealed that the 35 million litres of milk was on contract to First Milk until 31st March.  First Milk informed Torridge Vale last Friday that they would not be requiring the milk going forward, which left Torridge Vale having to place the milk in less than 10 days.  On this occasion the perfect fit was with Crediton Dairy who want milk from Devon farms and came to a recent agreement with Arla whereby 35 million litres less milk will be sourced from Arla, which suits both Arla and Crediton Dairy.

 

Positive outlook from the worlds largest processor (28th March 2014)

In announcing its record forecast farm gate milk price Fonterra’s CEO Theo Spierings commented “Looking ahead, the outlook for dairy remains strong, and the business has plans in place to profit from the continued rise in global demand.” 

 

Redundancies at First Milk’s Headquarters  (28th March 2014)

It was inevitable that following the deal between Adams and First Milk there would be redundancies.  First Milk have entered statutory consultation with at least 29 members of staff based at its Headquarters in Glasgow with a view to redundancy.  Whether all of the redundancies are as a direct result of the fact that First Milk now has one buyer for the vast majority of its cheese as opposed to numerous buyers is questionable but certainly First Milk has to cut cost and slim down.

 

No BSE cases to date  (28th March 2014)

To date the UK has been BSE free in 2014 and there were only two suspected cases in 2013 both of which were negative on slaughter.  The last confirmed case of BSE was five years ago in 2009.  (Source:  DIN).

 

WANTED  (28th March 2014)

Howard Rotavator in good working order by Ian.  If you have one for sale or know of one please email the office.

 

Arla hold members milk price for April  (26th March 2014)

Arla have confirmed that its  milk price for its 13,500 European member owners will be held for April.  For GB members that means a www.milkprices.com standard litre price of 35.01ppl for the third consecutive month.

 

Muller Wiseman (MW) increases its non aligned milk price from April (21st March 2014)

The news that MW is to increase its non aligned milk price from 1st April will surprise many including Ian.  Supplying farmers who already receive the 1ppl increase in production payment will receive an additional 0.1ppl, which may only be a tiddly bit but it’s an upward movement and one which is against the general flow of dairy prices. In addition cash flow wise the 1ppl incentive was paid at the year end in one lump and will now be spread across the entire year’s milk payments.

 

For suppliers who have not succeeded in hitting the 1ppl incentive the increase will be 1.1ppl because today’s announcement confirms MW will close the 1ppl increase incentive scheme to replace it with an extra 1ppl across the board for all its non aligned suppliers.

 

The incorporation of the 1ppl bonus takes the MW non aligned standard litre price to 33.6ppl, which is 0.1ppl above the Arla direct standard litre price announced a few weeks ago.

 

The move by MW should lay to rest the theory that the company had only introduced the 1ppl incentive to dodge around the Voluntary Code of Practice. Having said that this move is not strictly code compliant with only 10 days notice but I doubt anyone will raise an eyebrow at that technicality.

 

GDT auction prices ease again  (21st March 2014)

Prices at this week’s GDT auction fell again this time by an average 5.2% to record an all products average of $4439 US compared to the $4794 average recorded two weeks earlier.

 

Notable movers so far as farmers are concerned were:

 

WMP down 5.8% to average $4439/tonne

 

SMP faired better than most down only 1.7% in two weeks to average $4584/tonne this is a reduction of 4% ($196/tonne) in the past 4 weeks from $4780.

 

In the same category Arla Westbury SMP averaged $4405/tonne, which is a 6% ($280/tonne) reduction in four weeks from a top of £4685/tonne.

 

On cheddar the position is more brutal where the price has dropped by $492/tonne (9.5%) to average $4684, however, this is over the past 8 weeks and was on the back of a chart topping $5133 tonne.

 

 

First Milk pay 3% return on member capital (21st March 2014)

First  Milk have declared a further 3% will be paid as a capital return to members to be added to the 5% paid last autumn. In addition the co-op will pay 5% on members’ preference shares.  These three payments total an equivalent of 0.25ppl for a 1 million litre producer.

 

 

New NFU Chairman and Vice Chairman  (18th March 2014)

The NFU (E&W) held their Dairy Board elections this morning and there was a healthy battle for the top two positions, which saw a new team in place.  Time will tell whether it’s a dream team.  Rob Harrison came out top for the position of Chairman with Michael Oakes taking Rob’s previous position as Vice Chairman.

 

New butter powder plant in the North West  (18th March 2014)

J B Woodcock & Sons T/A Yew Tree Dairy have started on the groundworks for its new butter powder plant, which has the capacity to process half of the quantity Westbury is capable of processing.  This will mean Woodcock’s plant can process upto 1 million litres of milk a day.

 

A unique feature of this plant will be its flexibility  in terms of it can be switched off for periods and made to “sweat every Christmans and Spring” when milk is plentiful.

 

Carl Woodcock couldn’t keep the Dutch designed plant a secret for any longer, mainly because tanker drivers can see the excavation works and are asking questions.  Steel work will be erected soon and the butter churn is on its way with a  5 tonnes per hour capacity (50% of the Muller Wiseman Market Drayton one).

 

It’s great news and we certainly wish the Woodcock family the very best in its continued development of what is a very exciting site.

 

Record February Milk Production up 11.5%  (14th March 2014)

February production was a 20 year plus record at 1.090 billion litres, which represents an eye-watering increase of 112 million litres (+11.45%) on February 2013 production.

 

Standard litre prices are transparent and simple  (14th March 2014)

It would appear one milk buyer who pays farmers on either a basket price or simply tracks competitor prices is trying to create a lot of smoke and mirrors behind how competitor prices are calculated.  Yes, in particular, Arla’s price and the suggestion that their 33.5p standard litre price for its direct suppliers is based on 4.3% butterfat.

 

The figures we quote are www.milkprices.com who’s standard litre is:

 

1 million litre producer on EODC collection

4% butterfat

3.3% protein

200,000/ml SCC

30,000/ml Bactosan

It excludes any capital retentions or AHDB levy.

 

Simple & transparent.

 

Cheapest retailer milk – Morrisons at 42ppl  (14th March 2014)

Morrisons are selling Meadow Park semi-skimmed milk for 42ppl, which is cheaper than competitors 4 pints for £1 deal (44ppl).

 

The fear is that Morrisons attack to be the cheapest will simply be followed by its competitors.

 

Certainly Tesco have stated this week that they (Tesco) “hope our competitors will follow our lead” (reference milk price selling and procurement).

 

Buckle up its heading for a rough ride for all as retailers do battle.

 

Top Marks to Reaseheath  (14th March 2014)

Full marks to Reaseheath College's Toni-Anne Harrison for her quality comments on peak time Chris Evans’ Radio 2 Breakfast Show this week talking about training in the dairy industry.

 

Massive publicity for the UK dairy industry – well done

 

Morrisons ditch 100% British meat commitment  (14th March 2014)

Following a chance conversation with a man in the know (AKA as a big mole), Ian contacted Morrisons to establish whether the rumor that their weekly kill of British lambs by Woodheads was scheduled to reduce by 6,000 lambs a week, starting on Monday with British lamb to be substituted by New Zealand lamb.  Morrisons eventually confirmed that from now until June, Morrisons will be selling New Zealand lamb which

 

 “is currently in season, and therefore at its best.  From the beginning of June, we’ll switch back to 100% British lamb.” 

 

This is the first time Morrisons have mad such a switch.

 

As a result Morrisons will presumably have to amend their website and marketing.  No longer can they feature a picture of ewes and lambs with the claim “100% from British farmers” and they may have to amend their claim that they sell 700,000 British lambs a year.

 

No doubt some farmers, their wives, sons and daughters will be able to give Morrisons Market Street butchers some useful tips as to how or where they can stuff their New Zealand lamb.

 

Morrisons issued a statement to Ian, which reads:

 

“In-season New Zealand lamb offers customers a great quality and affordable alternative to our British lamb which will continue to be available in all stores.  Both our British and New Zealand lamb is clearly labelled with country of origin information and customers will be able to decide which they want to buy. We’ll switch back to 100 per cent British lamb at the beginning of June as it comes back into season.  We can be very clear though that our commitment to British farmers remains more significant than any other retailer. Morrisons will still sell a higher percentage of British meat than any other major British supermarket and all Morrisons-branded fresh meat along with all of the meat sold from our in-store butchers’ counters will continue to be British.”

 

This story appeared today on www.rforster.com.  You can tell its quiet in the dairy world hence we have taken a passing interest in other newsworthy stories connected to beef, lamb and retailers

 

Young people being urged to eat no meat and drink no milk during in May  (14th March 2014)

Friends of the Earth (FOE) has launched a Meat Free May campaign targeted at young people – and false claims that cattle universally damage the environment through their greenhouse gas emissions (GHGs) are offered as justification for persuading them not to eat any meat, or drink any milk, for a month.

 

Visitors to the FOE website are told that meat and milk production are responsible for 14.5% of all global greenhouse gas emission –and it would be better the planet if they moved to a more plant-based diet.

This is further proof, if it were needed, that misinformed environmentalists are determined to pursue the false claim that meat eating, specifically beef eating, accelerates climate change

Young Friends of the Earth has challenged young visitors to its website to take meat and milk out of their diet for a full month.

But what it has not said is that there is a counter view that grass, on which ruminants graze, absorbs (sequesters) more greenhouse gas (GHG) than the cattle themselves produce – and so cattle make a positive contribution to climate change resistance and more beef eating and milk drinking, would encourage this.  Of course no one mentions this.

Source www.rforster.com

 

Vegetarian Society excited by Tesco’s support for National Vegetarian Week  (14th March 2014)

This is another headline in the same Robert Forsters new Beef Industry Newsletter, which is self explanatory.

 

The text in Robert’s Beef Industry newsletter reads:

“Tesco has stunned the red meat industry by agreeing to be the headline sponsor for National Vegetarian Week – which is the focus of a national campaign to promote a meat free diet.

 

It takes place on 19th-25th of May and is organised by the National Vegetarian Society whose Chief Executive says she is excited that Tesco have taken up the veggie challenge because more people are moving towards a meat free diet - and it’s never been easier to persuade them.

 

John Scouler, Tesco’s commercial director has said the company is delighted because its job is to give customers the best possible range of food whenever and however they want to shop - and it is no different for vegetarian clientele.

 

First to query the move is the British Meat Processors Association (BMPA) – although its response is hardly red blooded.

 

It has said that while it is perfectly appropriate for Tesco to offer vegetarian products as part of their overall consumer offer it does seem strange it has chosen to sponsor National Vegetarian Week.

 

So it is appropriate to remind both Tesco and the public in general of the many proven positive nutritional benefits of including red meat in a balanced diet.”  (see story above from Robert’s site for the counterpoint.)

 

Tesco appear to be skating on thin ice in terms of PR with livestock farmers.  If the 4 pints for £1 promotion, together with Tesco’s support for National Vegetarian Week had come out of the woodwork on or before the NFU Annual Conference they could have instantly gauged whether they were winning farming friends with their ideas. Perhaps these ideas were planned to come out afterward the NFU conference. Time for Tesco Tom (Hind)  to get a grip unless by chance he is at the centre of these innovations.

 

2.3ppl price increase for Dairy Crest Formula contracted producers plus a second option - (10th March 2014)

Dairy Crest and DCD have reviewed and rebased their formula following its first birthday the result is both an improved offer and contact terms.

The new formula will deliver an April milk price of 32.56ppl plus a 0.19ppl signing on premium  for those who sign up before April 1st. This takes the total price to 32.75ppl (www.milkprices.com) and is an increase of 2.3ppl on the current formula price.

 

This contract gives producers the option to contract either 25%, 50% or 75% or 100% of their annual production.

 

Producers should note if they sign up before April 1st the 0.19ppl sign on premium  lasts for the duration of the contract and can only be varied if DC give a minimum 12 months notice to change it and it’s the same notice if they wish to rebase the contract in future. This makes the contract evergreen.

 

In addition the two have launched an alternative “simplified formula liquid contract,” which features a reduced butterfat requirement of 3.75%, no profile and includes volume bonuses.

 

However, it is an all in all out with 100% volume commitment required by each producer. The April price for this will kick off at 32.56ppl.

 

Dairy Crest and DCD were pioneers in offering producers the option of a formula contract and given the general tone of the industry these two offers are considered to be a positive result for all parties

 

0.56ppl milk price cut for Sainsbury’s suppliers-from 1st April- (7th March 2014)

The Sainsbury’s cost of production model has produced a 0.56ppl reduction for the three months of milk delivered in April, May and June.

This should take producers standard litre price down to 33.16ppl (from the current 33.72ppl). Note the Sainsbury’s model looks backwards to what has already happened to costs. The next review will take effect from 1st July.

 

Tesco raise price to its Arla suppliers from March 1st- (7th March 2014)

Arla Tesco direct produces will receive 34.2ppl from March 1st following a meeting and review this week. This new improved price affects around 50 Arla producers who are not members/owners of the Arla Co-operative.

Basically it is the 33.5ppl non aligned Arla direct standard litre price plus 0.5ppl towards the Promar costing’s plus 0.2ppl towards compliance with the livestock code of practice.

 

1.62ppl price cut for Muller Wiseman formula contracted producers - (7th March 2014)

The current MW non aligned formula price is 34.62ppl (Jan-March) and will be reduced to 33p from April 1st.(www.milkprices.com)

The formula calculates an ex farmgate milk price via global commodity prices and a basket of competitor milk prices.

Muller Wiseman producers can commit and sign up to a ceiling of 150 million litres under the formula. Subject to committing a minimum of 10% of their production by 21st March.

 

GDT auction prices fall 4% - (7th March 2014)

This weeks GDT dairy auction saw the average price fall 4% to average $4794 tonne which is a price not recorded since November.

SMP prices down 3.9% to average $4,658 tonne.

WMP prices down 5.7% to average $4,703 tonne.

Arla SMP down 3.4% to average $4525 tonne.

 

Morrison’s cheese contract goes to Lactalis - (7th March 2014)

Last week we reported that Lactalis had secured a major cheese contract and it has now been confirmed that they have won the Morrison’s contract from First Milk and its Haverfordwest Creamery.

In addition it is confirmed that another of First Milks cheese contracts with the Co-op is currently out to tender.

Having said that there is Anecdotal evidence that some deals on cheese have been done by processors in anticipation of ex farmgate milk prices dropping significantly and they haven’t and hopefully they won’t if the Arla factor remains as it is today. Ouch!

 

Tesco drop in store milk price by 28% to £1 for 4 pints - (7th March 2014)

From Monday (3rd) Tesco dropped the price it charges customers for 4 pints of milk from £1.39 to £1.00 to join ASDA’s, Aldi & Lidl’s prices.  The price drop is part of a long term commitment by Tesco to reduce prices on milk, tomatoes, onions, peppers and cucumbers and is not a short term promotion.

In addition, the price of a 6 pint bottle drops by 26% from £1.99 to £1.48.  Tesco were keen to point out that the lower prices will have no impact on its 650 TSDG Mueller Wiseman and Arla farmers milk price.

However, it will put pressure on the liquid market, especially the middle ground where the word is that some processors intend to almost dump surplus milk effectively crashing the price.

Under the old world of 2012 milk cuts followed by protests would undoubtedly be the order of the day but Arla’s underpinning is preventing ex-farm gate milk prices falling.

For some processors it’s a new world in which they have to get out there and sell their milk and milk products whereas previously prices they received fell and they simply passed the shortfall down the chain to the last domino – the farmer to absorb the shortfall.

 

Tesco sneeze and the whole retail industry catches a cold - (7th March 2014)

Tesco dropped its milk price on Monday only to be quickly followed by Sainsbury’s and Morrison’s and to a lesser extent The Co-op.

Yes Sainsbury’s and Tesco can claim that their aligned dairy farmers will not contribute to the price cuts. However Morrison’s cannot claim to be as transparent and are claiming to be “still looking after our farmers”.

The truth is neither farmers nor the public will ever know who is paying for the Morrison’s price drop and the likes of FFA are sure to be on Morrison’s case as they stir from a period of winter hibernation.

FFA are on the case for the sudden devaluation of milk and it will be interesting to see how they plan to highlight the problems and more importantly how much grass roots support they receive.

 

Tesco advert is a disgrace - (7th March 2014)

Tesco have rattled many dairy farmers with their commitment to offer 4 pints of milk for £1 earlier in the week but today’s revelation in terms of their advert takes the biscuit.

You would have thought that Britain’s biggest retailer could employ an advertising agency who could at least tell the difference between Dairy cows and beef cows.

Yes the Tesco bill board advert promoting 4 pints for £1 shows beef cattle grazing in a field. No doubt Tesco Tom (Hind) will be kicking some backsides.

 

Dairy Expo will be the first big Dairy show under surveillance - (7th March 2014)

Tomorrow (Saturday 8th) The 2014 Dairy Expo event with judges from the US, Canada and Holland will be held. This marks the start of the 2014 dairy show season. The indications are there will be increased covert surveillance at this years shows from farmers, judges, organisations and vets who are all keen to protect the image of British dairying and who will blow the whistle on any cheats. See Ian’s Dairy Farmer article, uncut version for more on this topic.

 

First Milk & Adams partnership starts 12th March - (7th March 2014)

The OFT issued its 27 page investigation report into the proposed partnership and have given it the green light. At the same time the Irish OFT equivalent also gave their approval to the deal.

No details have been released as to the price paid by Adams for the deal however this will become public in First Milks accounts if not sooner. The marriage ceremony is over and from 12th March the two will start to get accustomed to working together.

 

0.56ppl milk price cut for Sainsbury’s suppliers-from 1st April (5th March 2014)

The Sainsbury’s cost of production model has produced a 0.56ppl reduction for the three months of milk delivered in April, May and June.

This should take producers standard litre price down to 33.16ppl (to be confirmed). Note the Sainsbury’s model looks backwards to what has already happened to costs. The next review will take effect from 1st July.

 

Tesco drop in store milk price by 28% to £1 for 4 pints  (3rd March 2014)

From today Tesco have dropped the price it charges customers for 4 pints of milk from £1.39 to £1.00 to match ASDA’s price.  The price drop is part of a long term commitment to reduce prices on milk, tomatoes, onions, peppers and cucumbers and is not a short term promotion.

 

In addition, the price of a 6 pint bottle drops by 26% from £1.99 to £1.48.  Tesco are keen to point out that the lower prices will have no impact on its 650 TSDG Mueller Wiseman and Arla farmers milk price.

 

However, it will put pressure on the liquid market, especially the middle ground where the word is that some processors intend to almost dump surplus milk effectively crashing the price.

 

Under the old world of 2012 protests would undoubtedly be the order of the day but Arla’s underpinning is preventing ex-farm gate milk prices falling.

 

For some processors it’s a new world in which they have to get out there and sell their milk and milk products whereas previously prices they received fell and they simply passed the shortfall down the chain to the last domino – the farmer to absorb the shortfall.

 

Arla hold March milk price at 35.01ppl (28th February 2014)

Arla have announced that their member milk price for March will be held at the February level of 35.01ppl for their standard litre as calculated by www.milkprices.com.

 

This was undoubtedly the number one topic of conversation at both the NFU Dairy Breakout and last night’s PTF Dinner in London where over 600 of the great and the good in the industry wined and dined.

 

Fur and feathers are flying with one or two milk processors privately confessing they believe, (in some cases had prayed) the ex-farm gate milk price in the current market should drop by between 2 to 3ppl.  The reality is they are having to battle with what is called The Arla Factor.  Some were spitting feathers over Arla’s latest price moves but none are brave enough to move prices down.  From what Ian gathered several processors appear to have almost promised retailers that their last 2013 price increase would be followed by an early 2014 price drop.  Clearly they are not going out to customers for more money and a prudent man with big ears believes some have done forward business banking on the price dropping.  Once again, we have processors caught with no trunks on now the Arla-fuelled tide has gone out.

 

1.23ppl milk price increase for Arla Directs  from 1st March (28th February 2014)

This will be a welcome increase and takes producers standard litre price to 33.5ppl based on www.milkprices.com .

 

It immediately triggers a very interesting dilemma for Muller Wiseman and its producer representatives in terms of what happens with their Tesco direct price from May 1st.

 

Given the fact Tesco are committed to pay at least the price both Arla and Muller Wiseman pay their non aligned producers  it means either Muller Wiseman have to lift their price or we end up with two Tesco prices with the Arla one topping the table.

 

Tesco have made the commitment so it’s a case of whatever the individual processors standard litre price is at the time they will honour. Ian spoke to Tesco following the NFU Dairy Breakout session at the Conference and they confirmed this to be the position.  Note we are talking about the price paid to Arla Directs which is a clean price with no deductions.

 

For the producer representatives and non Arla suppliers who appear to have an insatiable appetite to find fault with what Arla do Ian suggests you spend your time and energy persuading your own milk buyer to increase the ex farmgate milk price and to get out there and obtain the increase from the market place. Evidence is that few if any are pushing for increases believing that a price drop is imminent so there is no need to do anything other than sit and wait.

It won’t be long before FFA is motivated to use its powers of persuasion initially with direct negotiation.  Watch this space for further news and farmer reaction. The pressure is mounting for other milk buyers to follow Arla’s lead but can they? The clock is ticking and the 1st March is looming by which time price moves for 1st April have to be announced under the voluntary code.

 

31.61ppl was the UK’s average 2013 milk price (28th February 2014)

Within the figures released by DEFRA it shows GB averaged 31.67ppl and Northern Ireland 31.30ppl.

 

Lactalis secure major retail cheese contract (28th February 2014)

Another talking point at last night’s PTF dinner was the news that Lactalis have secured a major retailer cheese contract to supply around 12,000 tonnes of unbranded cheddar.

This leaves the company that has lost it with around 120million litres of extra milk to broker unless replacement business can be found. The name of the retail customer and who had lost the business is yet to be officially confirmed but by process of elimination it’s not Tesco or Asda.

 

Change of policy by Chairman of the Voluntary Code Review (28th February 2014)

Mansel Raymond announced to the audience at the NFU Conferences Dairy Breakout Session that submissions on the code do not have to go via Dairy UK, NFU or NFUS and can be sent, by email, direct to the review Chairman Alex Fergusson MP.

The email address is reviewchairman@gmail.com and in response to a question raised by Ian at the Breakout Session, Mansel confirmed that this email address goes direct to the Chairman and is not accessible by others.

The deadline for producers, processors and anyone interested in putting forward any points is the 21st March.

Talk at the PTF dinner was that unless there was a level playing field across all companies on notice periods the code would not get signed off.

 

Badger cull report blow is first test for the new NFU team (28th February 2014)

Bright red faces and “who the hell has leaked the information” are the order of the day in DEFRA as The Guardian and TV reported the fact that last year’s badger cull failed the humaneness test according to the independent panel’s report.

For details of the article click on www.theguardian.com/environment/2014/feb/28/badger-cull-humaneness-test-tb-cattle?CMP=twt_gu

Unless this is a very selective leak of information, and the bulk of the report is OK, then the NFU will struggle to turn this into a positive story, which is sure to be a huge blow to the cull plans.

 

Arla to source sustainable soya for members feed (28th February 2014)

Arla has committed to purchase only RTRS (Round Table Responsible Soya) for inclusion in dairy feed for its 13,000 European owners/suppliers.

Basically Arla have invested around £1.2million a year to acquire the certificates which bridge the difference between RTR Soya and non RTR Soya, so the move is at zero cost to its 13,000 members and will be a useful selling point of difference for the co-op it says.

 

Quinney is battered (28th February 2014)

NFU Deputy President, Adam Quinney was literally battered by Minette Batters in Wednesday’s NFU elections. Minette took 52% of the votes on the first round and it was game over for Adam as she becomes the NFU’s first female top table national office holder. There is even the expectation from many that she will become the first female NFU President in the not too distant future. A lady in charge of the NFU might be a good thing, too, given that behind most good farmers there’s a woman kicking him up the arse.

Meurig Raymond takes over from Peter Kendall as President with Guy Smith taking the position of Vice President.

 

Apologies for not producing a bulletin last week  (21st February 2014)

To be honest there was no news to report with the exception of the Dairy Crest formula price drop announcement, which was too late to go to print arriving with farmers by email at 16.57 hours on Friday evening from “The Dairy Crest Milk Procurement Team”.  Great timing if you want a trouble free weekend and don’t want to appear on Potter’s weekly bulletin (see below for further detail).

 

0.314ppl further price drop for the Dairy Crest formula contract price – from 1st March  (21st February 2014)

This is the fifth consecutive monthly price cut and takes the standard litre price to under 31ppl at 30.947ppl.  This is 1.443p below Dairy Crest’s standard litre price of 32.39ppl, which has been static for several months.  The fall is predominantly due to the continued weakening of cream prices, which have seen £250/tonne wiped off in two months to £1,500 tonne and still falling.

 

As Ian commented when the contract was launched a year ago “locking into a commodity driven formula price is not for the faint hearted!  In whose interest are these pricing mechanisms designed to protect?

 

Global Dairy Trade auction results were a mixed bag with Arla SMP +1.8%  (21st February 2014)

Tuesday’s 110th auction saw the average price index fall 1.2%.

 

Notable prices were:

Butter down 3.8% to average $4586 tonne

Cheddar down 1.7% to average $4845 tonne

SMP almost stand on to average $4780 tonne

WMP down slightly at 0.3% to average US $4999 tonne

 

Arla continue to put forward Westbury SMP for auction, which averaged $4685 tonne on Tuesday up $85/tonne compared to the price achieved two weeks ago.

 

NFU Conference – Kendalls  (21st February 2014)

Next Tuesday & Wednesday the NFU (E&W) will hold their annual conference in Birmingham when president Peter Kendall will step down after a very successful 8 year term.  During his previous 7 opening addresses and press conferences Peter has regrettably had to feature the GB dairy industry almost exclusively for negative reasons.  Indeed, during this term of office dairy has had more than its quota of Kendall’s time and commitment.  Well as he stands up to deliver his parting message at least his dairy slot should be positive and upbeat.  It’s all change in dairy and no one really wants to return to the old days.

 

Arla 2013 results  (21st February 2014)

No real surprises in the fact 2013 saw Arla pay its highest recorded price.  Its 2013 performance price (the amount Arla generated from each kg of members milk) was up 12.5% to 3.05DKK per kg (33.91ppl) on 9.5 billion litres of owner members milk.  In 2012 the figure was 2.71DKK (30.21ppl) on 7.5 billion.

 

Growth outside Europe was a key factor and three priority targets for Arla going forward are Russia, China and the Middle East/Africa where Arla are building a long term permanent presence.

 

Total revenue up 10 billion DKK (£1.1 billion) to 73.6DKK (8.4 billion) and Arla hit their target profit of 3% (2.2 billionDKK/£250 million).

 

And for 2014  (21st February 2014)

Arla’s target is to increase revenue to 79 billion DKK with a 3% net profit target equal to 2.4 billion DKK targets on which Peter Tuborgh comments “We are off to a good start in 2014”.

 

Arla UK  (21st February 204)

The UK is easily Arla’s biggest market by value and last year Arla’s UK revenue rose by 22% to £2.2 billion.

 

Just to put this amount of money into perspective in 2012 the total value of UK dairy product imports totalled almost the same at £2.3 billion.  So to eliminate all UK dairy imports we need to wipe out the equivalent of Arla’s record UK 2013 output every year.  Food for thought.

 

England v Peru – Wembley Stadium – Friday 30 May 2014  (21st February 2014)

Upto five discounted tickets available in the pick of all areas to sit in.  The 5 tickets can be split.  If interested email Lydia@ipaquotas.co.uk for a seating plan and prices.

1ppl milk price rise for suppliers to Barber’s – from 1st February  (10th February 2014)

The take producers standard litre price to 33.37ppl (www.milkprices.com)

 

Firm trade at GDT auction  (10th February 2014)

Tuesday’s fortnightly GDT auction saw the overall price index increase by 0.5% despite the fact the quantity of product on offer was up on that put up for auction two weeks ago.

 

The average all products price was US $5,042 tonne up 0.33% mainly driven by higher prices for WMP (+1.4%) and butter (+2.6%).  Arla’s Westbury SMP averaged $4,600/tonne identical to that achieved two weeks earlier.

 

                                                US

WMP               averaged         $5,005/tonne

SMP                averaged         $4,746/tonne

Butter              averaged         $4,745/tonne

Cheddar          averaged         $4,935/tonne  

 

Milk production continues to aggressively head north  (10th February 2014)

January milk production weighed in at 1.170 billion litres, which is 110.6 million litres or 10.5% up on a year ago.

 

Cumulative milk production for the first 10 months of the quota year now stands at 11.32 billion litres, which is 438 million litres or 4% more than the same period a year ago.

 

Adams Foods (Irish Dairy Board) deal with First Milk gets the green light  (10th February 2014)

The OFT have given the green light to Adams Foods to acquire the sale and marketing of First Milk’s UK hard cheese business.

 

Westbury to process German concentrated skim  (10th February 2014)

The late December fire at Arla’s Pronsfield processing plant in Germany, which could easily have resulted in multiple fatalities, means the plant will not be back to full capacity for several months.

 

Arla will be bringing concentrated skim from Germany to Westbury for up to three months to relieve the pressure and have stated that the SMP will be sold outside the UK to other export markets so as not to affect our domestic market.  Arla would not disclose anticipated quantities expected to be imported from Germany, however, they have stated that the importation will not result in Arla or First Milk farmers milk being replaced with German milk.  The Pronsfield factory and Arla still have to fulfil powder contracts to Asia and Africa, which is where the skim is destined. 

 

It’s unfortunate that this move comes just as our peak production is about to kick into gear but in declaring the importation before it happens it should at least scotch the rumour mill when German transports are spotted in Westbury and stories rattle around along the lines of Eastern block milk coming to Westbury and blocking the filters up etc.  We have heard it all several times before.

 

Dale Farm expansion continues with acquisition of Ash Manor Cheese business  (10th February 2014)

The Dale Farm processing subsidiary of successful Northern Irish co-op United Dairy Farmers has progressed south into Wales with the acquisition of Ash Manor Cheese and their grating, slicing and cheese packing plant in Wrexham.

 

The deal gives Dale Farm instant access to established outlets for its cheese.

 

Scot to chair Dairy Industry Code Review but he won’t accept direct contributions  (10th February 2014)

The overdue review of the Code of Practice will be chaired by the Rt Hon Alex Fergusson MSP.  However, in a surprise move any submissions will first be channelled through either Dairy UK, NFUS or the NFU E&W, all of whom were key to the establishment of the Code.

 

Rumours of vetting and doctoring of submissions are already doing the rounds, which was only to be expected.  The review is expected to be concluded quickly by spring.

 

Arthur Reeves goes part time  (10th February 2014)

Popular dairy industry character and the man who is regarded by many dairy farmers as the face of Dairy Crest, Arthur Reeves, is to become part time  Arthur with the announcement that he is to retire from his full time position to take up a part time role with responsibility for investor relations for Dairy Crest from March.

 

Arthur’s retirement will hopefully allow him to spend a bit more time cheering on his much loved Charlton Athletic in the hope they can climb out of the relegation zone in The Championship.

 

ENGLISH ENTITLEMENTS

 

Given the fact English Entitlements will be rolled forward into the new scheme until 2021, it appears to be incredible value and a healthy return for those buying at £260 or less.

 

If you are interested in buying English Entitlements contact Jacquey Millward on 01335 324594 or Jacquey@ipaquotas.co.uk

 

0.74ppl milk price increase for Arla Foods members- from February 3rd   (31st January 2014)

This is how the one euro cent milk price increase announced last week converts for the 2,800 UK owner member’s and their future milk cheques.

This takes Arlas www.milkprices.com standard litre price to a headline grabbing 35.01ppl which includes 0.76ppl for the forecasted 13th payment and is before any other deductions for balancing, butterfat reconciliation etc.

 

The increase is the main topic of conversation amongst all producers and at the numerous meetings their representatives have had with processors this week especially given the fact those competing with Arla do so at a time when UK Cream prices are falling and milk volumes increasing daily. Under normal circumstances GB prices would be falling but it’s a new year and a new pricing rule book with a new set of officials marking the pitch and refereeing the game.

Those who use Arla’s price in their basket milk price calculation and formulas have a hangover and its going to get worse!

Will competitors follow? It’s highly unlikely that those who have opted into the 3 month notice period under the voluntary code will blink because if they do the consequences could be disastrous. Continued hibernation by some processors in this stormy weather is a certainty.  

 

0.481ppl milk price decrease for M & S direct suppliers – from 1st February  (31st January 2014)

The reduction takes the www.milkprices.com standard litre price to 34.262ppl

 

Farm gate milk price at all time record of 34.26ppl  (31st January 2014)

The DEFRA December farm gate milk price stood at 34.26ppl, which is a record for a December price and almost a stand onto the all time November record of 34.45ppl.

 

Glanbia embroiled in Black Milk investigation  (31st January 2014)

According to the Irish Independent Glanbia officials left a producer meeting in Kilkenny this week “red faced” and embarrassed following the news that one of its prominent suppliers is under Department of Agriculture investigation for the illegal involvement in Black Milk of at least 500,000 litres since April 2013.

 

The article states that the illegal movement of the milk is likely to turn a circa £120,000 superlevy bill into milk sales worth £165,000.  The estimated 2013/2014 ROI superlevy bill is expected to be more than £30 million.  Glanbia have confirmed that they are involved in and assisting with the investigations.

 

Dairy Crest sale generates more profit than it’s entire dairies operation  (31st January 2014)

Dairy Crest has sold its Nine Elms residential & middle ground depot for £17.6 million which is a profit of £15m which is 1.5 times (+50%) more than the profits it achieved in its Dairies division during the previous 12 months accounts (£10.2m).  Meanwhile as anticipated Dairy Crest Carmarthenshire Whitland processing site is set to close with the loss of 31 jobs.

 

1 Euro Cent milk price increase for Arla co-op members  (24th January 2014)

Arla have announced that from 3rd February its 13,500 farmers, including 2,800 from GB, will receive a 1 Euro Cents a litre price increase.

 

The likelihood is that this will convert to a GB ppl standard litre price increase of at least 0.7ppl to 0.8ppl.  The sterling amount will be confirmed next week following a tri-board meeting.  This will be very welcome news for British farmers irrespective of whether they supply Arla or not, because it comes at a time when traded volumes of spot and short term contract milk are increasing almost daily.

 

The main contributor to this latest Arla increase are the exceptionally strong returns from global markets, which Arla are maximising.  

 

This latest increase is certain to have some competitor processors head scratching as to how they can keep up with Arla bearing in mind most will need to recover any further increases from domestic customers at a time when cream prices are down and volumes of milk are increasing. The pressure is certainly intensifying, especially on those who have more milk than they have homes for.

 

Strong global dairy trade auction prices  (24th January 2014)

This week’s GDT auction returned strong prices, particularly for butter and cheese with the overall auction index up 1.4%.

 

Prices for butter and cheese rocketed up by 10% compared to the results achieved two weeks ago.  These price movements are in the opposite direction to EU prices, which have softened.

 

Arla sold March delivery Westbury SMP for $4600/tonne back 1.5% to the £4670 realised two weeks ago but still a very good price.

 

In addition, of particular interest is the fact the closer to July delivery the higher the SMP price achieved which bodes well for future confidence.

 

Results Summary (US Dollars)

Butter              +10.8%            to average       $4657/tonne

Cheddar          +10.4%            to average       $5133/tonne

WMP               +0.1%  to average       $4943/tonne

SMP                -0.5%   to average       $4698/tonne

 

More Dale Farm co-op products heading to China  (24th January 2014)

Dale Farm, a subsidiary of co-op United Dairy Farmers, have signed a further contract to export whey powder to China, which takes total Chinese sales to over £20 million.

 

Farming press fall hook, line & sinker for UK levy threat  (24th January 2014)

As the Semex Conference drew to a close chatter, tweets and emails went into orbit as farmers picked up on the suggestion that the UK could fill its quota by 31st March 2014.

 

The claim came in a press release from Julia Clark, a professional who trades milk quota with Townsend Chartered Surveyors.  The catalyst statement was:

 

if production continues to increase month on month over the next three months, the UK as a whole could be coming a lot closer to hitting its national production quota limit than may be comfortable for those producers who have been regularly producing over their quota (or without any at all) over the last few years.  As we have not reached our national quota level since 2003/2004, milk purchasers have for some time now not always insisted their producers hold enough quota to cover their production, and have been happy to pay for collections over and above quota held.  However, as the chance of a levy becomes more of a possibility, this approach may change, and milk producers who have not felt the need to ensure they have quota to cover production may wish to reconsider this decision.  The UK can still be subject to a levy if nationally it goes over quota, up until the end of the 2015 milk year when milk quotas are phased out.”

 

The press release was soon in circulation and several of the farming weekly’s swallowed it without subjecting it to a simple sanity test.

 

Within days quota at 0.1 to 0.2ppl was at 0.5ppl to 0.6ppl with incoming enquiries to our offices resembling the old days.

 

Peter and Jane maths shows the UK’s total quota is 15.3 billion and we will be hard pushed to achieve 13.7 billion by 31st March 2014 let alone 15.3 billion.  That’s a whopping 1.6 billion litre shortfall!  To fill our quota during the first three months of 2014 we would have to produce 5.1 billion litres in total.  It’s simply not possible.

 

Many anticipated an apology or retraction for the error with a couple suggesting the press release is an issue one of the professional bodies or farmer organisations should be alerted to.

 

So let’s get our feet back on the ground.  It is impossible for the UK to fill its national quota by 31st March 2014 and to fill it next year and pay a superlevy, whilst mathematically possible realistically needs a phenomenal production year on a scale never seen before.

 

Sally Gunnell is First Milk’s brand ambassador  (24th January 2014)

Olympic Champion Sally Gunnell has signed a two year deal to help promote First Milk’s brands, including its Lake District Cheese and CNP Sports nutrition brands.

 

25 billion glasses of milk from Arla in 2014  (24th January 2014)

Arla expect to produce 25 billion glasses of drinking milk in 2014, which equates to 3.5 glasses (250ml) of milk for every person in the world and represents about 50% of Arla’s total milk processed in the year.

 

Scottish dairy farmer numbers drop below 1,000  (24th January 2014)

Its 110 years since the number of dairy farmers in Scotland were recorded and in 2013 they fell below 1,000 to 993 (average 165 cows) for the first time.  When records started in 1903 there were 5,735.

 

Meanwhile, the Scottish Government is establishing an Independent Scottish Dairy Bureau to explore the opportunities to export Scottish dairy products to the BRIC countries (Brazil, Russia, India & China).  Paul Grant, Chairman of the family firm Mackays of Carnoustie, who produce preserves and marmalades has been appointed to oversee the venture.

 

Hedge laying Course at Swinscoe Nr Ashbourne  (24th January 2014)

Date: 15 & 16 February 2014 - Time: 0930hrs – 1530hrs

Cost: £30 per person per day. 10 people maximum.  Payment required before course. Please make cheques payable to Staffordshire Wildlife Trust and post to:-

Jonathan Gahan

Staffordshire Wildlife Trust

Bank House

20 Saint Edwards Street

Leek

Staffordshire ST13 5DS

Telephone: 07960875067

 

0.228ppl milk price cut to Dairy Crest formula contracts – from 1st February  (10th January 2014)

The latest cut in the formula price takes the standard litre to 31.26ppl (www.milkprices.com).  This is 1.129ppl below Dairy Crest’s standard litre price (32.39ppl) and takes the total reduction in the past four months to 0.82ppl.

 

The main influencer is DairyCo’s Datum Cream Index fall, which has dropped 0.58ppl in a month and is derived from a £100 tonne fall in cream values.

 

Understandably, one or two farmers are starting to enquire as to how well researched and robust DairyCo’s market indicator figures are.

 

GDT Auction prices ease a shade-(10th January 2014)

The first 2014 GDT auction saw the overall index fall marginally by 0.8% to average $4,943/tonne ($4,990 3 weeks ago, which was an all time record average).  Of particular interest to the British dairy industry were the results of Arla’s second auction entry of Westbury SMP for March delivery.

 

The Arla average price was $4,540/tonne (£2,760), which compared to the $4,695/tonne achieved three weeks earlier was a drop of $155/tonne (-3.3%).  SMP prices at this week’s auction were down 3.4% across the board to average $4,688/tonne.

 

Cheese prices moved up with average prices up 1.9% to average $4,656/tonne and butter prices were up 5.1% to average $4,223/tonne.

 

The auction is going from strength to strength, mainly due to Chinese demand.  This week saw a record number of 152 successful bidders compared to 133 three weeks earlier.

 

Milk production continues to climb-(10th January 2014)

December’s milk production stood at 1.150 billion litres an increase of 83.8 million litres (+8%) in a month and 111.5 million more than produced in December 2012.

 

The cumulative production for the first 9 months of the quota year stands at 10.151 billion litres, which is an increase of 3.3% (325.8 million).

 

1 out of 4 British dairy farmers is an Arla Amba owner-(10th January 2014)

Arla have announced that 2,800 British dairy farmers are now joint owners of the business, which equates to 25% of all dairy farmers, making a total of 13,500 Arla European farmer owners. These owners supply 3 billion litres (95%) of Arla’s British milk intake.

 

Arla have also announced that they wish to recruit an additional 300 million litres of new milk to meet existing and new contracts, which is in addition to 230 million litres recently recruited. These new recruits will be offered both full membership or a direct supply contract; however, priority will be given to farmers who want to join as full members.

 

Medina create a new position with the appointment of Shelagh Hancock as MD-(10th January 2014)

Medina Dairies, who are the largest UK privately owned liquid milk processor, are clearly re-trenching and pushing onwards and upwards with their latest news that a new role of Managing Director will immediately be taken by former Milk Link Business Director, Shelagh Hancock.

 

Shelagh joins a very long list of graduates of the Milk Link Academy of Excellence (AKA the Kennedy University of Dairying) who have not remained within Arla but have subsequently appeared in prominent positions elsewhere in the dairy industry.

 

 

MILK QUOTA WANTED!!!!!

 

Yes we have buyers and few, if any, sellers

 

 

ENGLISH ENTITLEMENTS

 

It’s the opposite story with few buyers.  Given the fact Entitlements will be rolled forward into the new scheme until 2021.  That’s incredible value and return for those buying.

 

If you have milk quota to sell or are interested in buying English Entitlements contact Jacquey Millward on 01335 324594 or Jacquey@ipaquotas.co.uk

 

 

1 out of 4 British dairy farmers is an Arla Amba owner  (6th January 2013)

Arla have announced that 2,800 British dairy farmers are now joint owners of the business, which equates to 25% of all dairy farmers, making a total of 13,500 Arla European farmer owners. These owners supply 3 billion litres (95%) of Arla’s British milk intake.

 

Arla have also announced that they wish to recruit an additional 300 million litres of new milk to meet existing and new contracts, which is in addition to 230 million litres recently recruited. These new recruits will be offered both full membership or a direct supply contract; however, priority will be given to farmers who want to join as full members.

 

0.5ppl milk price increase to Glanbia Cheese producers - from 1st January  (3rd January 2014)

Perhaps a late Christmas present but this further 0.5ppl milk price rise will be a welcome one and takes Glanbia’s standard litre price to 32.78ppl (www.milkprices.com)

 

Arla buy Westbury  (3rd January 2014)

Arla have purchased the freehold of the Westbury processing site from the Lloyds Bank receivers for an undisclosed sum.

 

This should  be viewed by all British dairy farmers as another positive move by Arla and one which all British dairy farmers will benefit from in terms of securing the plants future.

 

Westbury gives Arla choices and if domestic customers resist paying a market price for milk, which equates to at least the price realised on GDT, its likely Arla will simply sell more powder through the auction in order to maximise its returns to members. Next Tuesday ( 7th )will see Arla auction its second batch of Westbury manufactured powder at the GDT auction and if prices remain as strong as they were before Christmas further consignments from Arla can be expected.

 

The acquisition of Westbury further demonstrates that Arla intend to increase their commitment to the British dairy industry and remain top dog

 

The move means Arla are owners of the site as well as landlords to the two joint venture tenants who are Arla and First Milk.

 

Jim Paice’s rant over Arla to The Grocer within hours of taking the job as Chairman of First Milk appears to have turned a little sour.

 

He will soon be signing rent cheques as  First Milk now have to pay rent to Arla . On the plus side at  least the comments earned Sir Jim an Award as The Grocer’s 2013  “Rant of the Year/Sour Milk Award”.

 

Somehow you get the feeling this move by Arla is one of several planned for 2014 as innovation and consolidation in the British dairy industry turns the turbo charger on.

 

£9.69 million profit for Meadow Foods up 1.89%  (3rd January 2014)

Meadow Foods have reported an improved level of profits for their year end 31st March 2013 at £9.69m on a turnover of £339.2m

 

4ppl milk price increase for doorstep customers of Dairy Crest’s Milk and More home service  (3rd January 2014)

From the 29th December Dairy Crest’s doorstep customers have been informed that it is necessary to increase the price they pay for milk by 4ppl.

 

It’s a consequence of rising costs, especially for raw milk, but it certainly will not help halt the decline in doorstep deliveries in 2014.

 

Semex Conference – “Make The Right Moves”  (3rd January 2014)

What will 2014 have in store? Will it be a good year, or will prices dip?

 

Why not come and hear the views of, and debate with, Ian and other big-wig speakers from the industry at the January Semex Dairy Conference, being held between Sunday 12 & Tuesday 14 January in the heart of Glasgow city centre at the 5-star Radisson Blu Hotel.

 

There’s a cracking line-up of speakers including on Monday, the Secretary of State for Agriculture Owen Paterson; NFU President Peter Kendall; agricultural legal eagle William Neville from Burges Salmon; Dr Judith Bryans from Dairy UK; Mike Sheldon of Dairy Crest, Kate Allum of First Milk & last but not least  Ian will be on stage.

 

On the Tuesday delegates will hear from vet Rob Smith from Liverpool University;  Rob Hitch of Dodd & Co, as well as  Dairy farmers Colin Laird and Philip Cooke all of whom are also on the platform.

 

As usual there will be an informal Sunday evening gala buffet reception, plus the famous Semex Burns supper.

 

All in all it’s a great business, educational and social event to kick-start the year.

 

For further information and to register for the conference call Helen Miller on 01292 671525 or email helenm@semex.co.uk

 

Confusion for some AFMP members who are under notice to leave Arla (31st December 2013)

A letter dated 27th December sent to a number of AFMP members who have failed to either join as full Arla co op members or sign a direct supply contract has caused some confusion particularly for those under notice to move to a new milk buyer.

 

These farmers who are under notice to leave are the vast majority of the recipients of the letter most of whom are due to change milk buyer on 1st February.

Unfortunately the legally crafted letter makes no reference to those under notice and has been interpreted by some farmers as meaning if they deliver milk to Arla on 1st January they will automatically be locked into a direct supply contract for the next 12 months and will not be able to leave Arla.

 

This is not the case.

 

From 1st January 2014 AFMP will no longer exist and any producer who is under notice will therefore automatically switch to a direct supply contract until they have worked out there agreed notice period which for most is for one month until the end of January.

 

Note the switch to a direct supply contract does not affect the handful of Tesco TSDG producers who have not joined the Arla co op who will remain on a Tesco contract.

 

The farmers who will be affected by the letter are those who have signed no new contract and in most cases ignored all letters and calls requesting they make a decision.

 

Firm results in final GDT auction  (20th December 2013)

The final GDT auction for 2013 recorded a firm trade for the 48,000 tonnes of product sold (-13% to the tonnage sold two weeks earlier), which clocked up an average selling price of $4990/tonne (+0.34%).  The bulk of the price increases recorded were for the later April to June delivery contracts, which signals continued confidence amongst buyers, especially for butter.

 

For UK farmers all eyes were firmly focused on the SMP auction where Arla sold the first consignment from Westbury.

 

Whilst Arla have not disclosed the tonnage involved they were very pleased with the selling price of $4695/tonne for February delivery, which is equivalent to 42p/litre of milk.  Arla instantly decided that further volume of Westbury powder will be offered at the next auction.  It’s a significant move by Arla, which has the potential to affect all UK milk processors and their pricing in time.

 

At the auction SMP prices averaged                         $4868/tonne    (+1.7% on the index)

                        Butter prices averaged                       $4051/tonne    (+7.9% on the index)

                        Cheddar prices averaged                   $4569/tonne    (+1.0% on the index)

                        WMP prices averaged                        $4958/tonne    (-1.5% on the index)

 

First Milk investment at Haverfordwest cheese plant  (20th December 2013)

First Milk are to spend £7million at the Welsh cheese plant in two areas.

 

Around £5.4m will be invested in a new effluent treatment plant.

 

A further £1.4m will be spent on new natural gas boilers to replace the oil boilers, which is a move First Milk, say will be the equivalent of taking 2,000 cars off the road in terms of reducing gas emissions.

 

English Modulation rate set 12% at for four years  (20th December 2013)

The Governments announcement that a 12% modulation rate will prevail for the next four years until 2018 will be welcome news compared to the potential for a maximum 15% rate. The reduction is calculated to be worth £244 million to farmers.  Farmers in Wales were no where near as fortunate with the news that they will be subject to the maximum 15% modulation.

English Entitlement Trading & CAP Reform  (20th December 2013)

This is our update as posted on our website (www.ipaquotas.com), which we aim to update regularly.

 

The final detail of the reform will not be known until 2014 but here is what we already know as it affects the trading of Entitlements in England.  The bottom line is Entitlements held or bought now will have a value until at least 2020.

 

Existing English Entitlements for all three regions will be rolled over into the new scheme.

 

The minimum claim will be 5ha (12.5 acres).  Anyone with less than 5ha needs to consider either selling them, merging their Entitlements with others, let the land and Entitlements to a larger operator or face losing them with nil compensation.

 

The 5ha minimum will mean around 18,000 current claimants need to consider what to do with their Entitlements or risk losing them.   With current values around £300 per Entitlement there should be many small lots on the market but it is debatable how many current claimants will simply allow them to be confiscated.

 

Those with more Entitlements than registered land in 2015 will lose the excess.  Any Entitlements held need to be matched to the 2015 activated area.

 

So far as England is concerned the so-called Golden Ticket is confined to the history books as an idea that never materialised.  There is no requirement to have claimed on Entitlements in 2011, or any date and there will be no sale of Golden Tickets (mores the pity, Ian was licking his lips at the thought of trading the tickets)

 

The bottom line is future English payments are likely to be fairly close to the existing levels subject to exchange rates, final modulation deductions and assuming all the conditions are fulfilled.

 

There will be no small farmer scheme.

 

There are still lots of issues to be clarified as part of the Reform, for example, the English modulation rate, progressive reduction in payments/capping, minimum claim activity etc.  All will become clearer during 2014.

 

Further announcements and relevant detail will be posted here as they appear and apply to English Entitlement trading.

 

0.195ppl milk price reduction for Dairy Crest formula price – from 1st January (13th December 2013)

This latest decrease take producers standard litre price to 31.489ppl (www.milkprices.com)

 

Fonterra open the world’s largest milk powder drier and announce a further £120m investment  (13th December 2013)

New Zealand co-operative Fonterra has officially opened the world’s largest milk powder drier, on a greenfield site near Canterbury on New Zealand’s South Island.  Daily the plant processes 7 million litres of milk producing 720 tonnes of powder every day and 100% is exported.

 

At the same time Fonterra have announced a $235m (£120m) powder plant investment in the North Island, which will process an additional 900 million litres/year by the end of 2015.

 

Dairy Crest announce closure of its Whitland site after only 8 months  (13th December 2013)

Dairy Crest were trumpeted as The White Knights when they stepped in to save the Proper Welsh milk Whitland plant when they acquired it from the administrators, in March 2013 at a cost of £325,000.  Regretabbly the plant has failed to hit targets and is now set to close with the loss of 31 jobs. 

 

The Carmarthenshire plant was dogged by low sales volumes which resulted in high processing costs.

 

Former First Milk CEO Peter Humphreys was Chairman of the business prior to its administration.

 

Leading the way – The British dairy industry’s plans to wipe out our whopping £1.2 billion dairy trade deficit  (13th December 2013)

The Irish have a well publicized target to expand milk production post March 2015 by 50% by 2020.

 

Domestically, we have progressive processors investing and growing their share of international markets for example:

 

(a)  Arla with the auction of Westbury powder at next week’s GDT.

(b)  Dairy Crest – £45m investment at Davidstow to produce DWP for export (infant formula powder), especially to China & Asia.

(c)  Muller Wiseman – production of butter at Market Drayton to replace the export of cream and subsequent importation of butter.

(d)  Dale Farms – production of enriched and customized powders for Asia, particularly the Asian market, together with its £40m investment (see below).

 

All of these examples demonstrate that these processors all have vision and the conviction that they can compete in the exciting and fast growing international market place as well as continue to grow their respective shares of the domestic market.

 

Now three bodies have pulled together a document titled “Leading The Way”, which sets out the British dairy industries target and aspiration for the future of our industry.

 

The full document is attached below and was presented to Farming Minister George Eustice at the Dairy Suppy Chain Forum on Tuesday by its authors DairyCo, Dairy UK and NFU (England & Wales). 

 

The document makes for interesting reading with various statements including “we want to encourage a growing and vibrant industry” followed by “the growing global demand for dairy products provides a fantastic opportunity for a competitive British dairy industry on the international stage.”

 

Their aim is to wipe out the £1.27 billion UK dairy trade deficit by 2025 including around 287,000 tonnes or 90% of the 319,000 tonnes of cheese we import each year the majority of which comes from Southern Ireland who are pursuing ways to penetrate our Cheddar markets further.

 

Duncan Pullar, Dairy Co, commented : “We believe that our target to achieve a zero UK dairy trade balance value in the next ten years, from the current £1.2bn deficit, is challenging but realistic. The whole chain must invest, innovate, become more efficient and strengthen routes to market. Successfully adapting to the challenges and opportunities that lie ahead is the only way of securing a sustainable future for British dairying.”    

 Please click on the cross to access the document  ……….   

 

£40 million expansion programme completed  (13th December 2013)

Dale Farm, the successful processing arm of co-operative United Dairy Farmers owned by 1600 dairy farmers who supply around 1 billion litres of milk each year, has completed a three year expansion costing £40 million, near Cookstown, Co Tyrone.

 

The final piece in this jigsaw was this week’s opening of its £20 million whey protein plant and its expanded cheddar making and packing capacity.

 

The £40m investment means Dale Farm will double its cheddar production as well as the lucrative WPC80 whey protein production.

 

Dale Farm has achieved in excess of 30% sales growth in 2013 and is quickly increasing its sales to markets in China, Russia, Africa and The Middle East.

 

CEO of Dale Farm, David Dobbin, was very clear as to how Dale Farm are already prepared for the removal of quotas “We are well positioned to face the challenges coming out of the ending of milk quotas ending in 2015, especially with the doubling of our cheese and whey processing capacity

 

John Pickering Meadow Foods  (13th December 2013)

On 6th December, John Pickering (73) passed away peacefully.  He will be greatly missed by family, friends and the whole team at Meadow Foods.

 

John, a former dairy farmer, founded Meadow Foods with Simon Chantler in 1992.  As a main board director and shareholder John has been an important part of creating the business that Meadow Foods is today, an achievement of which he was understandably very proud.

 

GDT auction next Tuesday (17th)  (13th December 2013)

Many will be eager to view next Tuesday’s final 2013 GDT auction results when the first consignment of Westbury produced powder will be sold by Arla.

 

The overall tonnage to be sold is only 42,000 which is almost 20% down on the volume sold two weeks ago.

 

Cheap Milk Watch  (13th December 2013)

Farm Foods – 4 pints for £1

 

Khanjra International (Blackburn) 2 litres for 85p (equivalent to 96p for 4 pints). 

 

The price spotter has been unable to confirm the processor supplying this milk.  Answers to us on an email together with any other deals, which devalue milk but please confirm who supplies the milk, which is important to readers.

 

First 2014 milk price increase announcements (6th December 2013)

 

0.3ppl milk price increase from Meadow Foods – from 1st January

This will take producers standard litre price to 32.55ppl (milkprices.com)

 

0.07ppl milk price increase for Muller Wiseman formula producers – from 1st January

The formula is based on the following:

 

50% AMPE                                          down 0.8ppl

25% MCVE                                          down 0.1ppl

25% basket of milk buyers prices       up (it’s a closely guarded secret)

 

This takes producers standard litre price to 34.62ppl (milkprices.com) and will be the formula price for the next quarter until it is re-based from 1st April.

 

GDT auction results kick start the festive period and GB will soon join the party (6th December 2013)

A very product hungry 207 bidders participated in Tuesday’s New Zealand GDT auction where fierce competition for product saw the GDT all products price index increase by 3.9% to that recorded only 2 weeks earlier and the average auction price jumped 3.5% to average $4973 tonne. One New Zealand report described bidding at “fever pitch”.

 

An auction record of 22,500 tonnes of WMP were on offer where prices were up 3.4% to average over $5,000 tonne ($5035) the second highest on record. 

 

SMP average was $4761 up 5.6% on its index.  The devil was in the detail with SMP prices for June deliveries product up an eye watering 20% with the highest price paid $5745 tonne.

 

Butter prices up 4.7% to average $3750/tonne

 

The only product showing across the board falls in price at the auction was cheddar, which averaged $4501/tonne down 1.5%.

 

So globally production is increasing at a pace but to date it does not appear to be matched by the insatiable appetite for product from China and, to a lesser extent, Russia.

 

It’s a case of taking it a week at a time but fingers crossed that the ever increasing production continues to be outpaced by Chinese and Russian demand.  China’s October powder imports were up a staggering 145% (+ 45,000 tonnes) compared to October 2012 and for the first 10 months of 2013 Chinese powder imports are up 31% or 145,000 tonnes compared to 2012 and the only question is whether their demand will peak and tail off.

 

This is expected to be the final high volume GDT auction (52,000 tonnes sold) before the tonnage declines. At the next auction on 17th December whilst volumes will be down there will be on offer the first consignment of British SMP which will come from Westbury and be sold by Arla.  If this bull market continues this will be a very smart move by Arla and will certainly attract more interest from GB farmers and analysts when they view future GDT auction results.

 

OFT to look at IDB/First Milk cheese deal (6th December 2013)

The Office of Fair Trading are inviting written representatives concerning competition or public interest issues on the acquisition by Adams Foods Limited of First Milk’s sale and marketing of hard cheese.

 

November milk production up almost 10%(6th December 2013)

UK milk production continues to march North with November up 92.5 million litres (+9.5%) compared to November 2012.  Cumulative production for the first 8 months is up 218.8m litres (+2.5%).

 

Theo Muller and The RT Hon Owen Paterson open Muller’s £17million butter plant (6th December 2013)

A relatively small gathering of select industry people (plus Ian) attended todays official opening and tour of Muller’s 45,000 tonnes a year butter plant.  Owen Paterson as the local MP to the factory and Secretary of State for the Environment, Food & Rural Affairs during his opening speech was close to bouncing with enthusiasm and passion for what Theo Muller and his team have achieved.

 

At present the factory is producing 10/tonnes an hour in 25kg blocks with the promise that Muller have plans to fast forward its packet butter packing plans to mid 2014 by which time 250 gram retail (presumably branded) salted and/or unsalted butter will roll out of Market Drayton.

 

The factory expects to produce at least 30,000 tonnes of butter in its first year.  Currently the UK imports 100,000 tonnes of butter and exports around 70,000 tonnes of cream (equivalent to 35,000 tonnes of butter).  This factory will make a dent in the horrendous £1.2 billion dairy deficit we have and make the UK less reliant on Dairy imports.  It’s a step in the right direction as indeed is the Dairy Crests £45m investment in producing infant formula powder (DWP) at Davidstow which is also destined for export

 

From what Ronald Kerr’s and Theo Muller said today they have plans for further expansion in GB.  Theo first invested in the UK in 1993 and in the past 20 years has invested £750 million here and created 1,000 jobs at Market Drayton and the group employs 6,000 people across its UK businesses.  Owen Paterson asked “why do we import butter from (Southern) Ireland”?

 

Single Farm Payments - Fingers crossed for Monday (29th November 2013)

Monday will see the 2013 Single Farm Payment monies hit many farmers’ bank accounts and this will be a welcome relief for what has been a very tough year, especially for livestock farmers who were heavily involved in what was a very tough and costly spring.

 

For many there will be a queue of people waiting for a share of the money as day to day expenses have mounted up with the promise that when the SFP money lands suppliers’ invoice’s will be paid.

 

Starting next week the trading of SFP will start in England with us and we will be updating our website with the key points farmers need to consider if they have more Entitlements than the have area available or indeed if they have more area than they have Entitlements to put against.

                                                                                                         

Correction - Imported cull cows prove hard to sell  (29th November 2013)

Last week’s story should have read as follows:

 

Apologies to any owners of non-British passport cull cow owners who were misled by our typo, which suggested they were only worth 50p/kg.

 

Ian keeps his hand in with finished cattle and sheep marketing and it’s clear to him that not only are culls with no British passports hard to sell it’s going to get much tougher in 2014.

 

Today any cull cows with non-British passports can at best be sold at 50p/kg deadweight deduction compared to UK cows with a very limited number of outlets who will accept them, and from January 2014 the situation is set to get worse. Just about all of the major meat processors will not have so much as one foreign cull on the premises, and if one turns up on a load it’s likely the entire load will be escorted off the premises.

 

There are several issues. One revolves around concerns that they cannot be classed as British beef, which is king, especially following the horsemeat scandal. The easiest way to ensure no one can accuse a meat processor of having imported foreign meat and used it in its beef products  is not to  have foreign meat on the premises. Come 2014 with plant closures and general nervousness from one or two outlets, who currently accept limited numbers of foreign animals, the situation will get worse and that 50p gap is likely to widen significantly.

 

Video Clip of the week  (29th November 2013)

Click on this link to watch an excellent 5 minute video story under the heading of Undercover Boss.  It’s the story of a Californian Dairy Farmer who loves his job

 

http://www.youtube.com/watch?v=7K4sIM0ikrQ

 

Aylesbury goes up a gear  (25th November 2013)

The first liquid milk for retailers has rolled off the Aral Aylesbury plant today.  When it reaches full production the new dairy will have the capacity to process 1 billion litres of milk annually.

 

33.2ppl Stand on Milk Price for United Members  (25th November 2013)

United Dairy Farmers October member base milk price will be 33.2ppl the same as the September price.

The www.milkprices.com standard litre price for United works out at 34.17ppl.

 

0.75ppl milk price increase for direct suppliers to Belton Cheese - from 1st December  (25th November 2013)

This takes their standard litre price to 33ppl (www.milkprices.com)

 

0.43ppl milk price drop for Sainsbury’s Direct producers - from 1st January  (25th November 2013)

No surprises in this price reduction which almost exclusively comes from a 0.42ppl fall in feed prices as calculated by Dairy Co each quarter.  It takes their standard litre price to 33.72ppl. (www.milkprices.com) for Muller Wiseman and Arla producers and to 33.74ppl for Dairy Crest suppliers.

 

85% AFMP sign up exceeds expectations  (25th November 2013)

Arla have declared that 85% of AFMP farmers signed up to become full members of the Co-op by the close of play on the 15th November which is a figure they are extremely pleased with.

 

The window of opportunity is now open for some farmers who do not currently supply milk to Arla to join as full members. This window closes on the 30th November.

 

The 15% or so who have either chosen not to become members or have simply not bothered to make the choice will be switched to a direct supply contract from January 1st the price for which will be linked to the UK price and not the Arla European milk price.

 

72% Tesco AFMP sign up also exceeds expectations  (25th November 2013)

Arla have stated that 72% of its Tesco core producers have signed new contracts to join as full members of Arla Amba and they represent 70% of the Arla Tesco core volume.

 

The Tesco seasonal farmers sign up details are mixed in with the 85% of AFMP sign ups.

 

Illegal milk enters Northern Ireland and causes a stir  (25th November 2013)

Reports of illegal milk entering Northern Ireland from Southern Ireland (ROI) have now been confirmed with the seizure and destruction by the Authorities of a torque liner lorry carrying a number of 1,000 litre IBC plastic containers full of milk originating from the Cork area. The practice is likely to have been happening for some time with the milk going to Northern Irish Farmers who sell it on to their milk buyers who have no knowledge of its origin. There are also strong rumours that similar Black Milk has gone to Welsh dairy farmers. The stakes are high including EU penalties and the damage to traceability.

 

The problem stems from the fact ROI are over quota and given anticipated production super levy cannot be avoided by the country.

 

But that’s fairly insignificant because it’s the first signs as to how ROI is ramping up milk production ready for the end of Milk Quotas in only 16 months time!

If the current favourable conditions continue through to early 2014 it’s a certainty spring milk production in the UK will be overflowing and processing capacity will be creaking at the seams in both ROI and the UK. Will we cope in spring 2014 and even if we do will ROI simply flood us with milk in 2015.

 

It’s like a train in the distance coming towards you. It looks a long way away and you know it’s coming towards you yet when it arrives it’s still a shock.

 

Richard Clothier MD of Wyke Farms collects two Dairy industry Oscars  (25th November 2013)

Food Manufacturing’s Personality of the Year for 2013 Award was presented last night to Richard Clothier who fought off competition from Dairy Crest’s larger than life CEO Mark Allen, and people from global giants Coca Cola and Nestle, who were among the six finalists. It is not known exactly how many young free and single females have swooned in his direction as a result of his award, but rumour puts the number at between 0 and zero. In addition, Clothier’s Somerset cheesemakers Wyke Farms took the Award for Dairy Manufacturing Company of the Year, which is of huge value to the company who are the third largest producers of cheddar cheese on the mainland. Congratulations to Wyke and to Richard himself.

 

Billy Keane Joins Grahams Dairy  (25th November 2013)

Former MD of Wisemans, Billy Keane will join the Board of Grahams Dairy (Scotland) as a Non Executive Director. Keane is the chairman of Dairy UK and has been at the heart of recent changes there, and his appointment to Grahams will no doubt be a hot conversation topic amongst Muller Wiseman Management.

 

Keane spent 18 years with Wisemans and left following its purchase by Muller.

 

Sir Jim Paice’s interview with the Grocer  (25th November 2013)

This was included at the foot of last week’s bulletin as a “Stop Press”, and never before has a few lines sparked so many responses. Today we have limited reaction and commentary with the main thoughts to follow in Ian’s next Dairy Farmer article.

 

Several readers, particularly First Milk members, expressed their wish that the article received widespread publication and debate in the farming press. Unfortunately The Grocer magazine is unable to grant permission for us to circulate the article.

 

It is the comments from the First Milk members which are most important and whilst some were unnecessarily paranoically defensive and in some cases amusingly naïve, there were one or two excellent comments and ideas worthy of wider publication. These have been saved for Dairy Farmer.

 

But this week brings an interesting twist to the debate. Last week’s story was about damning and potentially erroneous comments made BY First Milk to third parties, but this week there’s news of damning and erroneous comments made ABOUT First Milk. The comments were made in a recent article in British Dairying by Barry Wilson. Barry got his facts wrong, and, in a highly unusual step, was forced by First Milk to send a 1st class letter to his 13,000 or so British Dairying readers this week apologising for his comments.

 

That begs the question that if First Milk are wrong about what Paice said about Arla (which will be judged on milk price in a year's time and determined by who has the higher one) then will First Milk write to all of Arla's 3,000 UK or even it’s 13,000 members and apologise as well!

 

 

0.254ppl milk price cut for Dairy Crest formula price producers – from 1st December (15th November 2013)

This takes the Dairy Crest www.milkprices.com standard litre price to 31.68ppl compared to 32.39ppl for the Dairy Crest liquid standard litre.

                     

The drop is down to falls in the value of bulk cream, cost of fertiliser and fuel as calculated by DairyCo and its Datum team with their figures used to generate the Dairy Crest formula milk prices.

 

1ppl milk price increase for Crediton Dairy Suppliers – from 1st December (15th November 2013)

This takes their www.milkprices.com standard litre price to 34.36ppl.

 

Producer No. 1 to Producer No. 600 (15th November 2013)

In addition to increasing their milk price by 1ppl, Crediton Dairy has signed up their first direct producer.  At the same time Meadow Foods have announced the signing up of their 600th direct producer from Pembrokeshire.

 

In connection with the Meadow signing there is a very interesting and pertinent comment on www.milkprices.com:

“Interesting – having not signed up to the Voluntary Code, despite the considerable pressure applied on the company from certain quarters within the industry last summer.  Meadow’s direct supply milk pool continues to go from strength to strength.  Is there a secret?  We doubt it!  Pay a competitive milk price, on a simple and transparent (in other words headline price achievable) pricing schedule, while treating supplying producers in a fair and equitable manner.  It’s not rocket science!”

 

Those certain quarters are the NFU and Ian previously commented that it was unlikely anyone would go into the likes of Simon Chantler’s or Charlie Payne’s offices with a view to bullying them into signing up to the VCP.

 

Milk production jumps 9.7% (15th November 2013)

RPA figures for UK milk production in October were up 9.7% (96.2 million litres) to 1.09 billion litres compared to 994.4 million litres in October 2012.

 

This has taken cumulative production for the first 7 months of the quota year ahead of last year by 1.6% (123.2 million litres) to 7.936 billion litres and rising at a record breaking pace.

 

The Moo Man has been nominated the BIFA’s best documentary (15th November 2013)

It’s yet more fantastic news for this ground breaking documentary with its nomination to the British Independent Film Awards (BIFA) Best Documentary Award.

 

The award winner will be announced on the evening of Sunday 8th December.

 

England v Denmark Tickets (Football) – Wembley

Up to 5 tickets for the match on Wednesday 5th March.  Tickets are available with a £5.00 per ticket discount.  Email Lydia@ipaquotas.co.uk for further details.

 

STOP PRESSNew First Milk Chairman has Rafa Benetiz moment as he “picks a fight” (15th November 2013)

 

Just as we were going to print we caught sight of an excellent article and interview by the Grocers Julia Glotz.

 

There will be more reaction and commentary to the interview next week and please feel free to email any thoughts you have to us.  There has been nothing like this in the UK Dairy Industry for decades and not since deregulation and the war of words when Andrew Dare attacked others.

 

The article is only available by subscription and by clicking on http://www.thegrocer.co.uk/fmcg/fresh/jim-paice-picks-a-fight-as-he-takes-over-first-milk-helm/351719.article

 

However a short version of the article is in the in the Grocer, available in Newsagents today, and Arlas response to the attack can be viewed now on http://www.thegrocer.co.uk/companies/suppliers/arla-refutes-jim-paice-claim-it-is-undermining-uk-dairy/351651.article

 

We don’t receive commission form Grocer but we urge those interested to read either the long or short version if possible.

 

 

1ppl milk price increase for Crediton Dairy Suppliers – from 1st December  (11th November 2013)

This takes their www.milkprices.com standard litre price to 34.36ppl

 

 

0.78ppl milk price increase for 1600 Arla Amba (AKA Arla Milk Link) members – from 28th October  (8th November 2013)

This takes their www.milkprices.com standard litre price to 33.83ppl.

 

0.65ppl milk price increase for First Milk liquid contracted members – From 1st December (8th November 2013)

This take their www.milkprices.com standard litre price to 32.5ppl.

 

0.5ppl milk price increase for First Milk manufacturing/cheese contracted members – from 1st December  (8th November 2013)

This take their www.milkprices.com standard litre price to 32.5ppl to match its liquid contract.

 

Both increases were announced on the eve of new Chairman Jim Paice’s first GB tour, where he has committed to address all 6 member meetings.  No one can question his enthusiasm and commitment to meeting grass roots members.

 

It’s press the green button on new Market Drayton butter plant  (8th November 2013)

Muller Wiseman Dairies have pressed the start button on its new £17m butter making facility at its Market Drayton HQ.

 

Mixed bag of results recorded at this week’s GDT auction  (8th November 2013)

Tuesday’s GDT auction produced a mixed bag of results and the overall average saw the price index down 1.8% with a staggering 199 participating bidders.  On examination of the various contracts from December 2013 to May 2014 delivery there was not detectable weakening of prices for Spring (EU) delivery prices, in fact, in the case of WMP and SMP prices were highest for May product.

 

Cheddar          was up 1.2% to average $4,380 tonne                       (£2739)

SMP                was up 0.5% to average $4,559 tonne                       (£2850)

WMP               was down 3.7% to average $4,891 tonne                  (£3058)

Butter              was down 7% to average $3,529 tonne                     (£2206)

 

New Zealand milk processors are forced to dump buttermilk  (8th November 2013)

New Zealand milk production continues to stretch its processing facilities to the absolute limit.  Consequently, Fonterra have been forced to dump very large quantities of buttermilk for several weeks on land causing what has been described as a buttermilk lake.  The lake is so large numerous aerial images have been posted on the www.

 

In addition, at least two tankers a day are discharging dairy by product into the sea.

 

Dairy Crest half year results described as “a steady first half”  (8th November 2013)

The DC results are further evidence that processing liquid milk in GB is tough with this latest set of results producing a mere 0.6% return on its liquid sales, which DIN referred to as a tiny profit.”

 

“So liquid milk accounts for 68% of DC sales but under 10% of profits” commented Barry Wilson/DIN.

 

Cathedral City is still a star performer with sales up 9%.  DC’s share price started the week at £5.35 and today was £5.30.

 

Join Arla Amba or stay as a Tesco producer – it looks like a no brainer for large producers  (8th November 2013)

Kite Consulting have analysed the choice faced by Tesco Arla producers and crunched the numbers and the report concludes the decision boils down to five factors.  These are attitude to volatility, volume bonuses, the co-operative principles of each farmer, their expectation as to the longevity of retail schemes such as Tesco’s and the effect on their farm balance sheet over a period. 

 

Analysis shows that over the past 5 years the Arla Amba price compared to the Tesco price shows a mere 1.4% difference and between 2010 and September 2013 it was only a 0.32% difference.

 

Critically the figures omit to account for the huge difference in volume bonuses where the maximum Tesco bonus achievable is 0.6ppl compared to more than x3 times this with an Arla Amba bonus of 1.9ppl.

 

Finally, throw into the pot the balance sheet calculation.  For a TSDG producer who decides not to join Arla Amba the report estimates he will draw around £39,000 starting in Februay 2014.  Hence, he cashes in his chips early and banks the money.  Compare this to the one who joins Arla Amba who receives 5p of his 7.5p investment back, which means he gets £150,000 back. 

 

It all points towards a no brainer for the larger Tesco Arla producers and in all cases it’s a case of crunching the numbers carefully before you make your final decision.

 

1.01ppl milk price increase for direct suppliers to The Fresh Milk Company (Lactalis) – from 1st December (1st November 2013)

This takes their www.milkprices.com standard litre price to 33.27ppl for members of their Milk Supply Association and 33.81ppl for those under the businesses profile option.

 

Crediton Dairy starts recruiting its own supplying farmers  (1st November 2013)

The Crediton Dairy business, which former Milk Link CEO Neil Kennedy and his team acquired from Arla as part of a management buyout last year, are now on the road hand picking and courting direct supplying farmers.

 

The business processes around 200 million litres of milk each year and its current standard litre price is 33.36ppl.  (Source and standard litre price from www.milkprices.com)

 

Muller call for contract notice period debate – Is MW incentive Trick or Treat?  (1st November 2013)

CEO of Muller Wiseman Dairies (MWD) Ronald Kers is calling for a debate on contract notice periods as part of the Voluntary Code of Practice (VCP) review, which is due to commence very soon.

 

In an article in FWI Kers specifically targets co-ops, like First Milk and Arla, claiming “many co-operative members wanting to switch buyer but being held back by a 12 month notice period.”

 

There is no doubt that the behaviour of those who sit around the table negotiating milk prices on behalf of processors is very different between those who risk losing producers in 3 months to those who have the cushion of 12 months notice or more.

 

In the interview Kers clearly indicates that unless notice periods come closer to convergence MWD are likely to review their 3 month notice period.  To be fair Kers echoes Ian’s earlier Dairy Farmer article comments in raising the limited change the Code has brought to milk purchaser behaviour.

 

The name of the person who will conduct the VCP review is yet to be announced although a short list of names is known.  Kers is suggesting that as part of the review farmers should be asked for their views irrespective of whether they supply a milk processor who operates a 3 month notice period or a co-operative.  It would not be difficult or costly to conduct such research.

 

The Kers call to action has sparked a debate with at least one co-op canary retaliating suggesting that in the case of MW incentives and bonus payments are withdrawn if a producer chooses to leave. 

 

As we understand it if a MW producer resigns anytime between now and 31st December to leave on 31st March they still receive the MW bonus payment if they produce at least 2% more milk than they did in the previous year.  Indeed if you leave MW at anytime you are still eligible for the bonus but the reality is that few will deliver 2% more milk than they did in the previous year if they leave during the milk year.  Is this a trick or a treat?  Verdict, it’s probably a treat. 

 

Kers has kicked off an important debate the industry needs to have as part of the VCP review and it’s time farmers views were sought and factored in.

 

AFMP members say Yes to becoming a co-operative  (1st November 2013)

At a meeting this week 99.4% of AFMP members voted in favour of converting MPL to a co-op.  The next news from AFMP should be when the 1 billion litre sign up target is passed demonstrating that full membership of Arla Amba is reality. 

 

With only two weeks to go to the 15th November deadline the clock is ticking and those who do not sign the new milk supply contract will be automatically transferred to an Arla direct contract from 1st January unless they have alternative plans.

 

First Milk and Adams Foods marry on Halloween Day  (1st November 2013)

Adams Foods of Leek, who are owned by the Irish Dairy Board, have signed a 10-year contract whereby First Milk will focus on delivery to Adams’ Leek packing plant quality British hard cheese (predominantly cheddar) and driving down its processing costs at its Aspatria and Haverfordwest Creameries

 

Subject to Competition Authority approval, Adams’ will then cut, grate, pack and sell a minimum of 50,000 tonnes of cheese a year produced by First Milk.  It’s a romance which has taken 12 months to get to the altar.

 

The Adams factory at Leek has seen phenomenal growth in the past two years, which, with this deal, sees the sites production having more than doubled in just over two years from 50,000 tonnes to 120,000 tonnes to become the largest cheese processing plant in Europe, according to Ian’s pocket book.

 

In addition, the two have agreed plans to invest in both of First Milk’s cheese factories in terms of state of the art technology and output expansion.  Currently the combined capacity of Haverfordwest and Aspatria is estimated to be around 60,000 tonnes and whilst the initial deal is for a minimum 50,000 tonnes there is little doubt the aim to have both factories at full capacity as soon as is sensibly possible.

 

The press release states that “First Milk will receive a competitive price for the cheese” but yesterday First Milk were tight lipped as to how this will be judged or measured other than through future member milk prices and First Milk’s end of year accounts.  There is clearly an agreed formula/mechanism which forms the bedrock of the deal which is commercially confidential.

 

The First Milk/Adams deal – Is it Trick or Treat?  (1st November 2013)

 

The 50,000 tonne deal takes care of over 35% of First Milk’s members milk.  It leaves around 900 million litres of milk to be processed or brokered by First Milk, including cheese exports, which interestingly First Milk have excluded from the deal and will continue to deal with in house.  Just as when Milk Link lost the ASDA cheese deal was a turning point for Milk Link it is possible that the same could be said in a year or twos time by First Milk who lose 30,000 tonnes of ASDA’s cheese business next spring and are set to close their Maelor packing plant.

 

On the basis First Milk no longer have to market and pack the equivalent of 35% of members milk it will allow them to concentrate on other areas with the rest of their milk.  On that basis the skeletons, creepy crawlies, gremlins and those telling scary stories outside of First Milk’s membership on Halloween night were sent packing by First Milk and Adams as they handed out the final deal and the treat to members.

 

As an aside there was certainly no shortage of First Milk member creepy crawlies, gremlins and scary story tellers at yesterdays AGM and subsequently on twitter and the like following their AGM.  It was disappointing that several made the comments they did.  They were, in Ian’s opinion, unnecessary on a day when a new Chairman and game changing announcement were confirmed.  One even stated he had stuck with First Milk all along and believed that now it was coming right.  Not the language Ian expected to hear.  It’s not supposed to be some sort of endurance test.

 

The deal is the start of a long term relationship between the two and means any other potential partners thinking of courting First Milk had better start hunting and tarting in other areas of the UK and Europe.

 

It’s not a silver bullet and marketing First Milk’s remaining 900 million litres will be challenging when the market corrects next year.   It is a good cornerstone to have in the building and on that basis it’s a treat.

 

Tesco trials cheese mode  (25th October)

One of Tesco’s main British cheese suppliers Parkham Farms from Devon will run a 6 month trial involving 30 of its direct supplying farmers and Tesco with a cheese cost tracker model similar to Tesco’s liquid model.

 

For the trial the farmers will be paid the TSDG standard litre liquid price of 33.79ppl which includes the 0.5ppl Promar costings supplement which all of the trialists will be involved in.  Promar will examine and process each farms costings going back to April 2012 so that by the end of the trial they will have two years worth of costings for each Farm. Tesco will then decide whether to move to stage 2 and introduce a separate cheese producer price based on cheese farmers costings with the aim of rolling the trial out to other suppliers of Tesco’s mild and medium cheddar.  Parkham farms suppliers supply all the milk needed by Tesco for its mature and extra mature cheddar.

 

Also involved in the trial are Adams Foods of Leek who are responsible for packing all Tesco’s own label cheddar.

 

First Milk’s Lake District Branded cheese Sales volumes plummet by 86%  (25th October 2013)

The latest Kantar cheese figures for the 12 week period ending 15/9/13 make for grim reading so far as First Milks Lake District Cheese (LDC) brand are concerned and must surely be questioned by members at the Co-ops AGM this coming Thursday (31st).

 

According to Kantar expenditure on LDC has plummed by 83% (down £3 million) with the tonnage of cheese down 86% to only 409 tonnes.  LDC’s household penetration is also down by 86% to only 2.2%. Other cheese brands like Wyke, Cathedral City, Seriously Strong and Pilgrims Choice are analysed by Kantar however their figures are no where near as alarming as the Lake District brands with the 2nd placed worst performing brand going to Seriously Strong with expenditure down 15% to £11.7 million, volume down 16.5% to 1,592 tonnes and household penetration down 8.8% to 9.5% of households. For some reason LDC are way out on a Limb.

 

Claims by First Milk only 10 days ago, will have to be revised particularly “one pack of Lake District cheddar is sold every three seconds, purchased by over 7.3million households in the last year”.  The LDC was launched by First Milk in 2008.

 

On an annual basis the Kantar figures show LDC volumes down 29%, household expenditure down 23% and household penetration down more than 30%. 

 

It must be make or break time for the LDC brand support in the next few months in the run up to xmas because if these figures continue to head south the brands future is sure to be questioned.

 

Kantar are the recognised world leaders in consumer knowledge and insights.

 

The Milk Cup will RIP  (25th October 2013)

The Dairy Council in Northern Ireland has decided to end its 30 year involvement as sponsors of The Milk Cup football tournament.  To be fair 30 years is a long time and the Milk Cup is really about liquid milk and as we all know most of the milk processed in NI goes into other diary products.   

 

 

First Milk ASDA cheese business reverts to Arla Milk Link (18th October 2013)

It has been one of the worst kept secrets in the industry  but First Milk have today announced that ASDA’s cheese business will be lost to Arla Milk Link from April 2014.

 

The ASDA business accounts for towards 300 million litres of milk and 61% of the output of First Milk’s Maelor cheese packing facility.

 

As a result First Milk has commenced employee consultation with 231 Maelor staff having declared that the packing plant will close at the end of May 2014.

 

The ASDA contract switch has been known for some months, however, one of the sticking points and delays to the announcement appears to be the fact Arla’s Oswestry cheese packing plant, which will be used to pack ASDA’s cheese, is only 12 miles from Maelor and First Milk are claiming TUPE regulations apply to the deal.

 

In a statement, First Milk are quoted as saying “In terms of our creameries in Wales, England and Scotland, it is business as usual”. That may be the case but the reality is both First Milk’s Aspatria and Haverfordwest  plants will already have reduced cheese production as the milk, which was destined to be made into cheese for ASDA, is diverted to other profitable outlets.  Arla Milk Link have been laying down cheese in preparation for the April change over since July.

 

Two farmers were keen to alert Ian to the fact that the chairman designate of First Milk, Sir Jim Paice, was the guest speaker at Tuesday evenings Welsh Dairy Show dinner.  Jim specifically declined to talk about the co-op during his speech stating that he couldn’t because he was not yet the chairman.  However, three weeks earlier he was keen to outline where he believed First Milk was heading when he spoke to the press.

 

United Dairy Farmers co-op in Northern Ireland secure European Lidl cheese contract  (18th October 2013)

United Dairy Farmer’s subsidiary Dale Farm, who have plants in GB as well as Northern Ireland, have announced they have been awarded a major contract to supply all Lidl’s own label cheddar across its 1,800 retail stores in 10 European countries as well as 750 Lidl stores in the UK and Ireland.

 

Going forward the contract will cover cheese in the UK, Ireland, Cyprus, Italy, Poland, Malta, Greece, Germany, Finland, Portugal and Spain.  That’s what you call an export deal and will be great news for the co-op’s 1600 farmer members.

 

David Dobbin, Dale Farm Group Chief Executive said, “Over the last 3 years, we have invested over £40 million in developing world-class manufacturing facilities.  As a result, our cheese manufacturing capacity at our Dunmanbridge site in Cookstown has doubled to over 50,000 tonnes per year.  We now have best in class cheese making and packing capability and the economies of scale needed to successfully compete internationally; winning this Lidl business is confirmation of the progress we are making.

 

 

Major fire at Muller Wiseman Dairies (MWD)  (18th October 2013)

At around 10pm on Monday evening 10 fire engines, 60 fire-fighters plus ambulance crews were called to a very large fire at MWD milk processing plant at Droitwich, which is believed to have started due to an electrical fault.  According to some reports explosions could be heard and thankfully the only injured employee, out of a total staff of 750, was treated for minor head injuries at the scene and allowed to go home.

 

Processing has been diverted to other MWD dairies along with temporary packing agreements with our other processors whilst the task of bringing the dairy back into use commences. Given the scale of the damage it could be some time before normal service resumes.

 

Ronald Kerrs commented “We are delighted with the support we have received from our customers and colleagues throughout the company and with the assistance we are receiving from other dairy companies in Britain.”

 

IDB set for major British cheese deal  (18th October 2013)

This is this week’s news headline in the Irish Farmers Journal (19.10.13) where the magazine has run a story suggesting a strategic partnership between First Milk and the Irish Dairy Board, which would boost packaging at the IDB’s (Adams) Leek cheese packing plant as well as “boost their negotiating strength with retailers.”

 

First Milk have spoken to Ian this afternoon stating they have no such announcement to make at this stage.

 

MILK WATCH  (18th October 2013)

2 x litres of Tomlinsons milk being sold for 89p in Stan’s Shop, St Martins, Shropshire

 

 

0.144ppl price cut for DCD/DC formula price contracted producers – from 1st November (14th October 2013)

The reduction has been triggered by a £14/tonne reduction in the September feed costs and would have been higher had it not been for the partial offset by a further £20/tonne increase in DairyCo’s September cream value.

 

The change will take the www.milkprices.com standard litre price to 31.938ppl compared to the November standard non-aligned DCD price at 32.39ppl.

 

UK milk production up 6.5% (64.7m litres) in September (14th October 2013)

Milk production continues to head north compared to a year ago and has now nudged ahead of that achieved in the first six months of the last quota year by 0.38% (+26 million litres).

 

The Arla Delmonte men say yes to AFMP as full members (14th October 2013)

On Wednesday afternoon in Denmark the Arla Foods Board of Farmer Representatives voted yes to the motion that UK AFMP farmers join them as joint owners of Arla Foods AMBA from 1st January 2014.

 

The same board also approved the proposal that Arla Milk Link members receive the 13th payment from 2014, which is 2 years ahead of the original agreement and is estimated to be worth in the region of 1.5ppl each year.

 

Now the real work starts with a little over a month to ensure all AFMP members make their choice between joining as full co—op members or to be direct suppliers.  It’s a huge job and the problem is some current AFMP members may not realise if they don’t make their choice by the 15th November it will be made for them and they will not become owners and will automatically be put on direct supply contracts from 1st January 2014.

 

First Milk’s annual results are not as all involved would have wished for (14th October 2013)

First Milk have released their annual results to year end 31st March 2013 and are certainly no better than anyone realistically expected and compare with the weak performance of several other processors.  Ian has examined First Milk’s accounts in detail with the help of an accountant and to be fair all of his challenging questions have been answered with only one exception, which was a case of Ian pushing his luck too far.

 

Below are some key points.  We don’t intend to over estimate First Milk’s faults or to under estimate its virtues so whilst almost all of our questions have been answered there is little point in us reporting in detail on the answers when other milk processors accounts have not received similar attention.  To be fair the accounts are fairly comprehensive, transparent and up front.

 

Key Points

Pre-tax loss of £7.8m (after all costs).

 

Turnover surprisingly down £40m to £530m.

 

Exceptional charges during the year £7m, which includes:

 

(a)  An accelerated £4.5m write down on the goodwill paid when Kingdom Foods (Glenfield) was acquired.

 

(b)  £1.1m net loss from the metal contaminated cheese are Haverfordwest.

 

(c)  £900,000 charge from restructuring and redundancies

 

(d)  £500,000 legal and professional fees

 

Bank borrowings increased by £26.3 million (+56%) to £73.6 million but not close to the full available facility

 

Pension contributions from First Milk to both the Scottish and MMB pension funds amounted to £1.35million.  Going forward pension contributions have been agreed at less than £2m each year for the next 3 financial years, which, whilst an unwelcome deduction, is less than 10% of what Dairy Crest have to contribute to their pension scheme.

 

The sweet to follow the bitter – First Milk’s half year interim results (14th October 2013)

At the same time as it released its full year’s financials First Milk issued a half years results to the end of September 2013, which show a £1.1m pre-tax profit.

 

In addition turnover is up £41m to £280m compared to £239m in 2012.

 

So 2012/13 was a challenging year for First Milk but following its half year results (see below) they appear to be trading profitably.  Kate Allum has stated that the interim results are strong and that “we are confident we can pay a competitive milk price and returns an investment going forward.”  No doubt First Milk will continue to change and will have to dump non-profitable business and continue to cut costs where possible. 

 

 

1.5ppl milk price increase for United Dairy Farmers members – for August milk deliveries (4th October 2013)

This takes their www.milkprices.com standard litre price for August to 34.42ppl.

 

1.5ppl milk price increase for AFMP non aligned – from 1st November (4th October 2013)

This is the  highest 1st November increase to date and takes their www.milkprices.com standard litre price to 33.13ppl.

 

1ppl milk price increase for Arla direct suppliers – from 1st November (4th October 2013)

This puts the direct suppliers 0.86ppl behind AFMP non aligned members with a standard litre price of 32.27ppl.

 

1.02ppl milk price rise for Tesco (TSDG) suppliers – from 1st November (4th October 2013)

The 1.02ppl is made up of 0.54ppl cost tracker increases (mainly feed) plus 0.48ppl due to lower volumes of milk from farmers.  It takes the standard litre to 33.79ppl for those who do the Promar costings and 33.29ppl for those who don’t.

 

1ppl milk price increase for Grahams Dairies suppliers – from 1st November (4th October 2013)

This takes their www.milkprices.com standard litre price to 32.5ppl.

 

0.5ppl milk price increase for members of South Caernarfon Creameries Limited – from 1st November (4th October 2013)

 

Auction prices up in 101st auction (4th October 2013)

This week’s 101st Global Dairy Trade Auction saw the index of prices rise by 2.4% compared to two weeks ago.

 

Cheddar was up         2.3%    to average       $4389/tonne

SMP was up                3.9%    to average       $4491/tonne

WMP was up              2.3%    to average       $5208/tonne

 

70 plus First Milk Tesco suppliers given 12 months notice (4th October 2013)

First Milk have given 12 months notice to around 70 of its Welsh members who supply Tesco with liquid milk.  From October 1st 2014 First Milk Welsh farmers will no longer be supplying Tesco with milk following the 12 months notice served by Muller Wiseman a month ago in early September.

 

If any of the farmers wish to continue to supply Tesco beyond September 2014 they will have to change milk buyers to either Arla or Muller Wiseman.  First Milk have made it clear in their letter that the notice in no way affects their membership of First Milk, however, the co-op then goes onto state “we would hope at some point in the future to be able to withdraw this notice.”

 

From Ian’s research he believes it is highly unlikely MW will reverse this decision because it is consistent with their earlier declaration to source 90% plus of their milk requirements direct and to remove reliance on third party suppliers.

 

Who had the cream in 2012? (4th October 2013)

The news that Wisemans 11 months trading to 31st December 2012 clocked up an eye-watering £7.12m pre-tax loss lays to rest any notion that they squirreled away money which could have been paid to its farmers in 2012.  In previous accounting years Wiseman reported profits of up to £50 million.

 

All processors seem to be cutting cost with restructuring and redundancies and Wisemans made several cuts in 2012 and still lost money.  The interesting question would be where the bulk of the money was lost.  One theory is most was lost in the middle ground and discounter areas…

 

In addition NOM dairy, now owned by Muller Wiseman, have declared that 2012 was another disaster having lost 10.68m to add to the 11.73 million it lost in 2011.  That’s another loss making dairy to join the likes of Amelca, Westbury and DFOB.

 

Next week should see First Milk’s financial results to March 2013 and hopefully Milk Link’s final trading results.  Both are likely to contain several interesting nuggets.

 

Neil Kennedy receives the 2013 Dairy Industry Award (4th October 2013)

The 400 strong dinner guests at Tuesday evenings pre-South West Dairy Show dinner and award presentation clearly agreed with the decision to present Neil Kennedy with this year’s award for his outstanding contribution towards the development of the British dairy industry. There may have been other nominations but Neil was the only really serious contender for the award.

 

Farmers Weekly Awards Night (4th October 2013)

It was a celebration of all that is great in farming at London’s Grosvenor House Hotel last night where TV news girl Kate Silverton hosted the evening.

 

The Dairy Farmer of the Year Award went to Hugh McClymont from Crichton Royal Farm, Dumfries, Scotland.

 

The Farmers Weekly 2013 Lifetime Achievement Award went to the hugely popular Lord Henry Plumb.

 

2013 SFP exchange rate will be 0.83605 (4th October 2013)

This represents a 4.76% uplift on the 0.79805 in 2012, however, note the Commission have put forward a 4% financial penalty reduction on all direct payments over €2,000 (£1,700) which will effectively wipe out the improvement.

 

Correction to Dairy Crest price increase story(30th September 2013)

Apologies for the fact we mixed up our numbers in Fridays bulletin notes relating to Dairy Crests 1st  November 1ppl milk price increase.

The confusion arose due to the fact we quote the www.milkprices.com  standard litre which is independent and recognised by all of the industry where as Dc quote their own standard which looks more attractive.

We have corrected the details in the story below however to clarify these are the numbers:

                                                              www.milkprices.com standard litre                     DC ‘S own standard litre

Liquid                                                              32.39ppl                                                                     32.50

Cheese                                                            33.14                                                                         33.25

Organic                                                            40.69           

 

 

1ppl milk price rise for suppliers to Payne’s Dairies Yorkshire - from 1st November (27th September 2013)

This takes farmers www.milkprices.com standard litre price to 32.45ppl

 

1ppl milk price increase for Dairy Crest suppliers – from 1st November (27th September 2013)

The 1ppl increase will be paid to all Dairy Crest suppliers including liquid, cheese and organic.

 

This increase will result in the following www.milkprices.com standard litre prices:

Liquid                           32.39ppl

Cheese                       33.14ppl

Organic                       40.69ppl

 

The Dairy Crest press release which featured the price increase was curious in the fact it made mention of Dairy Crest’s milk price formula and also attempted to inflate the headline standard litre prices claiming 33.25ppl for cheese and 32.50ppl for liquid on what is presumably a DC calculation and not an industry recognised independent calculation.  On the formula pricing it is not clear where DC have made a link between the formula price and this increase unless they are suggesting that the formula price is the basis for setting non-formula prices.

 

Record prices bring a smile to dairy farmers – says the Telegraph (27th September 2013)

 

Click on http://www.telegraph.co.uk/finance/newsbysector/industry/10297326/Record-prices-bring-a-smile-to-dairy-farmers.html to see an article in this week’s Telegraph in which Mark Allen, CEO Dairy Crest, is quoted.  Some dairy farmers may be smiling but most are trying to get 2+2 to = 4.

 

CAP Reform deal is finally concluded  (27th September 2013)

This week on the 24th September a compromise deal was reached between the European Council of Ministers, the European Parliament and the Commission meaning the next step is effectively to get on and produce the implementing legislation.  Within the compromise the following were agreed.

 

(a)  Capping and Degressivity

Compulsory degressivity and voluntary capping.  The direct support, excluding greening payments, will be reduced by a minimum of 5% for claims above 150,000 Euros.

 

(b)  Pillar 1 to Pillar 2

The facility for member states to transfer up to 15% of their direct payments (Pillar 1) to their Rural Development envelope.

 

Sir Jim Paice – Keep the faith – Please don’t go  (27th September 2013)

It’s a month until Sir Jim Paice will be confirmed as the new Chairman of First Milk but already he has gone to press with some interesting comments in an interview with the Western Telegraph.

 

He has outlined his vision for the future of First Milk and urged farmers to keep faith with the co-op and “think twice before jumping ship”.  In addition Sir Jim went on to state members “get a stake in the future and a share of the balance sheet and as that balance sheet hopefully increases they’ve got a capital asset that’s worth having.” Details of that balance sheet and the co-ops current trading performance are expected within the next 10 days.

 

Clearly his comments are aimed at anyone who is thinking of moving milk buyer and Sir Jim is certainly warming up his seat in preparation for his succession in late October.

 

In order to help First Milk prepare for his inaugural conference, therefore, Ian has put together a list of some suitable music to play during coffee and lunch. Other suggestions are welcome. 

 

The selection so far is:

 

Please Don’t Go – KWS

Don’t Leave Me This Way – The Communards (perhaps Sir Jim could impersonate Jimmy Somerville)

Can’t live, if living is without you – Bad Finger

I’ll do anything for love (but I won’t do that) – Meat Loaf

Think Twice – Celine Dion

 

We look forward to your contributions and promise to print some of the (non libellous) ones!

 

Milk Price Watch  (27th September 2013)

Co-op stores 3 x 4 pints for only £3 (44ppl)

 

0.74ppl milk price increase for Arla Amba (Milk Link) members – from 30th September (24th September 2013)

This is a net 0.74ppl, which is actually 0.85ppl rise in the on account price less 0.11ppl due to currency adjustment for the October to December period.

 

This takes members standard litre price to 33.05ppl.

 

1ppl milk price increase for direct suppliers to Glanbia Cheese – from 1st October (24th September 2013)

This takes Glanbia’s www.milkprices.com standard litre price to 32.28ppl.

 

1ppl milk price increase for First Milk members – from 1st November (23rd September 2013)

This will go to all members whether they supply on a liquid or cheese contract.  It takes their www.milkprices.com standard litre price to 32ppl (cheese/manufacturing) and 31.85ppl (liquid).

 

1ppl milk price increase for direct suppliers to Meadow Foods – from 1st November  (23rd September 2013)

This takes their www.milkprices.com standard litre price to 32.25ppl.  Recently Meadow received the prestigious award for “The Overall Dairy Company of the Year” at the Farm Business Cream Awards.  So its official the Meadow management team have had the cream!

 

1ppl milk price increase for non aligned Muller Wiseman Dairies (MWD) suppliers- from October 21st  (23rd September 2013)

This will take producers www.milkprices.com standard litre price to 32.5ppl.

 

In the MWD press release they stress the fact that the majority of dairy farmers will receive the additional 1ppl production incentive on top of this price which is effectively a 13th payment. In addition the firm are keen to point out that their price is “a clean price”  not  “eroded by charges for co-operative membership, balancing, haulage or capital levies”.

 

Dairy Crest performance is on track  (23rd September 2013)

This morning Dairy Crest has issued a first six months pre-close trading update stating its profit expectations for the period are on track.  Its half year results are due to be published on 7th November.

 

This week will be another big dairy industry news week (23rd September 2013)

On the radar are the following news items:

 

(a)  Arla Amba (Milk Link) price for October will be announced (scheduled for Tuesday)

(b)  AFMP member milk price increase is expected to be announced (scheduled for Wednesday)

(c)  Dairy Crest and Dairy Crest Direct milk price increases are expected to be announced and will have to try to keep up with MW and Arla (Amba/Milk Link & AFMP)_and all their numerous extra payments and incentives.

(d)  Tesco’s 1st November milk price increase will be announced

 

1.2ppl milk price increase for Belton Cheese suppliers – from 1st October (20th September 2013)

This takes Belton’s conventional standard litre price to 32.25ppl

 

1ppl milk price increase for suppliers to Woodcocks ( Yew Tree Dairy ) Lancashire - from 20th October (20th September 2013)

This takes the firms www.milkprices.com standard litre price to 32.75ppl.

 

1ppl milk price increase for non aligned Muller Wiseman Dairies (MWD) suppliers- from October 21st  (20th September 2013)

This will take producers www.milkprices.com standard litre price to 32.5ppl.

 

In the MWD press release they stress the fact that the majority of dairy farmers will receive the additional 1ppl production incentive on top of this price which is effectively a 13th payment. In addition the firm are keen to point out that their price is “a clean price”  not  “eroded by charges for co-operative membership, balancing, haulage or capital levies”.

 

There was a surprise twist to the end of the press release in the form of public criticism of FFA and its recent activities Roddy Catto, Chairman of the Müller Wiseman Milk Group which represents dairy farmers said:

“The Müller Wiseman Milk Group board continues to work hard in the interests of dairy farmers who supply the company to ensure that the standard non-aligned milk price and incentives offered are amongst the best available in the UK.

 

“Whilst protests organised by the Dairy Coalition were more understandable in 2012, blockades in Shropshire in the past week were counterproductive. We stressed to FFA organisers that we were at an advanced stage in our discussions with the company and made it clear that threatening serious disruption was against our advice, and more importantly, potentially damaging to our farmers interests.

 

“This was ignored and as a result, progress was halted and valuable time was wasted because the company’s focus was taken away from discussions and onto issues like farm collections and deliveries to customers. It makes no sense whatsoever to undermine the work of the MWMG farmer board in this way.”

 

Ian has spoken to both MWD and Roddy Catto to establish why this antagonistic tail was added to what was a very positive press statement and whether it was necessary. Roddy confirmed that his quotes were made with the full support of all of his board following what he described as FFA neglecting his request last Thursday for them not to protest.

 

MWD appear to be sitting almost on the outside of the fence in what has suddenly erupted into a public spat between FFA and the MWMG Board and to be more specific between Roddy Catto, David Handley and Paul Rowbotham all of whom spoke last week.

 

Aldi Milk Promotion (20th September 2013)

Reports suggest Aldi have 2 litres for 75p in Sussex and 2 litres for 79p in Scotland.  Incredible, but they do state “we buy the best for less”.

 

1.3ppl milk price increase for Wyke Farm suppliers – from 1st October (13th September 2013)

This takes the Somerset cheese makers www.milkprices.com standard litre price to a league topping milk for cheese price of 32.55ppl

 

0.153ppl milk price increase for DCD formula contracted suppliers – from 1st October (13th September 2013)

This takes their www.milkprices.com standard litre price to 32.082ppl, which represents a 0.692ppl premium over and above the current October DC liquid contract price of 31.39ppl.

 

The increase reflects the continuing strength of the price of cream, as well as an increase in the retail price of 4 pints.

 

1.97ppl milk price increase for Sainsburys – from 1st October (13th September 2013)

This takes their standard litre price to 34.15ppl.  The quarterly review of the Sainsburys cost tracker has produced a rise in feed costs of 0.94ppl, fertiliser +0.06ppl and fuel down -0.13ppl.

 

Tesco v Sainsburys milk price – Why the big difference? (13th September 2013)

So Sainsburys have announced that their producer milk price for the 3 months of October, November and December will rise to 34.15ppl.  The calculation is based on a cost tracker formula, which is reviewed quarterly by John Allen and Kite Consulting, which is retrospective so it’s based on what’s already happened to costs in recent months.

 

Now compare this to Tesco’s price, which is calculated by Derek Gardner of Promar Consulting based on a formula, which looks forward and predicts price movements and will to the 1st November 2013 pay 32.27ppl!

 

So both figures are based on essentially the same period.  Why then is there almost a 2ppl difference between the two formulas? 

 

Note the Sainsburys calculation also has the farmers SFP payments deducted from it to arrive at the 34.15ppl.  Also note, Tesco have yet to announce their TSDG producer price from 1st November, however, this is irrelevant to the point Ian makes and the question.

 

Constructive answers by email please.

 

Aldi heading for trouble with UK dairy farmers (13th September 2013)

Aldi appear to have decided that they are operating within EU competition rules having taken the jaw dropping step to exclude milk from Northern Ireland from its 100 plus Southern Irish stores.

 

In a statement Aldi have said “Following a recent detailed examination of our milk supply chain it was discovered there was a possibility that a portion of Northern Ireland milk may have found its way into the Aldi supply.  This possibility is unacceptable.”

 

The result is that Aldi has immediately suspended one of its liquid milk suppliers, Strathroy.

 

Aldi went on to state:  “Aldi has a very strong commitment to its Republic of Ireland milk farmers.  In recognition of the difficulties experienced by farmers earlier in the summer due to the poor weather conditions.  Aldi paid its milk farmers an additional 7% per litre on the price of its milk.  We took this action mid-way through the annual tender process to support the farmers and help protect their livelihoods.”

 

In another instance a UK cheese manufacturer has been barred from submitting a tender to supply cheese to Southern Ireland.

 

Meanwhile, we sit back and allow Irish cheese to flood into our market at retail, catering and government procurement levels much of it coming via the IDB/Adams Foods down the road in Leek.

 

We should get our representative organisations to tackle Aldi over its UK Store Dairy Sourcing Policy and if Southern Ireland can exclude our dairy products we should follow their lead instead of continually rolling over and hiding behind competition issues.

 

August milk up 5% (13th September 2013)

RPA provisional production figures show August production up 52.1 million litres (+4.9% compared to August 2012) to give the months production of 1.115 billion litres.

 

Cumulative production for the first 5 months of the quota year stands at 5.78 billion, a reduction of 39.5m (-0.68%) to that recorded in 2012.

 

First Milk increase interest payments to members (13th September 2013)

The rate paid increases to 5% having previously been at 3% based on what First Milk state has been strong performance over the first 6 months of their financial year.  The 5% is worth around £1500 to a 1 million litre member or 0.15ppl.

 

The total paid out to members in 2013 amounts to 8% or 0.24ppl.

 

1.3ppl milk price increase for suppliers to Barbers Farmhouse Cheese – from 1st October (6th September 2013)

This takes their standard litre price to 32.6ppl

 

0.29ppl milk price increase for suppliers to The Fresh Milk Company (Lactalis)  – from 1st October (6th September 2013)

This takes their www.milkprices.com standard litre price to 32.08ppl for members of their milk supply association.

 

2.28ppl milk price increase for Muller Wiseman (MW) – from 1st October (6th September 2013)

For the farmers who signe