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Note all standard litre prices quoted are before seasonality, balancing charges, capital retentions or production incentive payments/bonus.
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0.452ppl milk price increase for Muller formula contracted producers – August (15th July 2016)
This increase is almost entirely down to the extraordinary improvement in cream prices during June, which has resulted in a 0.453ppl uplift in the formula price for August.
In fact, the cream price for June (which drives the August price) has, according to AHDB, increased by £240/tonne, which is the biggest monthly increase for almost seven years.
The increase results in the following standard litre prices:
Liquid core formula 25.02ppl
Simplified contract 24.83ppl
The difference between the formula priced litres and the standard contracted litre is now 6.713ppl.
3ppl extra for Muller non-aligned suppliers (15th July 2016)
Non-aligned farmers supplying both Muller Group and Muller Direct will receive a June retail supplementary payment of 3.047ppl in addition to their published standard litre milk price.
0.5ppl milk price reduction for suppliers to Pattemores, Somerset - from July 1st (PRODUCER NOTIFIED) (15th July 2016)
Thank you to the readers who emailed Ian last week to inform him of this price cut, which was one of only two recorded for the 1st July. Several producers have commented that pressure has been applied to Pattemores to follow the lead of others and to rescind this cut. The fact Pattemores haven’t rescinded has understandably alarmed some of those producers.
UK deliveries crash (15th July 2016)
According to AHDB UK milk deliveries are crashing and are now down 10% on the weekly statistics, equivalent to a 4 million litres a day drop on the amount produced last year.
Arla brand to pay more money to farmers (15th July 2016)
Following the extremely successful launch, 11 months ago, by Morrisons of its Milk for Farmers brand comes the Arla Farmers Milk brand, which has been initially rolled out in 500 ASDA stores this week. In those ASDA stores consumers have the choice between standard ASDA discounted milk at 95p for 4 pints or to pay an extra 25p for the new brand. Note, the Morrison’s success is such that volumes sold are almost 8 times the amount budgeted.
As well as coming on the back of the Morrisons success its launch will have been spurred on following Arla’s recent research, which confirmed that 63% of consumers care about dairy farmers and are willing to pay more for dairy products if they know the extra money actually goes back to dairy framers.
So all eyes are waiting for the tweets and interviews from the small vocal family of grim reapers who quickly came out when the Morrisons brand was launched, all of whom either supplied another retailer or were a tiny processor with an Arla axe to grind. From Arla’s point of view these people were described as being like mosquitos biting an elephant’s backside.
Floating 40 cow dairy farm to open in January (15th July 2016)
Yes the world’s first floating dairy farm is to be built by Dutch developers in Rotterdam with 40 cows at a cost of $4million (£3 million). The milk will be processed on the floating deck into yoghurt and the project is fully integrated with, for example, the cow’s urine treated and utilised to grow red clover, alfalfa and grass under artificial light. Due to open in January next year, the main question is whether cows get sea sick?
RABDF – Houston we have a problem (15th July 2016)
Following on from last week’s reports of a disappointing NEC Livestock Event comes information from RABDF members that its finances are rapidly sliding down hill.
In 2014 RABDF had balance sheet reserves of over £1 million and by the end of 2015 this had slipped to £763,000. The main blow is down to declining income from its events with the provisional 2015 accounts showing an eye watering £238,000 loss. However, that was with ticket sales amounting to £963,000 compared to this year when entry to the event was free.
It appears almost inevitable that the organisation will lose money again in 2016 and that the £763,000 in reserve will be further eroded, which has led to one hack questioning whether the situation could spell the end of the organisation, which now has less than 750 paid up members. It’s certainly looking like a 999 situation, which has been allowed to continue too long and needs arresting. Given the numbers and facts we doubt even the First Milk magician, Mike Gallacher, could pull a rabbit out of the hat if he were to be parachuted in not withstanding the fact he has plenty to keep him occupied at First Milk.
For 2015 RABDF budgeted to make a loss of £170,000 but the actual deficit was £265,000 and this loss came on top of a 2014 loss of £156,000. Houston we have a problem and we are almost stranded.
2ppl milk price increase for suppliers to The Fresh Milk Company (AKA Lactalis) (8th July 2016)
This is another two stage price increase of 1ppl from August 1st and 1ppl from September 1st.
Previously FMC had declared a 3 month price holding guarantee, which, like others, it has decided to bin by announcing a price increase, which comes in addition to the previous 0.5ppl July payment.
The 2ppl results in a standard manufacturing litre of 19.13ppl on September 1st under their company profile contract and 19.70ppl under their seasonality schedule. Both are manufacturing standard litre values calculated by www.milkprices.com
0.5ppl milk price reduction for suppliers to The Wensleydale Creamery - from 1st July (8th July 2016)
This price decrease is certainly against the flow and is one of the few, if not the only, GB cheese processor farm gate milk price decrease to be implemented without any indication of an upturn or freeze on farm gate prices.
Spot price at 28ppl plus! (8th July 2016)
Spot milk prices are only an indication of supply and demand on a daily basis and come with a wealth warning.
However, www.milkprices.com have recorded daily spot prices during June and the average months spot price they calculate as 22.5ppl having started in early June at 17/18ppl and ended at 25/26ppl.
During the first week of July spot prices have traded at 28ppl and possibly more.
Livestock Event 2016 “was like a sick dog on life support needing to be put out of its misery” (8th July 2016)
Ian only attended the first day of the Event, which was poorly attended and the dairy exhibitors he spoke to were extremely disappointed at the number of farmers attending and the enquiries. Apart from the farmers the number of company absentees was staggering. Take the feed sector alone. No For Farmers. No Carrs Billington. No NWF. No Devenish. No Mole Valley. And why? Because having a show in July is just a crap month!
There is no way RABDF can run a successful one-day event in 2017 in direct competition to UK Dairy Day. The exhibitors Ian spoke to all claimed that if there was no agreement on merging the event they would only either attend the UK Dairy Day in 2017 or alternatively would boycott both events. There is talk of the two events amalgamating but the truth is if RABDF had consulted and listened to exhibitors and not moved to July in the first place we wouldn’t have two events. The disastrous date change and loss of direction by moving the name away from Dairy to “Livestock” left the door wide open to UK Dairy Day and Holstein exploited it very well indeed.
But as personalities battle for positions, it’s quickly heading for a knock-out in which Holstein UK are favourites to win. But it shouldn’t come to that. If the UK can negotiate an exit from Europe then two dairy organisations should be able to negotiate over trade shows. They will both be laughing stocks if they can’t.
It’s a miracle heads haven’t already rolled over the rapid demise of the RABDF’s flagship cash cow event, the profits of which are used to fund the whole organisation.
One dairy farmer emailed Ian to simply state “The Livestock Event was rubbish”, another described this year’s two-day event as “resembling a sick dog that needed taking to the vets and putting out of its misery”.
Michael King (RABDF chairman), Peter Alvis (vice), Lord Curry (president) and others within the RABDF’s council are desperately trying to shake things up and turn the ship around but it’s now much tougher than it was earlier this week.
Sean (Marmite) Rickard to chair First Milk’s Member Council (8th July 2016)
Sean Rickard is well known to farmers and is best described, like Ian, as Marmite. Some love him whilst others hate him, however, both groups tend to listen to what he has to say and talk about it.
Sean is to immediately take the Chairmanship of First Milk’s Member Council who will oversee the co-op’s strategy and represent its farmer members/owners.
Sean is sure to ruffle some feathers with his rather blunt straight talking style , which occasionally gets very serious when he wags and points his finger at you saying “let me tell you my friend”. He won’t be every farmer’s cup of tea but he will call it how it is no matter how unpalatable or unpopular.
Note, at last Friday’s SGM First Milk members approved the conversion of all Capital Account Balances, B Shares and Debentures into C Shares.
Russian dairy import ban extended to 2018 (8th July 2016)
Since August 2014 European dairy product has been banned from entering Russia and that ban is now extended until at least 31st December 2017. Further proof that the EU might have permanently lost that customer.
1.25ppl milk price increase for suppliers to South Caernarfon Creameries (SCC) (1st July 2016)
This is split into two increases:
1st July 0.5ppl
1st August 0.75ppl
In addition, SCC’s new cheese production facility will be officially opened next Tuesday (5th) by The Prince of Wales and Duchess of Cornwall.
Dairy Crest rescinds 1ppl July 1st milk price cut (1st July 2016)
Dairy Crest has done right by its Davidstow producers and rescinded the previously announced 1ppl milk price cut, which will mean for July producers manufacturing standard litre will remain at 21.72ppl (www.milkprices.com)
0.65ppl First Milk member milk price increases – from 1st July (1st July 2016)
From 1st July First Milk’s A litre milk price will increase by 0.5ppl whilst the B price will increase by 2ppl. The combination results in a nett 0.65ppl member price increase from 1st July.
350,000 tonnes is the new intervention SMP ceiling (1st July 2016)
From June 30th the SMP intervention ceiling has been raised from 218,000 tonnes to 350,000 tonnes at a fixed price of €1698 tonne (approximately £1,400 tonne). This ceiling is unlikely to be reached this year given the current direction of travel of markets.
Total tonnage in store has reached almost 300,000 tonnes of which 218,000 are at the fixed price and 80,000 tonnes via tender.
In the space of weeks SMP intervention storage has gone from 109,000 tonnes to 350,000 tonnes and the 300,000 tonnes of product in store will have to come out and be sold, which will hamper any recovery. It’s a huge tonnage and a big black cloud.
Now dairy prices really have turned the corner (1st July 2016)
AHDB Dairy this week has a headline titled “Wholesale prices move off the floor.” This surely officially confirms what others have been stating for the past 2 to 3 months, that prices have bottomed and are on the up.
6,500 cows in the world’s biggest robotic milking farm (1st July 2016)
A farm in Chile will install 64 robots and become the biggest robotic milking farm in the world.
RABDF does a U-turn abandoning its Livestock Event in 2017 (1st July 2016)
In 2012 the RABDF broadened the scope of the two day Dairy Event and once again re-named it to be The Livestock Event.
In 2013, they switched the event from September to July, a move which was heavily criticised by a number of exhibitors who felt they should have had prior input and consultation.
At the time of the 2013 move, eyebrows were raised at the press releases from RABDF with claims that the date change had been “a huge success” and that the main trade halls buzzed. Last year one industry leader commented to Ian he had seen more customers at his local car boot sale than were present on day two and that most of the people wandering around were, in fact, bored trade stand and cattle exhibitors.
Well, next week’s two day event will be the last Livestock Event and in 2017 the RABDF will revert to a one day event called “The National Dairy Event” on 6th September 2017 at the NEC.
Clearly with the now firmly established Holstein UK’s Dairy Day Show there simply isn’t room for two specialist dairy events in England let alone two within only 7 days of each other. With the announcement that next year’s RABDF one day show will not include any cattle showing it’s a near certainty which of the two will be the first choice of dairy farmers.
The two organisations are already in negotiations with a view to holding one joint event each year. If those negotiations fail, one of the events is likely to be axed by 2018 at the latest.
Given the RABDF Event has had so many name changes in the past decade or so, we reckon it’s at least five; we are tempted to run a competition for the name of the 2018 event.
28ppl farmgate milk price from wwwfreerangemilk.net from September (1st July 2016)
In an update from The FreeRange Milk Marketing Board (FRMMB) founder Nick Hiscox is “still set on 28ppl for September for those producers set up to supply our milk”.
Those interested should form an orderly que girls on the right, boys on the left but don’t hold hands! For more information email firstname.lastname@example.org or mobile 07931 581381.
Tesco (TSDG) Cost of Tracker is almost unchanged (1st July 2016)
The second quarterly TSDG Cost Tracker review has confirmed that a small nett 0.02ppl increase in the COP taking the current 28.69ppl to 28.71ppl from August 1st.
In addition Tesco has unveiled a new Fresh Milk Fair for Farmers Guarantee on all of its fresh milk which is 100% British sourced from 600 farms.
Tesco claim that since it started its TSDG relationship with farmers it has paid a whacking £240 million above the market price. Note the market price is taken as the AHDB average published price.
From Monday next 4th July the switch of around 200 million milk litres of liquid from Arla to Muller together with Tesco farmers will take place.
CAR WANTED BY IAN (1st July 2016)
Small to Medium Automatic car required to be used as a run around vehicle, low mileage preferred – please email email@example.com
2.5ppl milk price increase for Dairy Partners (Newcastle Emlyn) suppliers (PRODUCER NOTIFIED) (24th June 2016)
The announcement comes in two stages:
1.5ppl on July 1st
1.0ppl on August 1st
2ppl milk price increase for Wyke Farms – from 1st August (24th June 2016)
This takes producers manufacturing standard litre price to 21ppl www.milkprices.com
1.5ppl milk price increase for suppliers to Glanbia Cheese – from 1st August (24th June 2016)
This takes producers manufacturing standard litre price to (18.54ppl) www.milkprices.com
1ppl milk price reduction for suppliers to Booths supermarkets – from 1st August (24th June 2016)
This takes producers standard liquid litre price to 31ppl www.milkprices.com
0.9ppl milk price increase for Arla Directs – from July 1st (24th June 2016)
This takes producers standard liquid litre to 16ppl. Arla members price for July will be stand on.
0.68ppl milk price reduction for Sainsburys suppliers (24th June 2016)
The reduction will apply for the 3 month period 1st July to 30th September and is down to reductions in feed, fuel and fertiliser prices as published by AHDB.
The following Sainsbury www.milkprices.com standard litre prices will be:
29.3ppl for Muller
29.18ppl for Arla
29.24ppl for Direct Milk (Ex-Dairy Crest Direct now Muller)
Meadow Foods 2ppl increase (24th June 2016)
Last week’s newsflash that Meadow Foods had announced a 2ppl producer milk price increase in two stages triggered a flurry of interesting emails to Ian.
The bulk of them came from suppliers to Meadow Foods who were keen for Ian to highlight that the 2ppl increase only applies to the A deliveries, which amounts to 80% of deliveries. A number of suppliers were keen to highlight the fact Meadows B price during April and May, has been under 12ppl. However, the B price is expected to up around 2ppl to over 13ppl for June and rising.
In addition a couple of readers questioned Ian’s claim
last week that Meadow announced a 5ppl increase in 2007. Having checked our records and compared them
.com the Meadow price was increased by +8.79ppl over a seven month period
split as follows:
May’07 +1.0ppl, Aug ’07 +1.8ppl, Oct’07 +4.99ppl and Nov’07 +1.0ppl = Total +8.79ppl in the 7 month
Paynes Dairies axe B litres – Is that fair? (24th June 2016)
Producers supplying Paynes Dairies have been informed that their B litres will be abolished and become 100% A litres with immediate effect from 20th June. Some producers have rightly questioned whether this is how A&B milk pricing is designed to operate. The reality is what should happen is the B price should lead the A price up and on occasions overtake it.
Charlie Payne is coming in for some criticism with this latest surprise move having recently paid only 9ppl for B litres and as soon as the spot price is rallying (today 20ppl) he intends to buy all milk at a standard litre (A) price as well as require production profiles from producers.
As stated in this week’s AHDB Dairy Market Commentary “B prices should be the first to move upwards – assuming they work as they were intended to.” Now it seems the ending to that sentence should be … “work as they were intended unless the milk processor suddenly scraps alphabet milk pricing.”
Arla and Muller make the top 20 league (24th June 2016)
The 2015 ICFN league table of the top 20 milk processors by volume puts Arla at no. 4 (no. 5 in 2014) with 14.2m tonnes and Muller no. 14 (no. 17 in 2014) with 6.3m tonnes.
The top 20 processors account for 25% of the worlds milk processing.
Belton Cheese is officially recognised as one of Britain’s fastest growing international sales businesses (24th June 2016)
The latest Sunday Times HSBC international league table of 200 businesses has seen Shropshire based Belton Cheese ranked 135th as a mid market private company with fast growing international sales.
Belton produce 8,000 tonnes of handmade cheese a year from milk sourced from 85 local farmers of which 15% is now exported to the USA, EU, Canada, South Africa, Australia, China and Japan and growing at a pace.
Sorn Milk producers call it a day (24th June 2016)
David Shaw’s Sorn Milk business in Ayrshire will make its final collections from its 49 supplying farmers next Thursday, June 30th after which its doors close.
Recently the business has failed to pay its farmers anything more than what is almost certainly the lowest milk price and the final straw was a nett milk price paid to producers of 10ppl when the milk was delivered into Yew Tree’s new drier in Lancashire at 14ppl. It is claimed that 48, if not all 49, Sorn producers tendered their resignation because they simply couldn’t take any more pain.
The loyal producers, some of whom have been with Sorn for almost 22 years since it started, wanted owner David Shaw to share the pain and take a haircut on his margin but it didn’t happen.
Ironically, many of those Sorn producers from July 1st will be supplying Yew Tree direct achieving 16ppl and trending upwards whilst some have joined First Milk.
One of the major problems Sorn encountered was when their relationship with Arla irretrievably broke down. Had that situation been handled differently, particularly in terms of a Sorn margin haircut the closing of the doors next Wednesday would likely not have happened.
Sorn farmers have been quick to alert Ian to the fact that David Shaw has stated that he is not selling his milk tankers and that they are bought and paid for. That’s led at least one Sorn producer to discuss the matter with his lawyer because he claims that earlier in the year a 2ppl milk price deduction for 3 months was taken by Sorn to finance the purchase of a new lorry.
Let’s all hope it all ends amicably, peacefully and financially fairly for all involved in the shut down.
!!!!!!!!!MILK PRICE NEWS FLASH!!!!!!!
2ppl milk price increase from Meadow Foods breaks the log jam early (17th June 2016)
Last week in this bulletin Ian made it abundantly clear that the UK milk market is on the move and even suggested the possibility that the odd milk purchaser might announce an August producer milk price increase.
Well, once again, Meadow Foods have come up trumps by today announcing a 2ppl producer price increase split over two months, with 1ppl from 1st July and the same from 1st August.
This is a very important signal to other milk purchasers to step forward and pay farmers a fair share of what they are entitled to, especially those involved in the liquid and spot market.
Back in 2007 Meadow shook the industry when they announced a whopping 5ppl price increase. They had correctly read the market signals then and only a fool would suggest that the bean counters in Meadow have got it wrong this time.
Some milk purchasers will be desperate to re-build their own balance sheets and would love to be able to delay producer milk price increases by a month or more. Well, Meadow has once again broke rank and announced that they will pay producers any extra as soon as they can. Now all eyes will be on who follows suit. It’s a certainty that the two price drops for July 1st from cheese makers Dairy Crest and Wyke must be the last and there will even be pressure on them to rescind part or all of their July cut. It’s time to cut out the spin and for the market to follow Meadow’s lead, which Ian believes is not only a UK first, but possibly a European and world first price increase following this serious milk price crisis.
Simon Chantler, Chief Bean counter at Meadow commented:
“We are starting to see the green shoots of recovery in the price we are able to pay for our milk and wanted to pass this on to our producers as soon as it was possible.”
Although there is still some way to go before the pressure is lifted from producers, we feel that the slowdown in EU milk production over the flush period, a general tightening of supply are offering a better market outlook. These developments are the most positive we have seen for a number of months and this has led us to adopt a more optimistic position for the recovery of milk prices in the medium term.
We know the last two years have been incredibly difficult for producers across the UK, Europe and the world and Meadow Foods hopes to be writing again soon to producers with further positive news on the market and milk price.”
1ppl milk price reduction for Dairy Crest/Davidstow producers – from 1st July (10th June 2016)
This takes producers manufacturing standard litre price down to 20.72ppl (www.milkprices.com)
1ppl milk price reduction for Wyke Farms producers – from 1st July (10th June 2016)
This takes producers manufacturing standard litre price down to 18.92ppl (www.milkprices.com)
2ppl performance bonus from First Milk together with further price cuts (10th June 2016)
It’s a bitter sweet combination from First Milk with its latest price cut announcement plus its performance bonus.
A 2ppl business performance payment will be made to all members during the coming months starting now with the first 0.25ppl.
This means the net outcome to producers allowing for the extra 0.25ppl will be the following June 1st price cuts
0.44ppl price reduction for Haverfordwest, Lake District, Arran & Campbeltown cheese suppliers
0.34ppl price reduction for the Scottish mainland pool
0.32ppl price reduction for the Midlands pool
The resulting www.milkprices.com standard litre prices are still under 15ppl for liquid and 16.51ppl to 16.64ppl for manufacturing/cheese so there is a lot of work to be done to lift member milk prices out of the relegation zone into those of the main pack. However, just over 12 months ago most First Milk producers knew they were staring down the barrel of a very large gun, which would see the co-op fold. Things have changed since Mike Gallacher took to the helm and he knows he still has a lot of work to do but he should be over the worst part of the turnaround work or should we say what was on day one a rescue plan.
More signals that the bottom of this crisis is well and truly behind us (10th June 2016)
A few weeks ago Ian said we were at the bottom and since then all of the signals are pointing north.
Commodity prices are moving higher and quickly. They are moving A LOT!
Not that anyone would get this from AHDB's latest market bulletin which drably states in the headline that "EU prices picking up...a bit". In the commentary it says that "Average monthly prices still showed little change, although the feeling seems to be that the market has hit the bottom".
NO AHDB! Wrong! The market hit the bottom seven weeks ago and has been climbing ever since. Now prices are shooting up!
There are good reasons to talk the market up for your levy payers so come on! Get with it! This is not what you would call cutting edge market intelligence.
Ian has also stated that when major processors start to talk about holding prices for two or three months to give stability to their supplying farmers it would be a clear signal that the bottom had passed.
Dairy Crest have announced a 1ppl price drop for July with a guarantee that no further deductions to farm gate milk prices will take place until at least the end of September. Well the reality is they and others know that the next move will be upwards and Dairy Crest along with others will soon be looking at a September milk price increase.
B prices should be moving up and are highly likely to overtake A prices within a few months until processors push the A prices up. Ian’s best guess is that at least one of our major processors will go for a September price increase and possibly even an August one but that’s perhaps a bit optimistic.
Some of the July milk price cuts are a combination of needs as well as the fact processors know this is the last cut they can get away with. Ian is hopeful that Arla and Muller will not have to cut producer prices further and that their next move will be up.
Farmers will need to have good memories as to whether their processor treated them fairly during this crisis and if they didn’t the next 12 months will present opportunities to change processor.
That’s certainly the case with Sorn Milk whose processors are leaving David Shaw like rats jumping off a sinking ship as soon as they possibly can.
There are now a number of producers who were under notice from their current milk buyer to leave who are now receiving letters saying the notice is rescinded. The next move will be a recruitment drive, which could come by the end of the year. There is a long way to go in what will be a long haul but at least we have passed the bottom of the crisis.
SMP volumes smash the Intervention ceiling (27th May 2016)
It’s a little over a month since the Intervention door opened to a doubling of the tonnage it would accept a €1698/tonne (£1300). The new tonnage capacity of 218,000 tonnes was filled on 24th May and moves are already afoot to add more than 60% to a new ceiling of 350,000 tonnes. That sounds good but it’s a ridiculously high tonnage which still has to be sold out of store and will certainly check any recovery.
Milk production up 10% (27th May 2016)
According to AHDB Dairy EU milk deliveries for the 12 month period to the end of February are up an eye watering 10%.
0.67ppl milk price reduction for Waitrose suppliers - from June 1st (27th May 2016)
This takes producers’ standard liquid litre down to a healthy 30.88ppl.
1ppl milk price reduction for Arla members – from June 1st (27th May 2016)
It’s a 1.3 Euro Cents litre reduction equating to 1ppl for 13,000 Arla members, which takes their liquid standard litre price down to 19.12ppl, including the current forecast 13th payment of 0.73ppl (www.milkprices.com)
Will this be the last Arla member price reduction? (27th May 2016)
It’s a hefty one at 1ppl and given the comments made at the DIN Conference last week by Peter Giortz-Carlsen, Head of Arla Europe, it’s clear Arla are successfully moving large quantities of milk from commodities into higher value branded products and there was more than a slight hint of optimism from the very positive looking Carlsen that prices had reached the bottom. There was no doubt that Carlsen is acutely aware of the financial pressure his 13,000 members are under.
Ian’s bet is this is likely to be the final Arla member price cut but that does not mean prices will start to increase soon.
All eyes will be on other processors next week to see who sticks or chances a further farm gate price drop. This market is fragile but privately virtually all processors who are in the real world acknowledge commodity prices have certainly passed their low point.
Sainsbury’s tender results in processor changes and swap shop for farmers (27th May 2016)
When Muller announced its plan to acquire Dairy Crest’s liquid business Ian posed the question whether Sainsbury’s would be comfortable having virtually all of its liquid and cream business in the hands of Muller. The no answer comes as no surprise.
It was a near certainty the retailer would bring in a third wild card processor to mix things up but few, if any, anticipated the introduction of two processors.
The Sainsbury’s farmer merry-go-round will see Medina (South of England) and Tomlinson’s Dairies (Wales & Cheshire area) supplying milk to three Sainsbury’s regions from July 2017.
It’s easier to get the Pope’s mobile number than to get information on how the new arrangement is likely to pan out but the following will be very close to the reality of the new split.
Sainsbury’s have around 270 producers in its aligned SDDG supplying circa 450 million litres of which more than 95% are currently under the Muller umbrella with the remaining 5% (13 farmers) with Arla.
From July 2017 Muller will surrender four of the regions they currently service, with two moving to Tomlinson’s, one to Medina and one to Arla. This gives Arla 2 regions.
Simple maths means an average region is circa 50 million although at least two of the switched regions are understood to be larger than 50 million litres and one is bang on 50 million.
It is believed there are 9 Sainsbury’s regions, which leaves Muller with 5 or 55% (250 million litres) and still the main supplier having lost four regions and close to 200 million litres.
The 120 or so SDDG farmers in the four regions will not be affected in terms of milk price but they will be requested to do a Bossman transfer from Muller to one of the three successful processors,
In the case of the 30 or so who are involved in the Bossman transfer from Muller to Arla they will be given the additional option to become Arla directs or full Arla members. Conversely a handful of the existing Arla SDDG farmers will transfer to Muller. For most of the former Dairy Crest Sainsbury’s suppliers they will have been transferred from Dairy Crest to Muller and now to Medina or Arla in less than 18 months.
This could perhaps be interpreted that Sainsbury’s support the dairy co-operative model more than their rivals Tesco do.
What’s next in the liquid retailer merry-go-round? (27th May 2016)
All eyes will now turn to the outcome of the ongoing Lidl liquid milk tender and the co-op (CTRG) liquid tender.
Muller currently supply almost 100% of the liquid milk to the co-op (CTRG) and the lion’s share, if not 90% plus, to Lidl. Sod’s law says these tenders will result in more chaos and destruction as processors once again knock seven bells out of each other.
Fonterra raise its forecast farm gate milk price (27th May 2016)
Fonterra has increased its 1st June milk price forecast for the new season by 35 cents to NZ $4.25 per kg milk solids, which converts to 15ppl.
Many analysts had hoped predicted the opening price forecast would have been at $4.50 but understand why Fonterra are airing on the side of caution.
DEFRA meeting to discuss the current crisis (27th May 2016)
Liz Truss, Secretary of State for Environment Food & Rural Affairs, was congratulated for hosting this week’s dairy industry meeting but she quickly realised, whichever muppet or organisation who briefed her is not to be trusted in future.
The meeting was held at Nobel House in London involving representatives of the main processors, Dairy UK, EC and European Investment Bank, farmers and the NFU.
Unfortunately, Liz’s opening comment was that “the reason that dairy GB farming is struggling is because there is not enough processing capacity and investment in GB processing has been adequate.”
Jaws were heard to hit the tables at which point Dairy UK informed her that during the past 5 years a total of £876 million had been invested in UK processing and that an unprecedented increase in global milk production was at the heart of the crisis.
1ppl milk price reduction for suppliers to Dale Farm (20th May 2016)
This takes effect for March deliveries and reduces suppliers’ standard liquid litre price to 17.74ppl and for United’s Dale Farm Kendal to 22.14ppl (www.milkprices.com)
1ppl milk price reduction for Crediton Dairies suppliers – from 1st June (20th May 2016)
This takes producers liquid standard litre price down 22.36ppl (www.milkprices.com)
0.95ppl milk price reduction for Heler’s Cheese suppliers – from 1st June (PRODUCER NOTIFIED) (20th May 2016)
0.75ppl milk price reduction for Yew Tree Dairy (Woodcocks) suppliers – from 1st June (20th May 2016)
This takes producers liquid standard litre price down to 20ppl (www.milkprices.com)
0.129ppl milk price reduction for Muller/Direct Milk DPO formula contracted suppliers – from 1st June (20th May 2016)
This is the sixth consecutive price reduction and takes the core and simplified formula standard litre price to 24.47ppl – 24.661ppl.
GDT average index up 2.6% (20th May 2016)
Tuesday’s auction saw the lowest volumes of product on offer for over three years so the increase needs to be balanced against the tightening of supply with only 18,113 tonnes sold averaging US$2283.
Butter up 3.8% to average US$2697 tonne
WMP up 3.0% to average US$2252 tonne
SMP down 0.9% to average US$1658 tonne
Cheddar down 0.8% to average US$2693 tonne
Glanbia rescind part of a 2ppl price cut (20th May 2016)
Glanbia has written to producers to inform them that the previously notified 2ppl price cut for May 1st will be reduced to 1.5ppl.
This takes producers standard manufacturing litre price to 16.54ppl as opposed to the planned 16.04ppl (www.milkprices.com)
In addition, Glanbia has capped its seasonality deductions at 4.2ppl reduced from 6.3ppl as additional help to its hard pressed suppliers. A rebate will be paid on April deductions to those who were deducted above the new 4.2ppl cap.
The move has been interpreted as Glanbia sensing a glimmer of light that commodity prices have passed the bottom (see below).
Intervention stocks are rocketing (20th May 2016)
When the Commission doubled the SMP intervention limit from 109,000 tonnes to 218,000 tonnes most believed that would comfortably get the EU dairy industry through the flush.
Well the way it’s going the new ceiling could be hit before the end of this month and last week a staggering 22,018 tonnes was placed in to store taking the total to 182,518 tonnes, leaving only 35,482 tonnes which could be filled in less than two weeks. At this week’s DIN Conference Tom Tynan from the EU Commission confirmed that if the new ceiling is reached the Commission “will continue to support the dairy market” but he didn’t say at the same level.
Note, the intervention price for SMP is €1698/tonne or £1300.
World dairy markets have passed the bottom (20th May 2016)
Whilst few, if any, processors and traders are informing the town crier the conversations Ian had at this week’s Dairy Industry News Conference reinforced his belief that the world dairy commodity market has already passed the bottom.
All the signals are pointing north; especially the upward movement in dairy futures and the fact the Dutch Dairy Board have this week raised all of their dairy commodity prices up. New Zealand’s farm gate milk price pay out is also moving upwards. Spot price in GB is not in single figures as some suggested and is 10ppl plus and we are now just past peak daily production. Throw into the mix the increase in cull cow slaughtering and worldwide, especially EU, production cuts and it looks to be a certainty that the positive talk is fully justified.
It’s positive news but it’s certainly not recovery and any road to recovery is set to be a long one. Several are predicting average prices around 20ppl to 23ppl for the next 5 or even 10 years with most, if not all, believing 30ppl plus could be a once in a lifetime experience.
Anyone banking on recovery equating to 30ppl is likely to be very disappointed but miracles do happen like Leicester winning the Premiership.
Dairy Industry Conference (DIN) (20th May 2016)
Ian has attended most of the DIN Conference’s but never one where the room was packed to capacity with the majority of Europe’s big hitters in the dairy industry keen to listen to the speakers.
There was a positive buzz in the air at this week’s event tempered by the acknowledgement that farmers cannot continue at current farm gate milk prices and processors are also under the cosh.
More on the Conference in Ian’s next Dairy Farmer article but for the 2017 Conference it looks like either a larger room is required or the ceiling on attendees could be reached well ahead of the main event.
OMSCO’s claim to be the first into China is under attack (20th May 2016)
OMSCO issued a press release this week, which in its opening paragraph claimed:
“Following a historic international partnership between leading global organic cooperatives, Organic Valley/CROPP and the Organic Milk Suppliers Cooperative (OMSCo), the first shipment of UK produced organic UHT milk, has been delivered to China under this collaboration.”
According to Ian this is factually incorrect because Daioni from South Wales have been exporting organic UHT milk to China for at least four years.
Rather cheekily OMSCO’s PR spin doctors responded to Ian’s request for clarification by claiming that the wording “refers to the fact it’s a first for OMSCO since the collaboration with Organic Valley”
Daioni have subsequently confirmed that they have already raised a complaint with OMSCO and are seeking a correction and apology having read the press release as Ian did.
All eyes are now on other claims made by OMSCO to check for accuracy and possibly even a correction and apology from its PR spin doctors.
It’s great news that OMSCO are continuing to find new markets outside the EU but they need to check they hold sufficient evidence to back up any claims.
Arla to incentivise farmers to convert to GM Free Feed (20th May 2016)
Arla believe they have a consumer driven market opportunity for milk and dairy products produced using GM Free Feed for which consumers will pay a premium.
There will inevitably be some segregation and logistical issues to resolve but from work in Germany it is believed it’s a commercial marketing opportunity, which Arla intend to capitalise on.
The expectation is to pay invited farmers an additional 1 Euro Cent (0.8ppl) a litre for GM free milk to defray the on farm cost of conversion for those who are interested.
The money will also be paid to members who currently produce GM free milk for Arla, particularly; those in Sweden where all milk is produced with GM free feed.
Note, Arla are the biggest organic milk processor in the world and along with the other GM free milk it collects translates to 20% or Arla’s total milk intake as GM free.
As the Status Quo 1975 lyrics go Down, Down, Deeper and Down..
1.75ppl a milk price reduction for producers supplying Grahams Scotland – from May 1st (PRODUCER NOTIFIED) (6th May 2016)
This takes producers standard liquid litre price to 20.5ppl (www.milkprices.com)
1ppl milk price reduction for producers supplying Paynes Dairies – from May 1st (PRODUCER NOTIFIED) (6th May 2016)
This takes producers standard liquid litre price to 18.2ppl (www.milkprices.com)
1ppl milk price reduction for producers supplying The Fresh Milk Company MSA (Lactalis) – from June 1st (PRODUCER NOTIFIED) (6th May 2016)
This takes producers standard manufacturing litre price to 17.06ppl (www.milkprices.com). According to milkprices.com his latest price cut means since June 2014 the producer milk price has halved.
1ppl milk price reduction for producers supplying Dairy Crest Davidstow – from June 1st (6th May 2016)
This takes producers standard manufacturing litre price 21.72ppl (www.milkprices.com)
1ppl milk price reduction for producers supplying Belton Cheese – from June 1st (6th May 2016)
This takes producers standard manufacturing litre price to 19.75ppl (www.milkprices.com)
1ppl milk price reduction for producers supplying Meadow Foods – from June 1st (6th May 2016)
This takes producers standard manufacturing litre price to 17ppl (www.milkprices.com)
0.75ppl milk price reduction for producers supplying Pensworth Dairies – from June 1st (6th May 2016)
This takes producers standard liquid litre price to 18.65ppl (www.milkprices.com)
0.72 to 0.66ppl milk price reductions for First Milk members – from May 1st (6th May 2016)
The reductions are as follows:
0.72ppl for First Milk’s Midlands and East Wales pool
0.66ppl for First Milk’s North of England and four creamery pools
0.61ppl for First Milk’s Bute and Scottish mainland pools
This takes producers standard manufacturing litre price to 16.97ppl (Lake District) and 16.52ppl (Haverfordwest, excluding the TSDG supplement)
0.49ppl milk price reduction for producers supplying Muller (Wiseman) – from June 1st (6th May 2016)
This takes producers standard liquid litre prices to: (www.milkprices.com)
Muller Wiseman Group 18.66ppl
Muller Direct (Ex-Dairy Crest) 18.00ppl
As pointed out in the latest Direct Milk Newsletter (Ex-Dairy Crest) the 18ppl June price is the lowest for over 10 years and producers milk prices have been slashed by 45% in only 24 months (excluding retailer supplementary payments)
GDT results are still unsettled (6th May 2016)
Tuesday’s GDT auction results produced an all products average down 1.4% and the hope and expectation had been for a third consecutive auction rise.
Fortunately, prices for the key product WMP were slightly up (+0.7%) to average US$2176 tonne, perhaps further confirming analysts belief that we have just passed the bottom of the price curve.
Other notable price movements were:
Butter down 5.5% to average US$2601/tonne
SMP down 3.6% to average US$1676/tonne
Cheddar up 1.8% to average US$2727/tonne
When will the peak spring flush come? (6th May 2016)
Likely in the next two weeks and fortunately it will be lower than first feared on account of recent weather and increased cullings. Meanwhile, the quantity of SMP going into EU intervention stores is rising rapidly including SMP coming from the UK and a staggering 7,100 tonnes from France in one week!
Total EU production in January 2016 was up 5.3% or 620 million litres with Irish production up a staggering 33% in January and 28% in March.
South Caernarfon Creameries (SCC) gain Sainsburys own label cheese business at the expense of Arla (6th May 2016)
Sainsburys have switched a significant tonnage (rumoured to be circa 5,000 tonnes) of its own label cheese from Arla in favour of SCC which will be a major boost to the West Wales Co-ops expansion plans.
Currently the factory is geared to produce around 12,000 tonnes of cheese a year with further expansion plans in the pipeline. An orderly switch in suppliers is likely to be completed towards the end of this year or early 2017 by which time Arla will have emptied their stores of all cheese made on behalf of Sainsburys. So hopefully no surplus stocks to be offloaded as feared by some.
Up until last year SCC supplied own label cheese to Tesco on a time limited contract which was not renewed however it is believed that the tonnage involved in the Sainsburys deal eclipses that of the Tesco deal and in addition it is better quality business for SCC.
Several in the industry claim the switch would not have happened in the old Milk Link days due to the extremely close relationship between Milk Link Mangers and Sainsburys.
Muller closure of Hanworth is reversed (6th May 2016)
Muller has reversed Dairy Crest’s earlier decision to close the former Dairy Crest Hanworth Dairy, near London, now owned by Muller. This is welcome news to milkmen given the fact Hanworth is one of the country’s largest glass bottling facilities for Milk More and doorstep milk. It is also welcome news for the 170 or so employees.
Compulsory milk levy is suspended from May 1st (6th May 2016)
Recognising how tough it is for dairy farmers Ornua (AKA the Irish Dairy Board) have suspended monthly levy payments from its Irish dairy farmers. Estimates from Ornua indicate the levy suspension will be worth €6 million to Irish dairy farmers (£4.8m).
German farmers receive less than 12ppl / 15 Cents Litre (6th May 2016)
According to DIN, German milk processor, Wiegert, are paying some farmers who had no home for their milk only 11.8ppl (15 Euro Cents)
It can only be called cheese if it’s made from animal milk (6th May 2016)
A German court has ruled on this point in a court case involving Tofu Town, a vegan cheese processor, who claimed they were within the EU law when they advertised cheese made from plant based ingredients as cheese.
If there is one thing that sparks a reaction from Ian its people selling meat free sausages and burgers. What’s all that about, its’ loonacy!
Cheap Milk Watch – 4 litres (7 pints) for £1 (6th May 2016)
Yes, 25p a litre for FarmFoods milk supplied by Paynes Dairies on sale across 300 plus GB stores.
Perhaps this is what Charlie Payne was referring to in his 28th April letter to producers notifying them of a 1ppl milk price reduction from the 1st May when he stated:
“But if the customer is adamant that they want the lowest milk price then we have to be reactive and negotiate a deal, which inevitably means lowering the price. If we lose the customer then that milk has to go somewhere! That means either the spot market or no market.”
Earlier in the letter a current spot price of 13 to 14ppl is quoted.
MCVE 38.8p to 15.7p in 30 months (6th May 2016)
AHDB Dairy’s MCVE figures confirm it is now at a record low of 15.7ppl compared to its 38.8ppl high point in September 2013, which means today it stands at only 40% of its high point.
£1 million plus for former Westbury Chairman – who has been accused of milking it (6th May 2016)
Richard Ashworth, Former Chairman of United Milk, who built the Westbury plant prior to it going into administration, is reported to have received more than £1 million from the EU over the past 5 years in salaries, expenses and allowances etc. for his position as an MEP. According to an article in The Sun, the ability to receive a basic salary plus £237 day tax free sustenance allowance helped boost the pot.
It’s not the first time Richard has been in the news for his EU expenses claims and one of the previous headlines he attracted was “Tory MEP Expenses Milker”.
HMRC lose in relation to input VAT for Single Farm Payment Entitlement (6th May 2016)
This is a very interesting case for farmers who have purchased any Entitlements since 2006. Thanks to UHY Hacker Young for the details.
Please click on the link to see the full article: Single Farm Payment Entitlement – Rural Payment VAT Flash
0.9ppl milk price reduction for Arla Directs (non members) – From 1st June (22nd April 2016)
This reduces producers’ standard litre price to 15.1ppl
0.75ppl milk price reduction for Arla members (22nd April 2016)
This reduces members’ standard litre price to 20.12ppl
1.49ppl milk price reduction for Muller Wiseman Co-operative Group suppliers – from May 1st (22nd April 2016)
This reduces producers’ liquid standard litre price to 25.94ppl (www.milkprices.com)
0.265ppl milk price reduction for Muller Direct suppliers – from May 1st (22nd April 2016)
This is a reduction in the liquid formula and takes producers liquid standard litre price to 24.79ppl (liquid core formula) and 24.60ppl (simplified liquid contract) (www.milkprices.com)
2.045ppl retail supplementary payment on March deliveries for Muller Wiseman non-aligned producers (22nd April 2016)
The payment will be made to the non-aligned producers in both the Muller Direct and Muller Milk Group pools
Second consecutive lift in GDT auction prices (22nd April 2016)
This week’s GDT auction produced a 3.8% average price increase to average US$2263.
The big story was the rather surprising 7.5% jump in the key commodity WMP to average US$2156/tonne. SMP held its own at US$1727, Cheddar down 3.9% to average US$2636/tonne.
Traders claim the auction’s results instantly injected life into the world’s WMP trading activity.
98% of Dairy Crest Davidstow suppliers sign the new milk balancing contract (22nd April 2016)
The contact kicked in on April 1st and the opening price was a stand on 22.72ppl manufacturing standard litre price (www.milkprices.com)
Booker Cash & Carry selling 2 litres for only 59p (22nd April 2016)
The hard sell from Booker states “you can quite easily sell below the discounters and supermarkets; you could even sell two (as in 4 litres) for £1.50 and make a fair margin.”
The promotion is branded as Robert Wiseman milk but we don’t think it’s that old and should state Muller Wiseman milk.
One off opportunity for Arla Tesco suppliers to switch to become Tesco Direct contracted producers (22nd April 2016)
The Arla AMBA Board have agreed a short window for current Arla members to switch to a Tesco Direct contract. The window is open until the 30th April.
The Arla members who decline to make the switch and sign up to remain full members of the co-op will receive a one-off 2ppl lump sum payment based on the volume of milk they delivered in 2015. The lump sum will be paid either at the end of this month or in May, depending on the date they decide to reject the switching offer. Note, the 2ppl bonus is in addition to the 1.42ppl paid by Arla to enable members to fulfil the Tesco supplier requirements.
Suspension of the ability to switch was instantly implemented by Arla in early February when the news broke that Arla had lost 200 million litres of Tesco liquid business to Muller. The argument put forward to the Arla board was that immediate suspension was unfair without giving prior warning and that the right thing to do was to re-open the window to give producers one last opportunity to make the switch. However, given the 2ppl bonus the likelihood is that very few will actually make that switch.
Of the Arla Tesco Directs, 39 are on a Bosman free transfer to Muller predominantly located in the South-West and Midlands area.
Managing Dairy Volatility Conference – 5th May – Lisburn, Northern Ireland (22nd April 2016)
The Conference is organised by Dairy UK and the Ulster Farmers Union with a view to examining international responses to cripplingly low milk prices and market volatility.
For full details click on this link http://www.dairycouncil.co.uk/news-events/2016/04/managing-dairy-volatility-conference
GDT auction prices lift 2.1% (all prices are in US$) (8th April 2016)
This week’s GDT auction produced an average price of $2188, which was a 2.1% increase on the average recorded two weeks ago which was down 2.9% at that time.
According to New Zealand analysis the $2188 is only 70% of the estimated $3000 required to cover the full cost of production.
Notable movers were:
Cheddar + 10.5% to average $2778 tonne
WMP + 1.5% to average $2013 tonne
SMP + 0.1% to average $1721 tonne
Butter – 2.0% to average $2702 tonne
The original intervention tonnage limit was hit in March (8th April 2016)
Had the European Commission not doubled the tonnage of SMP, which could go into intervention stores from 109,000 to 218,000 tonnes, we could be looking at further downward pressure an EU milk prices.
The European Commission’s original limit of 109,000 tonnes was hit in March, which is weeks before Europe’s spring flush.
Formal ratification of the proposal to double the tonnage is yet to be confirmed but traders and processors believe this is an automatic formality and indeed a necessity. However, because the limit has been hit and the 218,000 tonnes ceiling is yet to be ratified it’s back to bi-weekly tenders for SMP, which will not help prices.
Rabobank report writes off any recovery of milk prices in 2016 (8th April 2016)
Rabo quarterly global dairy report reinforces what most others have concluded that any global price recovery in 2016 is unlikely. They can’t say impossible but that’s what should be said because global markets and its dairy farmers will be depressed throughout 2016. The report comments that “EU exporting countries will find 2016 equally, if not more, challenging than 2015.”
DEFRA’s February milk price increase is a joke at 27ppl (8th April 2016)
In last week’s bulletin we highlighted the bizarre and irresponsible claim by DEFRA that the average UK farm gate milk price for February had increased by 2.48ppl (+10.8%) compared to that recorded in January due to the Arla 13th payment.
Well it gets worse because the average farm gate milk price paid to dairy farmers in Northern Ireland in February was 18.54ppl. When you do the maths this means DEFRA are stating that the average February price paid to GB farmers was a staggering 26.9ppl or as near as damn it 27ppl.
During the week DEFRA have resisted all complaints and dug their heels in and stand firm on their figures.
Dairy industry journalist Chris Walkland has received an acknowledgement that his official complaint to the National Statistics office has been received and is under consideration/investigation.
He, like most others, believes the reporting of the increase fails to meet the high quality standards required by DEFRA.
Questions have also been asked as to the reaction from AHDB Dairy whose remit is supposed to be to deal with market failure on behalf of its levy paying farmers. Its chairman, Gwyn Jones, has commented that AHDB Dairy has no influence whatsoever with DEFRA in this area. Meanwhile, the NFU Dairy are on mute which is very unusual for them. They usually issue a press release if they change their toilet roll brand.
The big question is, are DEFRA the big bad wolf they are all afraid of?
The matter is now bringing into question DEFRA’s credibility and it’s unlikely to disappear until DEFRA hold their hands up and issue revised figures which reflect the real situation.
Big changes in new Tesco Cheese Model (8th April 2016)
Tesco have completed their review of their cheese model and a new TCG - Tesco Cheese Group model will be operating from 18th April 2016.
The new model will involve a market tracker based on a basket of cheese processors milk prices, which are transparent and easy to calculate plus a 2ppl uplift/premium which is partly attributable to the farmers compliance with Tesco’s farm assurance and welfare standards.
The 26 farmers supplying Parkham Farms have enjoyed a Tesco Cost of Production model for almost four years and have now been given 12 months notice that this ends on the 17th April 2017, when the new TCG market tracker model will be used.
First Milk’s Haverfordwest producers move onto the new model almost immediately in 10 days time on 18th April 2016. Note, between September and April Tesco have paid First Milk’s Haverfordwest producers a winter supplement, which ends this month.
The changes will not be welcome but looking forward the Cost of Production (COP) cheese model was unsustainable and it’s hoped the new model will be sustainable for all involved, not just the farmers.
Put simply the supplement and the cost tracker were good whilst they lasted. It’s a big cut for Parkhams Farmers but both First Milk and Parkham will want to remain on the Tesco cheese bus.
The likelihood is that the Tesco cheese model would pay a farm gate price in the early/low 20ppl’s, including the 2ppl bonus today.
The new model will instantly breed competition amongst First Milk farmers because in 12 months time Tesco plan to operate the model with a dedicated group of Haverfordwest suppliers.
That gives First Milk a 12 month transition period to work out the detail and decide which of the 200 or so members will be on the Tesco bus. Only the selected dedicated Tesco’s farmers will receive the 2ppl bonus in 12 months time post the transitional period.
The penny will drop very quickly with the realisation that the Tesco cheese model is not one which automatically encourages production but one which pushes farmers to cut cost to be the best. Tesco, by nature, will want the best farmers and that’s their direction of travel with their cheese and liquid models and those who don’t want to listen or deliver will be dropped.
Tesco have confirmed that they anticipated in excess of 100 dedicated producers from First Milk and Parkham will be involved in the cheese group by April 2017, including all 26 farmers currently supplying Parkham Farms.
The new cheese model will cover all Tesco’s British hard cheese.
Note, one of Tesco’s competitors, Lidl, are out to tender for cheese at the moment and that’s making grown man cry!
CORRECTION & Apology (8th April 2016)
0.43ppl milk price reduction for suppliers to Waitrose – from 1st April (PRODUCER NOTIFIED)
The resulting standard liquid litre price will be 31.55ppl not 19.4ppl as incorrectly quoted in last weeks bulletin. Apologies.
It's no April Fool as DEFRA's average UK milk price soars by 11% and 2.48ppl in February! (4th April 2016)
According to DEFRA’s latest UK average farm gate milk price calculation the average February milk price soared by 2.48ppl and 10.8% from 23.09 to a whopping 25.57ppl!
Ian and others have challenged both AHDB and DEFRA over what they believe is a wholly irresponsible and totally misleading calculation, but to date DEFRA is digging their heels in and refusing to explain the numbers or back down while AHDB seems to be sitting back putting absolutely no pressure on DEFRA whatsoever to review the figure. In an email received by Ian from DEFRA they basically stand firm on the numbers.
The 2.48ppl uplift predominantly originates from Arla’s 13th payment to members amounting to 0.73ppl. The bean counters in DEFRA have allocated all 0.73ppl (around £22million) of Arla’s 13th payment to February’s milk income, as opposed to spreading it across the whole year to the tune of around 0.2ppl. At least Arla and www.milkprices.com allocate the 0.73ppl across each month.
Frankly, this is just ridiculous and irresponsible and paints a far, far rosier picture of the dairying situation than is the case and sends completely the wrong signal to everyone. At 25.57ppl the industry would not be in difficulty, although losses would be made by many farmers still, let alone be in crisis!
So let's consider the implications: FFA held a march in London a few days ago and delivered a letter to The Prime Minister outlining the crisis the industry faces. David Cameron will respond, but if he sees the average UK milk price paid to farmers for February INCREASED by 2.48ppl he will say “What’s the problem Handley & FFA and farmers? Stop moaning!” And it doesn't look as if AHDB Dairy wants to do anything about this absurd portrayal of the reality of the current crisis situation! GET A GRIP AHDB! CAN YOU NOT SEE HOW SERIOUS THIS COULD BE?
Once again, first out of the traps and onto the case was George Dunn and the TFA, whose input and pressure is very professional and visible. The farming press and media have also jumped onto the story.
The issue is one of a number of dairy statistical errors DEFRA have recently been pulled up on only this one puts its credibility firmly on the line as well as the market intelligence at AHDB in terms of its potency or impotency to persuade DEFRA to issue a correction. DEFRA have now stated that they hope to produce a February average milk price excluding bonus payments by 28th April. This is a very poor show given to obtain this information they only need to contact a handful of the 34 milk purchasers they survey.
2ppl milk price reduction for suppliers to The Fresh Milk Company (Lactalis) – from 1st May (PRODUCER NOTIFIED) (4th April 2016)
The resulting manufacturing standard litre price will be 18.1ppl on their GDT price linked contract. (www.milkprices.com)
2ppl milk price reduction for suppliers to Glanbia Cheese – from May 1st (4th April 2016)
This reduces producers’ manufacturing standard litre price to 16.04ppl. (www.milkprices.com)
Tesco COP drops below 30ppl with a further 1.39ppl price reduction – May 1st (4th April 2016)
Tesco’s new quarterly cost tracker review (May to July 2016) has resulted in the Cost of Production dropping from its present 30.08ppl to 28.30ppl from May 1st. However, added to the 28.30 will be 0.39ppl as a one off retrospective payment as previously agreed in respect of the new version of the calculation used by Promar, which will be removed next time around.
Note from May 1st Tesco will pick up the Promar costings invoice for each farm, which will see removal of the 0.5ppl Promar costings addition. It is now compulsory for all Tesco dairy farmers to participate in the Promar costings.
The resulting liquid standard litre price will be 28.69ppl.(www.milkprices.com)
The next eagerly awaited Tesco dairy announcement will be in respect of its forward plans, if any, to support First Milk’s Haverfordwest cheese pool. Will Tesco stick or twist with the co-op’s Welsh men and women?
1ppl milk price reduction for suppliers to South Caernarfon Creameries – from May 1st (4th April 2016)
The resulting manufacturing standard litre price will be 17.03ppl (www.milkprices.com)
1ppl milk price reduction for suppliers to Paynes Dairies Limited (Charlie Payne_ – from 1st April (PRODUCER NOTIFIED) (4th April 2016)
The resulting liquid standard litre price will be 19.2ppl (www.milkprices.com)
1ppl milk price reduction for suppliers to Barbers Cheese – from May 1st (4th April 2016)
The resulting manufacturing standard litre price is 20.92ppl (www.milkprices.com)
1ppl milk price reduction for suppliers to Belton Cheese – from May 1st (4th April 2016)
The resulting manufacturing standard litre price will be 20.75ppl. (www.milkprices.com)
0.95ppl milk price reduction for suppliers to Joseph Heler Cheese – from May 1st (4th April 2016)
0.85ppl milk price reduction for suppliers to Muller (Wiseman) – from May 1st (4th April 2016)
This takes producers’ standard liquid litre price down to 19.15ppl and for the former Dairy Crest Direct group 18.49ppl (www.milkprices.com)
In a newsletter to members the Muller Direct Milk DPO (Farmer Dairy Crest Directs) it confirms that this latest cut means more than 14ppl has been top sliced from the milk price standard litre high point in less than two years, excluding any retail supplements.
0.83ppl milk price reduction for suppliers to Marks & Spencer – from May 1st (PRODUCER NOTIFIED) (4th April 2016)
0.5ppl milk price reduction for suppliers to Pensworth Dairy – from May 1st (4th April 2016)
The resulting standard liquid litre price will be 19.4ppl. (www.milkprices.com)
0.43ppl milk price reduction for suppliers to Waitrose – from 1st April (PRODUCER NOTIFIED) (4th April 2016)
The resulting standard liquid litre price will be 31.65ppl.
First Milk Price Reductions – 1st April (4th April 2016)
The following are First Milk’s 1st April standard litre prices (www.milkprices.com)
0.97ppl reduction for Arran & Campbeltown suppliers resulting in a standard litre price of 16.04ppl
0.95ppl reduction for Bute (excluding the 0.57ppl ScotGov transport supplement) resulting in a standard litre price of 15.93ppl
0.9ppl reduction for Midlands Pool suppliers resulting in a standard litre price of 16.38ppl
0.72ppl reduction for the North of England Pool suppliers resulting in a standard litre price of 16.80ppl
0.68ppl reduction for mainland Scotland suppliers resulting in a standard litre price of 16.83ppl
0.45ppl reduction for Lake District suppliers resulting in a standard litre price of 17.06ppl
0.33ppl reduction for Haverfordwest (excluding the Tesco supplement/premium which was 4ppl in February) suppliers resulting in a standard litre price of 17.18ppl
The Haverfordwest and Lake District standard litre prices factor in average transport charges as independently referenced by www.milkprices.com
6ppl April B price is floated (4th April 2016)
There are still concerns that at peak production the UK will have insufficient processing capacity to handle all the milk. Already there are letters out to some farmers warming them up to the possibility of an average April B milk price pay-out of only 6ppl.
Buckle up this could last until Spring 2018! (4th April 2016)
Westland, a New Zealand dairy co-op and milk processor, has informed its farmer owners that it is expecting two more seasons of low milk prices at an average farm gate milk price of around 14ppl or under.
Muller to close its Aberdeen and East Kilbride processing facilities (4th April 2016)
A 45 day consultation period has commenced with staff at Mullers Aberdeen and East Kilbride facilities, which will affect 229 employees as well as 43 dairy farmers in Aberdeen.
Assuming the closures are confirmed all 43 dairy farmers will be given the option to continue milking and for the milk to be shipped to Bellshill, however, it will mean a flat rate deduction of 1.75ppl for the 300 mile round trip. The same distance as Aylesbury to Leeds minus the M1.
Any producer who does not wish to supply Bellshill and wear the transport charge deduction can leave after 12 months notice and will not have to pay the charge during their notice period.
Muller have stated that its currently Aberdeen Dairy is operating at only 40% of its capacity, which is a key factor in the move.
In addition, Muller has announced a three year investment programme in its Bellshill plant amounting to £15 million.
Discounted England Football Tickets (4th April 2016)
England V Australia – Sunderland’s Stadium of Light – Friday 27th May 2016
If any readers are interested in the discounted tickets in any section of either stadium please email firstname.lastname@example.org
0.94ppl milk price reduction for Arla members – from April 1st (24th March 2016)
This is a 0.75ppl milk price reduction plus a 0.19ppl exchange rate smoothing reduction.
The reduction takes the liquid standard litre price down to 20.87ppl (www.milkprices.com)
0.39ppl milk price reduction for Sainsburys aligned suppliers – from April 1st (24th March 2016)
The reduction is due to reduced prices for the 3 F’s. This takes producers standard liquid litre price to 29.98ppl for Muller, 29.86ppl for Arla and 29.92ppl for the former Dairy Crest Direct producers. (www.milkprices.com)
FFA march is a credit to the Handley’s and all involved (24th March 2016)
Estimates suggest around 2,000 people joined yesterday’s FFA march in London and there is little disputing the fact that if some had fully backed and promoted FFA and the Handley’s more numbers could easily have ramped up to 5,000. However, it was a well organised peaceful march which received widespread media coverage for the right reasons.
It was so successful that a second march on Wednesday 22nd June will take place just 24 hours prior to the EU referendum.
German co-op informs its farmers exactly how it is (24th March 2016)
German dairy co-op Milchwerke Berchtesgadener has circulated a very blunt flyer to its members, which amongst other things features two highway STOP signs.
The poster basically instructs its members to:
(a) Stop producing additional unwanted milk
(b) Stop using milk powder to feed calves and to use raw milk
The flyer states that the co-op has its back against the wall and all they can do with the extra milk is to sell it on the spot market for 17 Cents (13.4ppl). It also states that the co-op has seen deliveries from members increase by 11% and continuing to grow resulting in “our dairy is now close to collapse” and “in the name of all members of our co-op we request you reduce the milk supply”.
Meanwhile, GB production is on target to be up 3% for the year ending 31st March 2016 with cow numbers up.
First Milk announce plans to convert around £60 million loan capital into tradable shares (24th March 2016)
First Milk under Mike Gallacher have taken yet another bold step in a bid to re-shape the business and this time it’s a complete re-shaping of its capital structure.
The move comes almost 12 months to the day since Gallacher took up the challenge to turnaround the fortunes of the business and it is perhaps his biggest and boldest decision.
Total member loan capital is estimated by Ian to be in the region of £60 million and one of the key points is that by far the lions share belongs to existing supplying members. It is clearly the interests of those supplying members and the future of the business that Gallacher and his new board decided to make the change.
Unless they were numerically naïve by February 2015, at the latest, all First Milk current and former members had psychologically written off receiving any capital repayments. In early 2015 the talk was that First Milk were sinking quickly and most farmers were worried whether they would lose both capital, milk cheques and be forced out of dairying with nowhere to go. A number feared the writing was on the wall and there was no one banking on capital repayments.
Gallacher surprised most by taking on a huge turnaround challenge and on this occasion had a straight choice. Do we do what’s in the best interests of the current supplying members and the business or what’s in the interests of those who have ceased to supply?
The capital restructuring announcement was made on the 17th March, a week ago, and Ian has had a few enquiries from members but no complaints because most seem to understand the situation that the £60 million loan capital is set against minimal nett asset value, which could easily be in the region of 10p in the £1. Put bluntly, the situation whereby First Milk continued to pay out the capital £1 for £1 was unsustainable.
Trading in the shares is some months away but if Gallacher his team invest wisely in the business it should by default increase the share value.
Intervention ceiling is doubled (24th March 2016)
The European Commission has doubled the volume of SMP, which can be placed into intervention at the full price (€1698/tonne) to 218,000 tonnes. Simultaneously it has lifted the quantity of butter which can be placed into store from 60,000 to 100,000 tonnes.
The aim is to stabilise the market, particularly through the imminent spring flush, however, the more product which goes into intervention stores the more drawn out any recovery will be because it has to come out of store on to the market within a relatively short time frame. Hopefully the intervention price is at a level which will dissuade most, if not, all EU dairy farmers from producing more milk and ideally less.
AHDB backs milk promotion and market development with up to £3.5m (24th March 2016)
AHDB Dairy has revised its three year business plan and one outcome is a board decision to allocate “up to” £3.5m over three years for promotion and market development. This is an additional £1.8m on top of the previously allocated £1.7m. Note, the exact wording states up to £3.5m.
The plan is for AHDB Dairy to work with Dairy UK to apply for European Union co-funding to boost the total pot.
Never forget to kick a man when he is down (24th March 2016)
Congratulations to Public Health England who have issued new dietary guidelines in an Eatwell Guide recommending that our consumption of dairy is cut by 50%. The guide is circulated to GP’s, nurses, midwives, schools, teachers, dieticians, nutritionists and caterers.
The best analogy Ian heard was that it’s like knowing someone is dead but for Public Health England to load its gun and shoot another bullet into the head to be sure. Just when dairy farmers thought it couldn’t get worse. Public Health England give them another kicking. It wouldn’t happen in countries like France & Germany.
1ppl milk price reduction for Meadow Foods suppliers – from April 1st (11th March 2016)
This reduces producers standard liquid price down to 18ppl (www.milkprices.com)
Note, in order to achieve the standard litre producers must be within plus or minus 10% of their first three months milk production forecast.
1ppl milk price reduction for suppliers to The Fresh Milk Company (Lactalis) – from 7th April (PRODUCER NOTIFIED) (11th March 2016)
This takes producers manufacturing standard litre down to 20.17ppl for the GDT linked contract (www.milkprices.com)
1ppl milk price reduction for co-operative South Caernarfon Creameries (SCC) suppliers – from April 1st (11th March 2016)
This takes producers manufacturing standard litre price down to 18.03ppl (www.milkprices.com)
Note, SCC having lost the Tesco cheese contract also lost the Tesco Winter supplement, which, for February would have been worth 4ppl.
1ppl milk price reduction for suppliers to Crediton Dairy – from April 1st (11th March 2016)
This takes producers manufacturing standard litre down to 23.26ppl (www.milkprices.com)
Fonterra’s forecast farm gate milk price relates to 13.77ppl (11th March 2016)
Fonterra has announced a further 6% reduction in its 2015/16 farm gate milk price forecast from NZ $4.15 to NZ $3.90. This equates to a farm gate milk price of 13.77ppl and a total forecast payout between 15.3 to 15.7ppl for the year. Note, New Zealand’s total milk production is running 4% less than last year.
County Milk Products milk price to be biased towards commodity returns (11th March 2016)
In a recent letter to producers, County Milk Products have stated that their farm gate milk price from now on will be “biased towards that of commodity returns in the short term”.
Short term includes the April to June period where County state prices are “likely to be significantly down …”
Watsons Dairies (Medina) short notice changes to milk contracts (11th March 2016)
Watsons Dairies have given less than one months notice of a change to producers milk contracts, which means from April 1st seasonality will be introduced for the rest of 2016 and into 2017. This will be a one way negative downward price adjustment only of up to 1.5ppl on deliveries in the period April to July and up to a 1ppl deduction for the period August to January (2017).
Any aggrieved producers have the option to serve 20 weeks notice to terminate their milk contract if they give proper notice by around the 24th March. Note, this date must not be relied on and is based on the fact the letter to producers was sent out on the 3rd March.
UK deliveries for January (11th March 2016)
January milk production weighed in at 1.226 million litres up 2.7% to January 2015 production.
German and France calling for quotas (AKA Supply Management) (11th March 2016)
Through a joint statement from their respective governments both countries are proposing the European Commission allow the introduction of supply management/quotas to reduce the amount of European milk output. George Eustice has stated in a DEFRA response that the UK is against the European Commission introducing any supply management measures or further market support measures for the European dairy industry.
Farmers for Action march attracts evil forces (11th March 2016)
There are strong rumours and accusations that at least three industry leaders/senior people are not only paying lip service in giving minimal, if any, support or credit for FFA’s 23rd March London event but one of them is accused of actively encouraging both sponsors, businesses who have pledged support and the farming press to pull back or at least dilute their enthusiastic promotion. The question is why would they spend time doing this?
For details of the London event and transport from your local area log onto www.farmersforaction.org
Arla to close Hatfield involving 230 employees (11th March 2016)
Arla has announced the closure of its Hatfield Peverel in Essex liquid plant by the end of July, which processes around 170 million litres a year. The move will impact on 230 employees. The majority of the milk will be processed through its Aylesbury plant.
Incredible Deals (11th March 2016)
3 packs of Anchor (Arla Westbury) butter for only £5 will likely translate to a milk price of under 19ppl!
FOR SALE (11th March 2016)
Clamp silage – a quantity of 400-500 tonnes – Stoke on Trent area - Please contact Edward on 07970 258854
1.75ppl milk price reduction for suppliers to Wyke Farm (Cheese) – from 1st April (4th March 2016)
This reduces producers’ standard liquid litre milk price to 19.3ppl and the manufacturing standard litre price to 19.96ppl.
1.5ppl milk price reduction for suppliers to Woodcocks – from 1st April (4th March 2016)
1.35ppl milk price reduction for suppliers to Muller Wiseman – from 1st April (4th March 2016)
This reduces producers’ liquid standard litre price to 20ppl and for former Dairy Crest suppliers to 19.34ppl (www.milkprices.com)
1.0ppl milk price reduction for suppliers to Glanbia (Cheese) – from 1st April (4th March 2016)
This takes producers liquid standard litre price to 17.47ppl and the manufacturing standard litre price to 18.04ppl (www.milkprices.com)
0.75ppl milk price reduction for suppliers to Pattemores – from 1st April (4th March 2016)
Note, Pattemores do not have A & B pricing.
0.75ppl milk price reduction for suppliers to Pensworth Dairy – from 1st April (4th March 2016)
Note, Pensworth do not have A & B pricing or seasonality.
First Milk A price reductions – 1st March (4th March 2016)
0.6ppl milk price reduction for suppliers to its Haverfordwest, Aspatria/Cumbria, North of England, Arran and Campbeltown milk pools.
0.42ppl milk price reduction for suppliers to Scottish balancing pools.
The reductions will result in the following standard litre prices (www.milkprices.com):
Haverfordwest standard litre prices for liquid to 21.16ppl and manufacturing 21.63ppl (note, this includes the Tesco winter cheese supplement, see story below)
Cumbria/Aspatria liquid standard litre price to 17.54ppl and manufacturing 18.23ppl
North of England liquid standard litre price to 17.52ppl
GDT auction posts a modest 1.4% increase (4th March 2016)
This week’s auction saw average prices increase by 1.4%.
Notable movers were as follows:
WMP up 5.5% to average $1974/tonne
SMP up 1.3% to average $1802/tonne
Cheddar down 0.7% to average $2528/tonne
Dairy Crest introduce A & B pricing (4th March 2016)
Most farmers supplying Davidstow will be on A & B pricing from April 1st 2016. Signing up to the new contract is optional, however, for those who do make the move there is a 0.8ppl incentive.
This will mean on April 1st those on the new contract will receive a manufacturing standard litre price of 22.72ppl whilst those who opt to remain on the old/existing contract will receive 21.92ppl (www.milkprices.com)
50 Arla Directs are given 12 months notice (4th March 2016)
Around 50 Arla Directs have been served notice to find a new milk purchaser from 1st March 2017, assuming they don’t quit. The total litreage involved is around 40 million litres.
Tesco winter cheese supplement is extended to First Milk (4th March 2016)
Having given co-op members of Arla a beating and bloody nose over the short notice switching of 200 million litres of its liquid contract to Muller in addition dumping co-op members of South Caernarfon Creameries by ending the contract to supply cheese as well as producers 2.5ppl winter cheese supplement at least Tesco haven’t completely turned against all UK operating dairy co-ops.
The Tesco winter cheese supplement was due to end on the 29th February and for First Milk’s Haverfordwest producers has been extended until 17th April 2016. This means Tesco will continue to pay First Milk 29.58ppl for the milk, which goes into their own label cheese.
The January payment was worth 3.65ppl to First Milk members who supply the creamery and for December it was 2.55ppl.
Farming to London March – 23rd March (4th March 2016)
FFA are calling for all farmers to join them in London on 23rd March for what has been billed as “a celebration of farming” which will also highlight the current situation down on the farm. For more information log onto www.farmersforaction.org
December milk production in Southern Ireland up 30% compared to the year before (4th March 2016)
That’s according to AHDB Dairy and its an eye watering increase even though they were pulling back production in an attempt to avoid super levy in the final year of milk quotas.
Cheap (jaw dropping) milk and dairy products (4th March 2016)
6 litres of milk for £2 – Farm Foods – who supplies this milk, which is selling for 33ppl.
OMSCO’s new cheeses bound for the USA (4th March 2016)
OMSCo has developed two new cheeses for the US market. Both are cheddars, one with caramelised onion and one with cracked black pepper.
0.75ppl milk price reduction for suppliers to Wensleydale Creamery (Hawes) - backdated to 1st February. (12th February 2016)
This takes producers manufacturing standard litre down to 23.07ppl (www.milkprices.com)
UK Production continues to head North (12th February 2016)
December’s production weighed in at 1.215 million litres +5.1% compared to December 2014 (+ 59 million litres)
“Payne’s dairies edges back into profit after cutting farmer prices” (12th February 2016)
That’s a headline from an article in the Grocer which goes onto report that Payne’s 30th April 2015 profit of £69,000 reverses two years of losses and is some way off the 1.6 million profit in 2010. From the outside it looks like Payne’s, fell into the same trap as others in 2012 to 2014 trying to keep up with the likes of Arla in the price it paid producers for milk.
PTF scoops the Top Industry Award for a 2nd consecutive year (12th February 2016)
The Provision Trade Federation (PTF) has been named Best Trade Organisation at the Food Management Today Industry Awards for the second consecutive year.
The PTF represents in excess of 90% of the UK trade in Dairy and pigment but it’s in dairy where those involved in the UK Dairy Industry regularly appreciate its forward thinking regular updates, alerts and market predictions.
Its dairy predictions and market outlook simply eclipse and dwarf the very basic outlooks produced by other organisations.
For example, in its latest edition it calculates that 20% of the milk cheque money goes to 12% of the dairy farmers with the expectation those 12% (1500 farmers) will soon take 25% of the money, the 1500 farmers are those on retailer aligned contracts (Tesco, Sainsbury’s, Co-op, Waitrose, M&S, Nestle etc).
In Scotland the figure is closer to 40% going to 23% of dairy farmers.
On a more amusing but never the less serious note there is an opening article in the PTF’s latest dairy update headed
“Our Father, who art in heaven…”
Reporting that 140 representatives of the European Milk Board (100,000 members) met his Holiness Pope Francis in late January at the Vatican where they were blessed and all prayed for divine intervention.
“Hats off to them for doing something that doesn’t involve tipping milk in the streets or burning tyres. Given that The Almighty hasn’t got much on his plate these days the job should be sorted quite soon…” commented Walkland in the PTF bulletin.
The Author of the PTF’s Dairy report is Chris Walkland who will make a guest appearance at the NFU AGM Dairy Break out session at its conference in 10 days (23rd & 24th February) time where he will provide a Dairy Market Outlook & update. It’s sure to be hard hitting with no primary school basic analysis as to where the UK Dairy Industry is and what the outlook for the rest of 2016 and beyond is.
First Milk pricing changes see the A litres increased from 80% to 90% (12th February 2016)
First Milk has written to members confirming a schedule of pricing changes which take effect from April 1st
The key changes include the following:
A). The current A literage will increase from 80% to 90%.
b). A new milk price index will be utilised to track First Milks price against its main competitors and will be independently audited by www..milkprices.com and reported to members on a quarterly basis.
c). The current complex matrix of milk price schedules will be cut and this will be simpler for First milk to manage and easier for members to audit and monitor.
d). For members supplying First Milks Haverfordwest and Lake District Creameries there will be a transport charge ranging from zero to 1.5ppl according to the distance between the factory and the supplying farm.
e). Move money will be paid for quantity and less on hygiene. There are more details on this to be circulated to members and whilst there will be winners and losers the nett overall effect to First Milk are basically cash neutral. In other words it’s NOT a sneaky price cut but a re jig which is market related and visible.
Another disastrous GDT auction (Tuesday 2nd February 2016)
Today’s GDT auction results were nothing short of a disaster with the average price plunging 7.4% to US$2276.
All products dropped in value compared to the results achieved only two weeks ago, in particular, WMP which suffered the heaviest fall down 10.4% (US$236 tonne to average under US$2000 tonne).
Notable movers were:
WMP down 10.4% to average US $1952/tonne
Butter down 8.3% to average US $2905/tonne
Cheddar down 4.2% to average US $2807/tonne
SMP down 2.2% to average US $1792/tonne
The WMP crash prompted an instant reaction from several New Zealand processors whose farm gate milk price is now at or close to $4 compared to an industry wide accepted breakeven figure of $5, which the majority of New Zealand’s diary famers need.
One significant contributor to the fall is credited to the lack of demand from countries heavily dependent on oil revenue.
1ppl milk price reduction for suppliers to Joseph Heler Cheese – from 1st March (PRODUCER NOTIFIED) (5th February 2016)
ASDA confirm its commitment to Arla until at least 2019 (5th February 2016)
There were concerns that following the Tesco decision to switch around 40% (180 to 200 million litres) of their Arla supplied milk to Muller that other retailers would jump on the merry-go-round piling further pressure on non aligned milk prices.
Whilst such pressure from ASDA cannot be completely ruled out they have at least re-affirmed their commitment to source all its circa 600 million litres of fresh liquid milk from Arla until 2019.
In addition Asda has confirmed it will continue to support and promote the Arla (quality) mark landed last year with a minimum price guarantee of 28ppl.
Given this commitment it must surely be fair to assume that as part of the new 3 year deal a minimum price at a similar level of around 28ppl will be part of the package.
Meadow Foods to hold its March milk price (5th February 2016)
Meadow Foods have written to suppliers confirming that the March milk price will be stand on meaning a standard liquid litre price of 19ppl (www.milkprices.com)
New younger enthusiastic faces wanted on the NFU Dairy Board
The NFU Dairy Board is looking for up to four new appointees. Active dairy farmers with an interest or skills in the dairy supply chain, retail or processing, skills and training, large scale/intensive production, seasonal and extensive production, novel business structures, producer groups and succession are welcome to apply. More information can be found by pressing the link: http://www.nfuonline.com/sectors/dairy/dairy-must-read/driving-the-dairy-agenda-join-the-dairy-board/.
If interested please contact Sian Davies, Chief Dairy Adviser c/o Nancy.Fuller@nfu.org.uk with a CV and covering letter by 9th March.
Private Storage Aid extended (5th February 2016)
The European Commission announced last Friday that it has extended Private Storage Aid (PSA) for butter and skimmed milk powder until September 30th, 2016. PSA was scheduled to close at the end of February. Regrettably, the announcement didn’t mention a an extension to the PSA scheme for cheese..
Under PSA processors retain ownership of the products and receive EU payments for leaving them in store off the market
Responses to AHDB Dairy’s 3 year business plan (5th February 2016)
Following several requests Ian has decided to publish his response to the AHDB Business Plan. Click on this link: Ian Potter response
In addition, Kite Consultancy have published their response. Click on
A couple of Kite’s comments jump out at readers: “They (Kite’s clients) think it (AHDB Dairy) produces far too much information that is relatively basic, focused on average operators.”
Also “Many also believe that some of the intelligence work AHDB Dairy carries out is a waste of time and resources.” “There is no need for Market Intelligence to report on general dairy news, which is more than adequately covered by the general farming media, industry websites and social media.”
In AHDB Dairy’s news article published 11th January the commentary read:
“A recovery in prices to more sustainable levels for the whole supply chain is needed but, when this will happen, and how quickly, relies on a combination of three key events: a reduction in milk production, the sale of excess stocks and a rise in demand.” This supports the view that it is, indeed, teaching Grannie to suck eggs. If a dairy farmer doesn’t understand those fundamentals there is no hope!
Another comment in a previous report from AHDB diary stated that one of the really important findings in the report was that there is a big gap between current farmgate prices for aligned and no aligned fresh milk.
As one farmer emailed – No shit Sherlock and we pay levy money for this sort of commentary which is about as much use as tits on a bull!
From emails Ian has received there appears to be a significant number of levy payers who want to see AHDB Dairy bin its 3 year plan and rewrite it, in particular with an emphasis to support domestic dairy promotion, assist with an export strategy, help farmers in these unprecedented times to make tough decisions and big changes as well as up their game on communication and what is currently below average market intelligence commentary.
AHDB states that “AHDB’s dairy staff and Board have been out meeting and listening to levy payers in Scotland, England and Wales.” Well they might be claiming to listen, but the jury is out as to whether its board will take any notice or change!
One things for certain they are going to have to overcome their genetic phobia of associating themselves as the messengers for bad news when attempting to inform farmers of what they term as news.
NFU Vs AHDB (5th February 2016)
In Robert Forster’s excellent Beef Newsletter he recently referred to a disagreement between The NFU and AHDB, which appears to be spearheaded by the high heels of presidential candidate, Minette Batters. Her stance is evidently in contradiction to the position adopted by both the current and former NFU presidents Meurig Raymond and Peter Kendall.
The snippet reads as follows:
If Meurig wants to calm the waters in the run up to the NFU presidential election by supporting his old mate Kendall it could be his ultimate downfall. Farmers across all sectors want someone who will stand up for them and make a difference.
As a famous quote goes “Anyone can hold the helm when the sea is calm”
That sea is far from calm now so far as the UK dairy industry is concerned or AHDB and its three year plan.
Note, Minette Batters Semex Conference comments feature in Ian’s response to the AHDB Dairy Business plan. Click on the link: Ian Potter response
AHDB Dairy price reporting back on the radar (5th February 2016)
DIN has highlighted the decision by AHDB Dairy’s Market Intelligence analysts to cease publishing an average wholesale cheese price whilst continuing to publish the MCVE price.
Given the fact anyone with any idea of how to add up can calculate the cheese price from MCVE it’s a puzzle as to why publication of a key price like wholesale cheese has ceased.
DIN commented that “It is believed that AHDB Dairy are not publishing a mild Cheddar quote because they don’t trust the market reports they are getting.”
Ian questioned the cheese price quoted by AHDB in his October Dairy Farmer article. He questioned AHDB over who they contacted for prices, tonnes traded and how the average was calculated. Alas, the response was “It’s commercially sensitive information.” It appears that since that article no cheese price has been published.
It’s likely that in obtaining their prices either AHDB analysts asked the questions in the wrong way, leading to questionable answers or simply took shortcuts. Similar concerns have been voiced over AHDB’s bulk cream prices as to what questions are asked, and to whom, in arriving at the published prices.
Dairy UK publish its Export Strategy (5th February 2016)
Dairy UK have published “UK Exporting Dairy to the World”, where they highlight what’s required to allow the industry to unlock the potential in international markets.
In the report is a list of actions and recommendations that will boost our exports, including creating a one-stop shop for dairy exporters.
Farming Minister, George Eustice, commented “Exports are a crucial part of growing and strengthening the dairy industry and a key part of our plan is to see new markets opened, so that the sector can become more resilient, competitive and profitable.”
Now, how do the Minister’s words of encouragement fit with AHDB’s three year zero budget to help exports and this strategy? As it stands they don’t, and a revolt is brewing.
500 jobs axed at Arla (5th February 2016)
Arla has announced its global restructuring including a 500 head count reduction. Staff involved are expected to all be consulted and notified by mid March.
It’s a sad fact that across the world dairy processors of all sizes are cutting back on staff in order to remain lean and competitive.
In addition to announcing it’s plan current head of Arla UK Peter Giortz-Carlsen will take on the new position as Head of Europe and his UK role will be taken by Thomas Pietrangeli who is currently in charge of Arla Denmark
Another disasterous GDT auction (3rd February 2016)
Today’s GDT auction results were nothing short of a disaster with the average price plunging 7.4% to US$2276.
All products dropped in value compared to the results achieved only two weeks ago, in particular, WMP which suffered the heaviest fall down 10.4% (US$236 tonne to average under US$2000 tonne).
Notable movers were:
WMP down 10.4% to average US $1952/tonne
Butter down 8.3% to average US $2905/tonne
Cheddar down 4.2% to average US $2807/tonne
SMP down 2.2% to average US $1792/tonne
The WMP crash prompted an instant reaction from several New Zealand producers who’s farm gate milk price is now at or close to $4 compared to an industry wide breakeven figure of $5, which the majority of New Zealand’s diary famers need.
One significant contributor to the fall is credited to the lack of demand from countries heavily dependent on oil revenue.
3.25ppl milk price reduction for Arla Direct suppliers – from March 1st (1st February 2016)
This takes their standard liquid price to 16ppl & manufacturing price to 16.78ppl (www.milkprices.com)
With the real possibility that all of them could soon be given 12 months notice to find a new milk purchaser (see Tesco story below)
2ppl milk price reduction to only 9ppl for suppliers to Payne’s Dairies Limited (PRODUCER NOTIFIED) – from February 1st (1st February 2016)
This is a sudden drop communicated to farmers on the 27th January with the B litre price dropping from 11ppl to only 9ppl from today, February 1st and this from a liquid premium processor.
In addition, producers paid a 0.35ppl balancing charge deducted from the January milk statement against milk delivered over the Christmas and New Year period.
1.0ppl milk price reduction for suppliers to Payne’s Dairies Limited – from February 1st (PRODUCER NOTIFIED) (1st February 2016)
This takes their standard liquid price to 20.20ppl.
1.6ppl milk price reduction for suppliers to Dairy Crest Davidstow – from March 1st (1st February 2016)
This takes their standard liquid price to 21.64ppl & manufacturing price to 22.72ppl (www.milkprices.com)
1.5ppl milk price reduction for suppliers to County Milk – from February 1st (PRODUCER NOTIFIED)
1.5ppl milk price reduction for suppliers of Woodcock’s (Yew Tree Dairy) – from March 1st
This takes their standard liquid price to 22.25ppl.
1.3ppl milk price reduction for suppliers to Glanbia – from March 1st (1st February 2016)
This takes their standard liquid price to 18.43ppl & manufacturing price to 19.04ppl (www.milkprices.com)
1ppl milk price reduction for suppliers to South Caernarfon Creameries Limited – from March 1st (1st February 2016)
1ppl milk price reduction for suppliers to Belton Cheese – from March 1st (1st February 2016)
This takes their standard litre liquid price to 21ppl & manufacturing standard litre price to 21.75ppl (www.milkprices.com)
1ppl milk price reduction for suppliers to Pattemores – from March 1st (1st February 2016)
0.75ppl milk price reduction for suppliers to Pensworth Dairy – from 1st March (1st February 2016)
This takes producers liquid standard litre price down to 20.65ppl (www.milkprices.com)
0.62ppl milk price reduction for suppliers to First Milk’s Midlands & East Wales balancing group – from February 1st (1st February 2016)
This takes their standard liquid price to 17.28ppl.
0.19ppl milk price reduction for suppliers to First Milk’s Scotland balancing group – from February 1st (1st February 2016)
This takes their standard liquid price to 17.93ppl.
Tesco drop industry bombshell moving circa 180 million litres of milk from Arla to Muller (1st February 2016)
Speculation on the shock surprise by Britain’s biggest retailer Tesco to switch up to 200 million litres of its Tesco aligned milk from Arla to Muller has now been confirmed and it’s piled on the negative PR, the Tesco Comms Team will have to wrestle with.
Ian has exchanged emails with Tesco and had several conversations with them as he attempted to obtain answers to basic questions for example:
All three questions are currently commercially sensitive and a secret, however the switch will not take place until after the spring flush. So on the basis Tesco’s track record is not to do anything for free one has to assume that money is changing hands as usually happens when big milk volumes switch.
For GB milk its neutral. For the chosen few in Muller its good news, for the rest it will further fuel the argument that the non aligned (the have nots) are subsidising the chosen few.
Many in the industry believed that Muller’s take over of Dairy Crest’s liquid division effectively making 3 liquid processors become one would be good news for the industry but following this move the jury is out.
What it means for Arla? (1st February 2016)
Tesco have stated that the Arla Tesco direct farmers “will be protected and continue to be aligned directly to Tesco”.
Translating this must mean that if the 300 million or so litres Arla retain of the Tesco liquid business the Tesco Arla directs are protected. This means the 200 million or so litres Arla has lost is a loss to Arla Co-op members at the Tesco price. More evidence that the non aligned are paying for the chosen few.
This sounds very much like a deal has been struck to favour Arla (direct) Tesco producers which is certainly not one of the core foundation stones a Co-op is built on of working of working for its members.
In addition Tesco Arla directs look likely to be one of the last dominos with the announcement of a 3.25ppl price cut and the real possibility that in 12 months time their milk will need to find another home unless this market turns North before then.
Arla now need to find a home for an extra 200 million litres of milk. In addition with immediate effect no Arla member can switch to become an Arla Directs or vice versa. This means whatever happens to the Tesco Arla Directs they will not be able to join Arla as members.
Let’s hope the Tesco move doesn’t energise the liquid merry go round where the only people who can’t afford the ride are dairy farmers.
John Beckett 1935 – 2016 (1st February 2016)
It is with great sadness we announce the passing of John Beckett after a long and distinguished career in the agricultural industry.
John was a highly respected Director of Belton Cheese and recently retired as Chairman of the family business.
Away from Belton Cheese, John has been a champion for the dairy industry. He has been a past President of the Royal Association of British Dairy Farmers (RABDF), Chairman of Cheshire County Landowners Association and in 1977 he became the Chairman of NWF Group for 11 years.
In 2012 John was presented with the Royal Association of British Dairy Farmers’ Princess Royal Award. The honour was made for his outstanding services to the industry. The following year John received the National Agricultural Award from the RASE.
The transformation of Genus is probably one of John’s greatest achievements. In 1994 John was appointed Chairman and 7 years later the Genus business became the biggest breeding company in the world, trading in 70 countries.
Despite wearing many hats, John’s passion was to help young people acquire the business knowledge that he felt was lacking in some parts of the industry, believing that if farmers are to compete on more equal terms they need to fully embrace the science of management.
To this end John established the MBA Agrifarm Charitable Fund, administered by The Worshipful Company of Farmers, which would enable enterprising farmers to study for an MBA alongside executives from other sectors at the Cranfield School of Management. This is an initiative that will pay dividends for generations to come.
John was also past Chairman of The 300 Cow Club, Farmhouse Cheesemakers Ltd, Goodwin’s Cheese Ltd and M K Richmond Ltd John Deere dealership. He was a Liveryman of The Worshipful Company of Farmers and Honorary Fellow of Royal Agricultural Society of England.
A Service of Thanksgiving is to be held at St. Alkmunds’s Church, Whitchurch, and Shropshire at 12 noon on Friday 18th March 2016.
Tesco – guilty again (25th January 2016)
The Groceries Code Adjudicator (GCA) Christine Tacon has today published her report into her investigation into Tesco PLC in terms of how Britain’s biggest retailer has failed to comply with the supply code of practice. Her conclusion is simple: Tesco have seriously breached paragraph 5 of the code.
In her report she states she found evidence that Tesco deducted or deferred payments owed to suppliers for goods with some payments taking up to two years to be paid by Tesco.
In addition, she saw instances where Tesco overcharged or underpaid supplies without rectifying the matters.
“It was clear from the evidence that a major focus of the Tesco Commercial Team during the investigation was on hitting budgeted margin targets”.
It’s a report full of examples about Tesco charging extra fees, delaying or failing to pay, and for its buyers leveraging (i.e. leaning on!) suppliers.
She concludes her report with five recommendations and I guess if she could add number six it would be for her to fine Tesco for its breaches (legally she can’t.)
Tesco could be fined £500m (25th January 2016)
This comes on top of an ongoing Serious Fraud Office investigation into the £326 million Tesco accounting scandal. One city analyst has warned that Tesco could face a £500 million fine for the scandal. The big question will be who will Drastic Dave Lewis get to pay the Tesco’s fines?
Do leopards change their spots? We shall see, but they certainly don’t change into pussy cats. At the moment they look as if they have the morals of an alley cat (25th January 2016)
Britain’s biggest retailer (but far from being its favourite) Tesco are having a PR kicking on a scale never seen before in the UK with any retailer.
Drastic Dave Lewis, CEO, will be scratching his head with his bean counters as to how he can prop up his margins and pay the fines whilst turning in a healthy profit. It’s a near certainty Tesco will find a way for suppliers to pay for its errors and mistakes because that how the track record reads. We had better hope, pray and be ready to ensure that Tesco’s dark forces don’t try and recoup their fines, lost margins, and lost routes to margins by pick-pocketing hard working dairy farmers in an already crippled dairy industry (that’s apart from its pampered directs whose bonus money indirectly comes from non-aligned farmers). If they do the industry will have to put differences to one side and stand shoulder to shoulder to take them head on, no matter how big they are.
Tesco V NFU (25th January 2016)
The Tesco PR nightmare and how the NFU handle it is now favourite to be the deciding factor at next month’s NFU elections. Deputy president Minette Batters won over most of the audience with her measured, professional presentation at the Semex conference two weeks ago. President Meurig Raymond will get his main chance at the NFU conference at the end of February.
Who will have the nerve to go head to head with Tesco, because that is what is required and what will make or break the presidential bid. Career defining speeches beckon, and the reputation of Tesco and its allies in the supply chain are hanging in the balance.
Will the next NFU president wear black lace up shoes or high heels? Either the way, as the Nancy Sinatra song goes, the boots need to be made for walking…walking all over Tesco until it really does change its spots.
1.5ppl milk price reduction for Grahams Dairies (Scotland) producers from the 1st February (22nd January 2016)
This takes producer’s standard liquid litre down to 22.25ppl.
0.8ppl milk price reduction for Arla members – from 1st February (22nd January 2016)
This is 1 Euro Cent and takes producer’s standard litre price to 21.81ppl liquid & 22.68ppl manufacturing (www.milkprices.com). The 0.8ppl comprises of a 0.75ppl price reduction plus a 0.05ppl forecast 13th payment increase.
GDT Auction down 1.4% (22nd January 2016)
This weeks GDT Auction average continued to head South with the average price down 1.4% to US$2,405/tonne.
Notable movers were:
Butter down 5.9% to average US$3724/tonne
Cheddar down 3.4% to average US$2867/tonne
SMP down 3.2% to average US$1835/tonne
WMP down 0.5% to average US$2188/tonne
What’s coming down the line? (22nd January 2016)
Between now and February 1st it is a near certainty that most, if not all, milk processors have already decided to announce price reductions for 1st February or 1st March.
There is simply no light at the end of this tunnel, in fact the tunnel is getting longer each day. A group of farmers in Scotland are reporting a current brutal 14ppl milk price and post 1st April it could easily be lower when they are forced to change the destination of their milk.
Add to this rumours of one or two extremely aggressive liquid processors (one XL and one medium) raiding existing contracts by offering eye-wateringly cheap milk to attract new and existing customers and the end result is simply lower ex-farm gate milk prices. It’s grim and it’s going to get a damn site worse.
AHDB Dairy Market Intelligence raises eyebrows (22nd January 2016)
AHDB Dairy attracted the attention of two eagle eyed Potter bulletin readers with their news item produced by the Market Intelligence Department.
The top story was headed “DAIRY MARKET RECOVERY RESTS ON THREE KEY FACTS”
It went on to explain that “A recovery in prices to more sustainable levels for the whole supply chain is needed but, when this will happen, and how quickly, relies on a combination of three key events: a reduction in milk production, the sales of excess stocks and a rise in demand.”
As one reader commented “Is this the sort of Peter & Jane market analysis our levy money pays for? Heaven help the famers who hadn’t figured this out months ago”.
Llaeth Cymreig Accounts show £714,000 loss (22nd January 2016)
The accounts for the milk processor to the 31st March 2015 show a £714,000 loss and declare that a much lower loss of £70,000 has been recorded in the period April 1st 2015 to October 2015.
Worryingly is the note on page 4 of the Independent Auditors Statement indicating the existence “of a material uncertainty which may cast doubt about the company’s ability to continue as a going concern”. In the Directors report they, like others, incurred significant losses having to deal with surplus milk. They refer to an extra 143 artic loads of milk amounting to 4 million litres and state the calculation summary as resulting in a 12 to 15ppl spot market sale loss. 12ppl x 4 million = £480,000. They certainly are not alone with such problems.
1ppl milk price reduction for Muller Wiseman - from 15th February (15th January 2016)
The new standard litre prices will be:
21.35ppl Muller Wiseman non-aligned.
20.69ppl Muller Direct (ex-Dairy Crest liquid).
Increased volume payments boost Glanbia’s farm gate milk price by 0.25ppl (15th January 2016)
Whilst Glanbia decided to hold its February milk price its increased volume bonuses mean a standard 1 million litre producer will benefit from a 0.25ppl increase and for those producing more than 20,000 litres/day it is worth 1.5ppl.
The volume bonuses increase the www.milkprices.com liquid standard litre to 19.68ppl and its manufacturing standard litre increases to 20.34ppl.
First Milk exit Westbury (15th January 2016)
First Milk have wanted out of Westbury for some time to rid themselves of what has been a millstone and now they have concluded the deal to exit the facility for an undisclosed sum. For First Milk relieving itself of the burden to pay half the cost of running the Westbury plant with a one off payment to Arla of a few million will be good business and further evidence that Mike Gallacher is determined to turn the business around.
Westbury Dairies Limited is now 100% owned by Arla along with the site, which Arla acquired in December 2013.
Arla are now free to further develop the 750 million litre a year site where it currently produces Anchor butter, own label butter for retailers as well as powder.
It’s a certainty that First Milk do not require circa 350 million of balancing capacity with a maximum 1 billion litre member milk field only to lose money on every litre of milk processed through Westbury. Actually some might claim in doing so First Milk were carrying a balancing charge and running half a plant to benefit the rest of the UK dairy industry.
Note going forward, First Milk have negotiated preferential access to the facility during the Spring flush and at other times.
The exit from the Westbury joint venture is another smart move by Gallacher in connection with his turnaround plan. The savings from the exit form Westbury should unlock milk price moves for members in the coming months.
Ian has also been reliably informed that First Milk are now on the front foot and actively looking for additional milk in Cumbria, West Wales and the West Midlands.
First Milk Sharpen’s its act again – by name and by nature (15th January 2016)
Experienced businessman Clive Sharpe has filled the position of First Milk’s Chairman from February 1st, following the departure of Sir Jim Paice.
Sharpe has been involved in food manufacturing for 35 years and comes with an impressive CV having been Chairman of Quorn Foods and Burton Biscuits, former CEO of WT Foods, Golden Wonder and Homepride Foods and former non-executive director of Duerr’s Jams and Tangerine Confectionery as well as his current role as Chairman of Peters Foods, which he retains.
Looking at his track record he certainly appears to know his way around the food industry and hasn’t previously shied away from challenges. He is badged as a self-made down to earth man, with experience and buckets of energy. On paper it should be considered a coup for First Milk to get someone with Sharpe’s pedigree and experience.
Meadow Foods under attack (15th January 2016)
The NFU’s Dairy Board chairman has lambasted Meadow Foods in a press release following its 13.7m pre tax annual profit announcement.
In the release he highlights the fact that Meadow languish at the bottom of the milk price league table. According to AHDB Dairy they sit only second from bottom.
The NFU has hit out at the fact Meadow pay one of the lowest milk prices, do not participate in the Voluntary Code of Conduct have no formal producer representation and last week announced that only 80% of the A litres delivered from April will receive the headline A milk price.
Ian admits that until he posted his news item on Meadow’s decision to cut the A litres it pays for milk to 80% from April he hadn’t appreciated how much anger and unrest there is among Meadow producers.
Intervention storage increases (15th January 2016)
During the past couple of weeks the quantity of SMP placed into EU intervention stores has escalated with EU wholesale SMP prices now trading below the Intervention level of €1698/tonne (approximately £1280/tonne), which is a 6 year low.
In the past four weeks to 4th January, 16,286 tonnes of SMP have gone into EU intervention representing a 54% increase in the tonnage placed into store.
Of the total 46,639 tonnes of SMP offered into intervention nearly 5% (2,183 tonnes) has originated from the UK. In December a token 882 tonnes of SMP were removed from EU intervention stores.
Butter stocks offered into EU Intervention have also steadily increased with 166,914 tonnes by 4th January of which 4.2% (7,065 tonnes) originated from the UK.
Arla launches BOB brand (15th January 2016)
Arla has launched the Arla Best of Both (AKA Arla BOB) branded milk, which utilises the same filtration process used with Cravendale and they claim it tastes as good as semi-skimmed and has taken three years to develop.
It is on sale at RRP £1.50 for 2 litres and £1 for 1 litre packs and will be launched and supported by a £7 million advertising campaign, including TV campaign, which starts on 8th February. It’s classed as a fat free containing no more than 0.5% fat. It’s more innovation, and hopefully more added value milk from GB processors.
Danish Dairy Farmers to receive EU cash (15th January 2016)
The Danish Government have decided to pay the lion’s share of the $12 million (£8.4 million) the country receives from the EU emergency agriculture aid fund to its hard pressed dairy farmers who are “having difficulty making ends meet”.
Tracking Quads, RTV’s, Tractors, Cars, Husbands & Wives (15th January 2016)
Would you like to monitor the mileage your vehicle is doing over the year or make sure your trailer is where you left it? Then look no further, Pinpointpal tracking device is small, efficient and easy to use and has a huge variety of benefits. Whether its a farmer wanting to check his workmen are where they should be or have checked the livestock they should have, or a contractor wanting to make sure his loadall is where he left it. You can calculate mileage claims, set movement alerts and its even possible to monitor the hours a machine has been in use. The list is endless. Recommended retail price £250 however we have a special IPA offer of £150 + VAT this includes 2 years free monitoring and its only £25 a year thereafter.
For more information on the device please contact Lydia on 01335 324594 or email@example.com
0.25ppl and 0.18ppl First Milk price reductions - from 1st January (8th January 2016)
Those affected are as follows:
0.25ppl reduction for suppliers to Campbeltown, Arran, Lake District, Haverfordwest & North of England balancing.
0.18ppl reduction for the Scottish balancing pool.
The resulting www.milkprices.com 1st January standard litre prices are:
Liquid Standard Manufacturing Standard
(includes the 2.24ppl Tesco winter cheese payment) 20.35ppl 20.84ppl
Lake District 18.14ppl 18.85ppl
North of England 18.12ppl
Scottish Balancing Pool 18.12ppl
Midlands & East Wales 17.90ppl
GDT auction prices down on average 1.6% (8th January 2016)
There were no surprises in the first auction of the year, which continued to trend slightly down.
Notable price movements were:
Cheddar up 3.5% to average US $2964/tonne
SMP down 0.8% to average US $1890/tonne
WMP down 4.4% to average US $2210/tonne
UK milk production continues to rise (8th January 2016)
November milk production totalling 1.163m litres shows a 3.8% (43m litre) increase on that recorded in November 2014.
In the first 8 months of the dairy year to the end of November the UK has produced an extra 303 million litres (+3.13%) compared to that produced in 2014 equivalent to an extra 1.26 million litres everyday.
Meadow Foods milk price calculation changes (8th January 2016)
Meadow Foods will change how they pay suppliers from April 1st with the A price paid on 80% of producers 100% A (quota) allocation with any remaining production paid at the B litre price.
Is this a price cut, a price adjustment that will be more or less neutral or will producers never know the truth?
The reality is just like most, if not all, milk processors Meadow simply has too much milk on its hands and a limited number of resignations and/or farmers quitting. With this move Meadow have decided to spread the risk across all producers making those who produce any B litres plus 20% off the A litres take the pain.
If Meadow are paying the A price on only 80% of the milk it should mean that the A price improves. If that happens the adjustment will be neutral and if the B price is say 15p those who produce the extra litres bear the pain until prices turn the corner and head North. At this point the B price will be the first move and will drag the A price up with it.
Only time will tell whether Meadow’s A price improves on April 1st.
MCVE and AMPE continue to head south (8th January 2016)
AHDB’s dairy market indicators MCVE and AMPE next month are likely to both hit their all time record lows. The December MCVE stands at 18.9ppl and AMPE at 16ppl (see the table at the top of this bulletin).
Dutch cull cow slaughtering rocket with 1.5ppl premium (8th January 2016)
Within a matter of hours cull cow prices in Holland fell 15 cents per kg (11p/kg) as cow numbers sent to slaughter rocketed resulting in slaughter houses bursting at the seams and waiting lists forming.
One of the key factors has been the decision by Friesland Campina who are now paying a 2 Euro cents kg (1.5ppl) to members who supply the same or less milk between 1st January to 11th February compared to the base period of 13th to 27th December. It does not apply to organic producers where extra milk is required. The fact is Friesland Campina members are producing far more milk than the company requires or can handle.
US blizzard results in 40,000 cattle deaths (8th January 2016)
Over the Christmas period between the 24th to 29th December, a blizzard called Goliath in Texas and New Mexico saw an estimated 30,000 to 40,000 cattle die and hundreds of tanker loads of milk fail to be collected.
Most of the animals perished in up to 14 foot snow drifts created by 80mph winds and that’s in what is geographically described as a desert area! Crazy weather.
Snap to it on Snaptags! (8th January 2016)
Ian Potter Associates has, for the last 3 years, been actively marketing the Snaptag brand of cattle, sheep and pig ear tags. Repeat orders from every customer (OK, with the exception of one) speak for themselves in terms of their quality and durability. Basically they're the bull's/boars/rams nadgers when it comes to tags.
And this, of course, is the bull's nadgers when it comes to dairy bulletins, which we send to you FOC because we're nice people.
There is, though, no such things as getting summut for nowt, and we strive to sell something on the back of it - hence our plugs for these tags, Pinpointpal vehicle tracking devices, and the occasional request for information for our database cleansing so we know who's genuinely a dairy farmer and who's just pretendin'.
So if you've got livestock and are in the market for tags (and even if you aren't - we're not fussy!) then give us a call! Our general tags & sample tags (BVD) are extremely competitive so why not ask us to quote! Go on...you know you want to...
Thank you, and we look forward to your custom and to continuing to be able to send this bulletin out FOC.
Suffolk man ‘had sex with 450 tractors’ – reproduced with the permission of the Suffolk Gazette (24th December 2015)
A Suffolk man with a bizarre sexual attraction to tractors has been banned from the countryside and forced to sign the sex-offenders’ register.
Ralph Bishop, 53, was found by police with his trousers around his ankles “interfering” with a tractor parked in a field outside Saxmundham.
He was arrested on suspicion of outraging public decency, and admitted to having had sex with around 450 tractors all over the Suffolk countryside.
When officers searched his terraced home they found a collection of more than 5,000 tractor images on his laptop.
The photos showed Bishop had a special desire for John Deere and Massey Ferguson tractors, particularly green ones.
A police insider said: “We couldn’t believe it when we found him in the field. He was wearing a white t-shirt and Wellington boots and very little else. He was clearly in state of high excitement at the rear of the machine.
“Thankfully nobody else was around, but the field is close to a village primary school so we had to arrest him and educate him about the error of his ways.
“He told us he was particularly ‘in to’ axle grease and the presence of this around the back of tractors was all too much for him.”
Bishop, twice divorced, was released without charge on condition he sought psychological help. He was put on the sex-offenders’ register.
“He is also banned from the countryside and is now not allowed to go within one mile of a farm,” the police insider added. “So he has to live and remain in the middle of Ipswich to comply with that.
“However, we are watching him because we are worried about the safety of several street-cleaning machines.”
Another policeman added: “He’ll also need to keep away from the town’s gardens – if he takes a fancy to a lawn mower he might find he loses more than just his liberty.”
Real Complaints to Councils - You couldn’t make them up (24th December 2015)
Extracts from letters written to local councils:
the dog’s mess that I find hard to swallow.
2. I want some repairs done to my cooker as it has backfired and burnt my knob off.
3. I wish to complain that my father twisted his ankle very badly when he put his foot in the hole in his back passage.
4. Their 18 year old son is continually banging his balls against my fence.
5. I wish to report that tiles are missing from the outside toilet roof. I think it was bad wind the other day that blew them off.
6. My lavatory seat is cracked, where do I stand?
7. I am writing on behalf of my sink, which is coming away from the wall.
8. Will you please send someone to mend the garden path? My wife tripped and fell on it yesterday and now she is pregnant.
9. I request permission to remove my drawers in the kitchen.
10. 50% of the walls are damp, 50% have crumbling plaster, and 50% are just plain filthy.
11. I am still having problems with smoke in my new drawers.
12. The toilet is blocked and we cannot bath the children until it is cleared.
13. Will you please send a man to look at my water, it is a funny colour and not fit to drink.
14. Our lavatory seat is broken in half and now is in three pieces.
15. I want to complain about the farmer across the road. Every morning at 6am his cock wakes me up and it's now getting too much for me.
16. The man next door has a large erection in the back garden, which is unsightly and dangerous.
17. Our kitchen floor is damp. We have two children and would like a third, so please send someone round to do something about it.
18. I am a single woman living in a downstairs flat and would you please do something about the noise made by the man on top of me every night.
19. Please send a man with the right tool to finish the job and satisfy my wife.
20. I have had the clerk of works down on the floor six times but I still have no satisfaction.
21. This is to let you know that our lavatory seat is broke and we can't get BBC2.
22. My bush is really overgrown round the front and my back passage has fungus growing in it.
23. He's got this huge tool that vibrates the whole house and I just can't take it anymore.
1.724ppl retail supplement addition for Muller Wiseman producers (18th December 2015)
This is the November deliveries supplement paid to producers on the standard non retailer aligned contracts.
0.57ppl Muller Wiseman formula price reduction (18th December 2015)
The reduction will apply for deliveries in January to March inclusive and takes the standard liquid litre price down to 17.67ppl. (www.milkprices.com)
GDT (18th December 2015)
The average price of this weeks auction crept up a little by 1.9%. The anticipation from analysts was for WMP to see a double digit increase of 10% plus however the reality was only a 1.8% lift.
Key prices were:
· Butter average US $3136/tonne + 9%
· WMP average US $2304/tonne + 1.8%
· Cheddar average US $2856/tonne + 1.1%
· SMP average US $1891/tonne + 0.2%
First Milk successfully concludes its refinancing package (18th December 2015)
Mike Gallacher and his commercial gurus have successfully agreed terms with Barclays and Lloyds to extend loans well ahead of the 1st February deadline.
This sends a very important signal to members that the same two banks have clearly decided the turnaround plan looks good consequently both have decided to support it. I doubt in this environment either of the banks have been charitable or in the Christmas spirit so one assumes they have detected confidence is the plan.
First Milk Members vote for a Commercial Board (18th December 2015)
At a special General meeting this week Members unanimously approved First Milk governance shake up which will see only two farmers on the board.
The day of enthusiastic amateurs believing they have the necessary skills to help run First Milk by sitting around the board room are finally over.
For continuity its likely one of the two farmer positions will be filled by one of the existing farmer board members and the hunt is on for the second who could come from the existing board or could be a new face. Whoever it is he or she simply has to come with a proven track record in the commercial world and not just in milking cows. Gallacher has to have a very commercially focussed board and he is almost there.
It is late for First Milk to realise the serious damage its governance and management team has done in the past 3 to 4 years but as they say its better late than never and its time to turnover a new page for 2016.
What next for First Milk (18th December 2015)
The announcement of a new commercially experienced chairman should come in January.
The goal for 2016 must surely be for Gallacher to significantly close the gap between First Milks lower member prices and its competitive set. If signs of that appear in the First half of 2016 the talk will no longer be whether First Milk can survive but more that it will have turned the corner which some may claim has already happened in 2015.
There are signs of glimmers of hope for First Milk but sadly in this environment they will come too late for some members
1.425ppl milk price reduction for Dairy Crest formula contracted producers – from 1st January (11th December 2015)
This comprises of a 1.6ppl reduction as a result of the re-basing announced 12 months ago and a positive +0.175ppl increase in the 5 parameters used in the formula for November.
Note, the adjustment means there will still be a 3.6ppl advantage in favour of the formula liquid standard litre (25.37ppl) compared to the Dairy Crest standard liquid (21.81ppl).
1ppl milk price reduction for Booths Supermarkets suppliers – from January 1st (11th December 2015)
This reduces producers’ www.milkprices.com standard litre price to 32ppl, still a chart topper.
1ppl milk price reduction for Wensleydale Creamery suppliers – from December 1st
This reduces producers’ www.milkprices.com price to 22.75ppl on the liquid standard litre and 23.82ppl for the manufacturing standard litre.
Southern Ireland’s November milk production +50% (11th December 2015)
This was the headline in an Irish Farmers’ Journal article where estimates claim an additional 150 million litres of milk were processed in Southern Ireland in November compared to November 2014. The range extremes used were +22% for the processor Aurivo to +76% for Dairygold.
Note, in November 2014 over production resulted in many dairy farmers cutting production and drying off cows early, which a factor is contributing to the seismic increase.
Milk price prospects do not look great between now and 2020 at 23 to 24ppl? (11th December 2015)
The European Commission has published a report “Prospects for EU Agricultural Markets Income 2015-2025”
The report predicts the world will increase milk production by 16.1 million tonnes a year. Of more concern is the prediction that the EU is expected to be the area which will see the highest production increase and the highest world exports increase with around 50% of the extra milk produced in the EU going into powders for export whilst 30% will go into cheese. This all means that the EU will account for almost a third of all dairy product traded on the world market. So effectively, as if we didn’t realise it before, the extra dairy products will have to be exported.
Of more concern is the expectation that for the next four years plus to 2020 the average EU milk price will run between 32 to 33 Euro Cents kg or 23 to 24ppl at today’s exchange rate with very slow recovery from the current lows
Arla’s Vision to 2020 (11th December 2015)
Arla has published its 2020 growth strategy in which it anticipates its 12,700 members will increase milk production by 2.5 billion kg by 2020.
Arla’s strategy with its member’s milk is to focus its marketing growth towards six markets, The Middle East, China, Russia, Nigeria, and USA & Europe. The split in its additional sales values are expected to be 50% in Europe and 50% outside of the EU.
Consultation is open on AHDB Dairy Business Plan 2016 to 2019 – Ian urges Dairy farmers are urged to have your say (11th December 2015)
AHDB, including AHDB Dairy, has launched a consultation on its 4 year business plan and budget to 2019 in which they are particularly interested in answers to the following questions:
Do you agree with the proposed activities for the dairy sector? If not, which activities will make the biggest difference to improving the competitiveness of dairy, and why?
What levy funded activity (ies) in your view could be stopped, and why?
Do you agree that levy rates should remain unchanged for 2016/17?
Any other comments you have on the Plan
Ian has studied the plan and was stunned to learn that if dairy farmers assume AHDB Dairy is facilitating exports of surplus dairy products they can think again. Their current budget to help dairy exports is a nice round jaw-dropping zero, nothing and nowt!
It is the only AHDB sector that fails to have a budget to assist exports. The other five AHDB sectors (EBLEX, Cereals/Oilseeds, Horticulture, Pork and Potatoes) all show an average £1.05m a year allocated to export development until 2019. Yes, that’s a total £5.24million a year compared to the black sheep of dairy which hasn’t allocated so much as £1.
In the 2014/15 year AHDB Dairy received total nett income of £8 million and spent £8.1 million. Levy payers are urged to send even a brief email with your thoughts as to whether you believe AHDB Dairy will invest the levy tax to deliver the maximum benefit to you, based on the plan and budget.
The Dairy Board and its chairman have to be challenged as to whether their plan is the best way of spending the money and, with increased milk production, they should surely be asked why they have decided not to allocate any funds to promote dairy consumption domestically or to exports. If invested professionally and correctly this is very likely to enhance the profitability of all British dairy farmers. There is no demand creation plan at home or abroad, but presumably the AHDB Dairy board have good reasons for this.
I am beginning to question whether the AHDB Dairy Board fully understand the implications of having a strategy to produce more milk (i.e., the current one) without having a strategy one to actually deal with it. At least we all know they have a strategy to ensure they spend all of the extra levy money they collect. Do they actually know which direction the UK dairy industry is heading?
Instead processors are having to explore exports in their own whilst farmers produce milk at 30 year record levels.
Back in 2010 Northumberland sheep farmer Graham Dixon took on EBLEX on behalf of group of sheep farmers when he stated “we want more say in how our levy money is spent. We must direct more of the levy money towards a new marketing and promotion campaign!” The result was a joint attack by EBLEX to bolster both exports and promote consumption of lamb by our own domestic consumers.
Ian also believes Ministers should be looking at the budget and plan before they sign it off. The Secretary of State claims she stands behind exports but there is no real substance to her claims. Both DEFRA and AHDB are keeping their hands firmly in their pockets.
It’s ironic that AHDB have declared that they are picking out the best bits from each sector and rolling them out across the piste, yet this doesn’t appear to have affected the dairy sector where they have ignored export development completely.
Alternatively, you might have a view on the necessity or not for AHDB Dairy to continue to spend significant amounts on genetic and genomic evaluations when a number of competent private operations are already at the cutting edge of this field. Is this a case of using levy money in areas which are already been adequately serviced by others?
As one person commented to Ian this week AHDB Dairy needs grabbing by the scruff of the neck on this issue and it needs some real leadership.
Ian will be making a submission to AHDB on its dairy business plan and hopes all of you will too, even if it’s only a few lines by email. He has tried to contact both its Chairman Gwyn Jones and its Strategy Director on the export issue. Both opened the email a week ago, but neither has found the time to respond.
This consultation closes at 17.00 hours on Wednesday 13 January 2016 - Responses can be submitted by email to firstname.lastname@example.org or via post to Ruth Ashfield, AHDB, Stoneleigh Park, Kenilworth, Warwickshire CV8 2TL.
Allegedly, feedback from this consultation will be considered when the plans are finalised in January before submission to Ministers for approval.
A copy of the AHDB Dairy business plan is available at
Help Needed – Stolen Machinery (11th December 2015)
Stolen Friday 4th December early hours in the morning from a farm in Chaigley, Nr Clitheroe
John Deere 6125R Tractor (PF15 XXV)
R M H - Blue Feeder Wagon
Cash reward for any information leading to the location (confidential)
01995 61108 or 07714 813063
Crime Reference Number: EG1506659 log 202 4/12
1ppl milk price reduction for suppliers to Barbers Farmhouse Cheese - from 1st January (4th December 2015)
1ppl milk price reduction for suppliers to Wyke Farms – from 1st January (4th December 2015)
This takes producers www.milkprices.com manufacturing standard litre price to 21.77ppl and the liquid standard litre price will be 21.05ppl.
1ppl milk price reduction for suppliers to Glanbia Cheese – from 1st January (4th December 2015)
This takes producer’s www.milkprices.com manufacturing standard litre price down to 20.09ppl and the liquid standard litre price will be 19.43ppl.
0.9ppl milk price reduction for Arla (non member) direct suppliers – from 1st January (4th December 2015)
This takes producer’s liquid standard litre price down to 19.25pp for the 40 million litres or so supplied direct.
0.51ppl milk price reduction for suppliers to The Fresh Milk Company (FMC) (AKA Lactalis) – from 1st January (PRODUCER NOTIFIED) (4th December 2015)
The reduction was accompanied by the declaration that no further milk price cuts will be applied in either February or March.
This takes producers www.milkprices.com manufacturing standard litre price (4.2% B/F & 3.4% protein) to 21.21ppl on the FMC GDT linked contract. The standard litre liquid price is 20.5ppl.
0.45pp milk price reduction for Sainsburys aligned suppliers- from 1st January (4th December 2015)
This takes producers www.milkprice.com liquid standard litre price to 30.37ppl (Muller) 30.31ppl (Arla) and 30.25ppl Dairy Crest.
The adjustment is due to a reduction in feed (-0.31ppl), Red Diesel (0.11ppl) and fertiliser (-0.03ppl) as calculated by Kite Consulting.
0.43ppl a milk price reduction for First Milk - Suppliers to its Haverfordwest, Aspatira and North of England pools – from 1st December. (4th December 2015)
0.3ppl milk price reduction for First Milk – Mainland Scotland producers – from 1st December (4th December 2015)
The reductions result in the following www.milkprices.com standard litre prices
· Haverfordwest based on the liquid standard litre 18.36ppl
· Haverfordwest plus the 2.24ppl Tesco winter supplement based on the manufacturing standard litres 18.85ppl
· Plus the 2.24ppl Tesco winter supplement 21.09ppl
· Aspartia based on the manufacturing standard litre 19.1ppl
· Aspatria based on the liquid standard litre 18.39ppl
· Mainland Scotland on the liquid standard litre 18.3ppl
· Midlands & East Wales based on the liquid standard litre 17.9ppl
Note, all www.milkprices.com standard litres are before seasonality, monthly profile payments, balancing charges, capital deductions etc.
Dairy Crest to hold its standard liquid & organic milk prices until February 1st (4th December 2015)
0.67ppl liquid retail supplement to be paid by Dairy Crest on November deliveries (4th December 2015)
In addition, Dairy Crest estimate the December supplement is expected to be higher at 0.9ppl. The supplementary payments relate to the additional money farm Lidl and Morrison’s.
GDT auction records an average 3.6% increase to US$2419 (4th December 2015)
The increase comes on the back of three consecutive auction falls.
Key price movements were:
Butter US$3009 (+5.7%)
WMP US$2260 (+5.3%)
SMP US$1918 (+3.2%)
Cheddar US$2829 (-1.5%)
Intervention SMP stocks are increasing again (4th December 2015)
Quantities of SMP put into intervention have kick started again and during the last two weeks in November just over 1800 tonnes a week were entered from Poland, Lithuania and Belgium.
The total Intervention stocks in store since July amount to 27,273 tonnes.
The nett quantities of SMP offered into private storage in the same two week period total 1519 tonnes and the total in private storage amounts to 4,147 tonnes and rising.
Muller announce its management team post the Dairy Crest completion (4th December 2015)
From the 27th December when Muller take over Dairy Crests liquid business the fresh milk division will be headed up by Andrew McInnes who will be MD of the division handling 25% (3.5 billion litres) for Britain’s total milk production. McInnes is the current acting MD of MWD.
Of the 13 people included in the Muller fresh milk top team four have transferred to the Muller camp from Dairy Crest under a Bosman ruling including Lyndsay Chapman who takes the role of Agriculture Director.
Muller (Wiseman) hold its farm gate milk price until at least February 2016 (27th November 2015)
Muller will hold its non-aligned farm gate milk price for January at 22.35ppl for circa 1200 farmers, which will be a small glimmer of stability to start the New Year.
In addition, it will continue to show retailer supplementary payments both transparently and separately each month.
The supplementary payment is calculated on actual sales after each month end and for October deliveries amounted to an extra 1.75ppl.
0.6ppl milk price reduction for Bowland Fresh Suppliers - from December 1st (PRODUCER NOTIFIED) (27th November 2015)
In both a short notice and very short on words letter, Bowland Fresh have given their producers less than 7 days notice of an early unwelcome Christmas present in the form of a 0.6ppl milk price reduction.
According to our records this is the first and only December 1st liquid milk price reduction to be announced.
First Milk’s half year finances show a small profit (27th November 2015)
In contrast to the First Milk’s recent end of year accounts where it stated that the business had continued to be loss making to the end of September 2015, the co-op has announced that it has made a small profit in the same period. It made an operating profit of £1.1million compared to a loss of £7.6million in the corresponding 6 month period in the previous year. It has also declared that it anticipates its full year end results will return a profit at 31st March 2016. The reason for the difference in the two versions is that in the end of year accounts they included figures for the exceptionals, whereas this latest announcement is restricted to the day to day activities excluding the one off costs.
During the same six month period debt, excluding member capital contributions, has reduced from £60.7million at 31st March to £46.1million at the end of September.
AHDB appear to have grown some hairs and, dare I say balls, with a refreshing up front analysis of First Milk financials.
They have pointed out in their news section that it’s effectively the farmer members who have taken the pain, which has resulted in the six month profit declaration. In other words it’s the significant farm gate milk price cuts which are the main reason for the turnaround.
AHDB estimate that in the six month period April to September 2015 the milk price paid to First Milk members was 4ppl plus “adrift from its competitive set”. Note, the set does not include retailer aligned COP milk prices.
This 4ppl figure compares to the same period in 2014 when the gap was less than 1.5ppl. The difference to the half year financials of a milk price gap of 4ppl to that of 1.5ppl amounts to £15 million, so in effect, if First Milk had continued to maintain a 1.5ppl or less difference between its paid out milk price and that of the competitive set it would have shown a £15m loss but as it is that loss has been shouldered by the members in the form of a much lower milk price.
AHDB comment “It appears that from April to September 2015 a big part of FM’s turnaround in fortunes was achieved by passing lower prices onto its farmer members”
For the story click on this link
First Milk sells Kingdom Foods/Glenfield Dairy business (27th November 2015)
First Milk has agreed to sell its struggling Glenfield Dairy Business (AKA Kingdom Cheese) as a going concern to rapidly expanding Scottish family business Grahams for a yet to be disclosed sum.
The business was acquired by First Milk’s CEO Kate Allum in May 2011 for £5million, which included £1.4million towards an outstanding loan.
At the that time the employees numbered 140 and when the sale is completed in the next few days the staff head count transferred to Grahams will be 79, which is a big chunk of First Milk’s 400 head payroll when it reduces to 320 (-20%).
The business predominantly produces cottage cheese/soft cheese and Quark and has some key retail customers, for example M&S & ASDA.
The venture has archived next to nothing for First Milk during its ownership and is estimated to have lost in the region of £1million a year.
It’s no secret that the plant requires significant investment to remove some of the labour intensive operations. On that score either Grahams will attract some funding to make the improvements or alternatively they will surely be weighing up the costs of moving some of the useful kit to their new greenfield site project.
In terms of milk supply, from the day that Grahams take over they will utilise their own milk, leaving First Milk to find a new home for their extra milk, which is unlikely to be an exciting profitable prospect for the first half of 2016.
First Milk what next? (27th November 2015)
The fact that the finances show a small profit is perhaps the first real evidence that after almost 8 months at the helm CEO Mike Gallacher is starting to visibly demonstrate that his mission is to turn the business around. This will undoubtedly be encouraging to First Milk members and the expectation is that further positive news will be forthcoming very soon and likely next month. This includes an announcement on a new Chairman, who must surely be very commercial, a different board structure with less farmer involvement and more commercial experience, the outcome of the refinancing deal with the Barclays and Lloyds and further divesting of interests allowing Gallacher to focus on his core business of making quality cheese for Adams to sell. These are just some of the announcements members are waiting for.
At the same time as all of this is going on he desperately needs to deliver a significantly improved member milk price. For sure all of these deals take time to put in place and time isn’t a luxury Gallacher has on his side, however, for those who were circling like vultures believing there would be some First Milk easy pickings to be had they will now realise Gallacher may have come to the table late but he is setting his stall out to slim down and turnaround the business rather than let it sink during his watch. He has a lot of work to do and a long way to go but the indications that he both has a plan and will execute it.
Only 30,000 lucky farmers are set to receive their BPS payment next week (27th November 2015)
The RPA has announced that only 30,000 English farmers will receive their annual BPS payment next week.
Those who will not be paid by the end of January will receive a letter very soon informing them that they will be paid after February but with no current facility for an on account or partial payment.
Arla holds members milk price until the end of the year (25th November 2015)
Arla will hold its member milk price at 23.04ppl until at least the end of December.
Crude oil down to $44 barrel (20th November 2015)
1ppl milk price reduction for Blackmore Vale suppliers – backdated to 1st November (PRODUCER NOTIFIED) (20th November 2015)
This takes producers’ standard litre to 24ppl (ww.milkprices.com)
0.086ppl milk price formula increase for Dairy Crest formula contracted producers – from December 1st (20th November 2015)
This takes producers’ standard litre to 26.80ppl for those on simplified and core formula and 26.99ppl for those who signed with the extra premium in April 2014. The upward movement is attached to the improvement in the cream price.
1.751ppl Muller Wiseman monthly retailer supplement (20th November 2015)
Muller Wiseman’s non-aligned producers will receive an extra 1.751ppl on their October deliveries.
GDT auction prices fall for the third consecutive auction (20th November 2015)
It’s certainly a roller coaster ride so far as GDT auction prices are concerned.
During four auctions in August, September and early October, the average auction price rose 56% but admittedly it came on the back of a disastrous run of 10 consecutive falls to all time records lows. On the 6th October the average all products price was $2834.
Now GDT has experienced three consecutive falls pulling prices back 17.2% to this week’s average of $2345.
Notable price movements:
WMP down 11% to average US $2148
SMP down 8.1% to average US $1851
Cheddar down 5% to average US $2874
Note, the quantity of product on offer at this week’s auction was down 11.6% (3953 tonnes) to 30,044.
Glanbia Cheese boost volume bonuses (20th November 2015)
Glanbia Cheese will introduce a welcome revised volume bonus schedule from 1st February and all deliveries will see a positive benefit other than anyone who produces less than 1,000 litres day where it’s no change to their bonus.
The bonus increases range from +0.05ppl for those delivering an average 1,000 to 2,499 litres day to +0.45ppl for deliveries averaging 20,000 litres plus each day making their new bonus +1.5ppl.
With friends like these who needs enemies? (20th November 2015)
With Farmers For Action once again giving retailers a beating to try and get them to pay more money to farmers comes news this week that Morrisons has had a beating for (wait for it) paying more money to farmers via its successful Milk For Farmers brand.
And starting the beating was none other than the magazine which says it is “Working for Your Farming Future” i.e. – The Farmers Weekly. In an article on the 10th November Philip Case wrote that “A supermarket shopper has accused Morrisons of misleading the public over its premium milk brand.” Note, only one complaint from a so called consumer! He went on to write about something every Arla farmer has known all along, in that the additional money raised goes to all Arla farmers across Europe and not just to UK ones.
What he didn’t say was that all of Arla’s product revenues such as the brand giant Lurpak was also spread across UK farmers, and not just with Danish farmers where the product is made. He also printed (on line) the extensive exchange of emails from the shopper, who is Mr Brown from Derby, who has since confirmed he has lodged a complaint with the Advertising Standards Authority.
The story was then picked-up by The Sunday Telegraph on the 15th November, and subsequently by other news outlets, including the Farmers Guardian.
Thus, in one fell swoop through a wholly irresponsible piece of journalism that does nothing for any dairy farmer’s future, The Farmers Weekly has potentially compromised not only the Morrisons milk brand but other such schemes as well which could have put more money in farmers’ pockets.
With regards to the article in today’s Farmers Guardian it is more balanced than the very one sided view printed in Farmers Weekly. However, I do take issue with their claim “The chain has received a barrage of criticism from farmers who said consumers had been ‘duped’ into thinking the extra money would benefit only UK producers”. I don’t believe The Farmers Guardian hold sufficient evidence to back up the use of the words “a barrage of criticism” because one complaint is hardly a barrage. Also, is the use of the word duped correct?
Morrisons have 11 million customers a week. One complaint = .0001% of its weekly shoppers. And the Farmers Weekly made a story out if it. Shameful.
No doubt all of this will give FFA’s protestors much to talk about as they wait on the picket lines in the cold until the early morning hours. A sponsored coach trip and picket line outside FW’s HQ at Quadrant House, Surrey is now under consideration.
What’s good for the Goose is good for the Gander (20th November 2015)
On the 19th October this bulletin reported on the onset of dirty tactics against Morrisons Milk for Farmers brand, and reported on the Twitter activity from the Midlands milk company Nemi Milk, made by the feed company Independent Feeds Ltd. It accused the Morrison’s brand of misleading consumers and posted tweets comparing the brand and Arla to FIFA, and even sending Liz Truss messages about “someone milking British public emotions and the UK dairy crisis”. The milk is “shameful”, the marketing “ill-informed” and Arla is “a co-op who deliberately misleads”. It is a “#scandal”.
Since then a Richard Brown from Derby who “has a lifetime’s experience of farming” has admitted on Facebook that he has submitted a complaint to the Advertising Standards Authority over the milk (see above story with friends like these who needs enemies). Although it has not been proven yet, there is a strong suspicion that there is a link between Richard Brown and Nemi Milk’s / Independent Feeds boss Andrew Henderson, who denied on Twitter that he contacted Trading Standards. Whether they know each other or not really doesn’t matter, however. Both clearly have a gripe that Milk for Farmers is misleading. The ASA will no doubt rule over time whether the brand or the marketing is, or isn’t.
Mis-representation or elaboration of any facts surrounding a product would, of course, be the last thing that anyone in the industry would want.
To that end, therefore, Ian is now questioning the credentials on which Nemi Milk is marketing its milk as “Britain’s First Natural Antioxidant Plus milk” and milk that is “naturally enriched with selenium”.
Under EU rules all health claims on food products have to be approved by the EU, of course. Currently claims for antioxidant properties are not-authorised, which makes Nemi’s claim somewhat, er, suspect. For selenium a claim may only be made where the increase is at least 30% compared to a similar product.
Needless to say the necessary investigations have been out in train to make sure that the claims Nemi Milk is making also do not mislead consumers. If they do then that will naturally also have to be a matter for… The Advertising Standards Authority or Trading Standards to investigate. After all, what’s good for the goose is good for the gander!
With friends like these who needs enemies? (17th November 2015)
With Farmers For Action once again giving retailers a beating to try and get them to pay more money to farmers comes news this week that Morrisons has had a beating for (wait for it) paying more money to farmers via its successful Milk For Farmers brand.
And starting the beating was none other than the magazine which says it is “Working for Your Farming Future” i.e. – The Farmers Weekly. In an article on the 10th November, Philip Case wrote that “A supermarket shopper has accused Morrisons of misleading the public over its premium milk brand.”
He went on to write about something every Arla farmer has known all along, in that the additional money raised goes to all Arla farmers across Europe and not just to UK ones. What he didn’t say was that all of Arla’s product revenues such as the brand giant Lurpak was also spread across UK farmers, and not just with Danish farmers where the product is made. He also printed (on line) the extensive exchange of emails from the shopper, who is actually believed by some to be a disgruntled farmer with a vendetta against Arla. The story was then picked-up by The Sunday Telegraph on the 15th November, and subsequently by other news outlets.
Thus, in one fell swoop through a wholly irresponsible piece of journalism that does nothing for any dairy farmer’s future, The Farmers Weekly has potentially compromised not only the Morrisons milk brand but other such schemes as well which could have put more money in farmer’s pockets. Note, the expectation is that the new brand will add £5million to farmers milk payments by the end of December.
Morrison’s has 11 million customers and just one complains and then goes to The Farmers Weekly and they make a story out of it. Shameful.
No doubt all of this will give FFA’s protestors much to talk about as they wait on the picket lines in the cold until the early morning hours.
1ppl milk price reduction for suppliers to Barbers Farmhouse Cheese – From 1st December (6th November 2015)
1ppl milk price reduction for suppliers to Wyke Farms – From 1st December (6th November 2015)
This takes producers’ standard litre (www.milkprices.com) to 22.05ppl and on the manufacturing standard litre 22.81ppl.
1ppl milk price reduction for suppliers to Belton Cheese – from December 1st (6th November 2015)
This takes producers’ standard litre (www.milkprices.com) to 22ppl and on the manufacturing standard litre 22.75ppl.
GDT results are a rollercoaster (6th November 2015)
This week’s auction saw all prices pulling back significantly compared to those recorded only two weeks ago. The average all products price fell on eye-watering 7.4% with all commodities falling between 5% to 11%. It’s certainly a rollercoaster and further confirmation that this is going to be a long drawn out road to recovery.
Key price movers were:-
WMP down 8% to average $2018 tonne
SMP down 8% to average $2453 tonne
Butter down 5.6% to average $1844 tonne
Cheddar down 4.6% to average $2987 tonne
Dairy Crest half year results are not rosy (6th November 2015)
Dairy Crest has released its half year results to the 30th September and the city reaction was to mark its share price down by 13p from a previous close of £6.43 to £6.30.
Key numbers were:
2015 2014 Change
Sales £203.8m £215.3m -5.3%
Adjusted Profit before Tax £16.0m £25.7m -38%
Nett Debt Increased £242.3m £209.6m +16%
Liquids division (soon to be sold to MW) recorded a £16.7m pre tax loss compared to £2.5m loss in 2014
Tesco reviews will result in casualties and opportunities (6th November 2015)
The Tesco Sustainable Dairy Group (TSDG) have completed their review of the milk purchasing scheme the result means opportunities for the best and casualties in terms of the loss of their TSDG contract for the poor performers.
One of the key outcomes is that in future all TSDG producers will be core producers with no seasonal producers and all will be measured and rated annually on a traffic light system.
Those who fall into the bottom 5% as the worst performing suppliers in terms of animal welfare standards, milk quality, environmental management, carbon foot printing and generally engaging with their customer Tesco will be given six month notice of contract termination.
Once notice is served there will be a three month period when Tesco will support these farmers in an attempt to improve their performance and score rating. If, after that period, they have not achieved the required standard they will be axed three months later.
Conversely the top performing 5% will received an extra 100,000 base litres of production allocation, which will be an annual award with the extra literage predominantly coming from suppliers who exit as Tesco suppliers either voluntarily or who are axed.
Tesco’s two key liquid suppliers Arla and Muller Wiseman will now compile a waiting list for the 150 new core producers who are required. The list will be evaluated on a combination of geographical location and a score card. Whilst current Tesco seasonal producers (estimated to be circa 300) have a slight advantage in getting onto the waiting list many will fail the geography test and the expectation is that completely new TSDG suppliers will be required to make the numbers up. In addition, a Tesco young/new entrant reserve pool will be created.
Participation in Promar costings could be considered optional in terms of, if you don’t want to participate in the costings you are free to supply another buyer but not Tesco. So it’s compulsory for Tesco suppliers and whilst the 0.5ppl payment towards Promar will be stopped it will be replaced by a standardized payment/subsidy per farm.
COP budget prices will change from twice a year to four times/every quarter so far as the three F’s are concerned.
Tesco utilize a QVIS (Quality, Value, Innovation and Service) score card as a transparent measure to rate all its suppliers and now it will be tailored to dairy.
Finally, the processor price matching clause is to be removed from the contract in the event the non aligned price eclipses the TSDG price.
The idea is to bring the bottom up for those who want to engage. It won’t all kick off overnight but 2016 will be when the starting whistle is blown by Tesco and a league table of producers will be created. Those in the relegation zone after one year will drop off unlikely to be offered a second chance as will those who refuse to provide Promar with their costings.
Overall most farmers will realise it’s time to put up or exit as Tesco suppliers if they can’t achieve the standards.
We have asked a handful of key questions about the new ideas to Tesco to which we await a response which we will report back on.
24 hours in the life of David Handley from Praise to Police (6th November 2015)
Farmers for Action founder members David & Marilyn Handley have been threatened and intimidated by a 35 year old Staffordshire dairy farmer who also claims to be a spokesperson for breakaway group United Action for Real Farmers.
The threat came by text message and whilst it was a long text the relevant sentence read:
“……. I will be in your yard within hours to ram them where the sun does not shine” The threat was in relation to retired FFA Committee member Paul Rowbotom who it appears is central to the breakaway groups organisation.
During recent weeks the Handley’s have been the subject of a number of playground taunts on social media from the breakaway group but now at least one has turned to threatening behaviour.
It’s similar to the 1970’s when, in football, we had small groups called “firms” who were convinced they were the best supporters and anyone who got in their way got a good kicking.
Only 24 hours earlier the Handley’s were a topic of conversation around a table of dairy industry leaders where Marilyn Handley was once again referred to as the unsung hero of the UK dairy industry and David was congratulated for what he and his FFA team & committee had achieved with retailers in recent months.
Let’s be honest if you were David Handley you would be asking do I really need this sort of aggro from a handful of Mavericks who by their own admission were not very long ago staunch supporters and admirers of his efforts. Many would say stuff this and walk away.
We have the contact details of the farmer whose mobile phone was used to send the text as do the Police and we are hoping it was sent without thinking. We contemplated exposing the details but at this stage it would only fire up more trouble for those involved.
If you have any comments email us so we can gauge the responses because threats of violence we believe cross the line. In addition we understand the farmer’s milk purchaser is likely to be questioned as to whether it condones this behaviour and whether such threats are a breach of his milk contract. If the farmer involved wants to communicate his thoughts we are happy to listen to his version. Alternatively consideration of an apology wouldn’t be out of place if he feels one is appropriate.
Retailers will be laughing their heads of at the fact our most passionate dairy farmers who want to make a difference are squabbling and posting inappropriate messages on social media about the Handleys. Come on lads Handley surely can’t be the enemy. It’s a sad state of affairs.
Scottish dairy farmers to give their views on repatriation of AHDB dairy levy (6th November 2015)
Following on from a lively well attended dairy meeting organised by Mole Valley and SNFU in Coylton this week, the suggestion to poll farmers views at the Agriscot event on 18th November regarding repatriation of Scotland’s producers AHDB dairy levy is on the card.
Northern Ireland’s dairy farmers do not pay the AHDB levy, however, they do pay a levy for milk promotion, which is topped up by milk processors. Whilst AHDB would argue that repatriation of the levy money wouldn’t raise enough money the fact is in Northern Ireland they still succeed in raising and spending more money for milk promotion than AHDB do in the whole of Great Britain.
Speaking at the event, industry journalist Chris Walkland emphasised the great story there is behind the Scottish Dairy brand and believes Scotland should sell its brand by adopting the NI model, with money coming from either a new separate promotional levy or by having promotion money coming out of repatriated AHDB levies. "Where the money comes from is one for Scottish farmers to decide on," he said.
A straw poll by the meetings Chairman of the
dairy farmers in the room showed that when asked “how many of you believe AHDB
do a good job and are value for money?” Not one hand was raised.
Gaff of the week goes to Oliver McEntyre, Barclays Bank National Agricultural Specialist (6th November 2015)
Thank you to the readers who were keen to alert Ian to a quote in the latest Holstein UK Journal/Newsletter.
The Barclays National Agricultural Specialist stated
"From high input high output systems to low input low input milk from grass systems, large herds to smaller ones, from the uplands to the lowlands, the cost of production reaches towards 20p/litre in some cases."
So with the current Tesco COP over 30ppl, is this not simply and extremely unhelpful comment? Was this 20ppl a typo or for real?
China’s ending of its one child policy is big news for world dairying (6th November 2015)
China has announced its one child policy will end and with it comes the expectation that up to 2 million extra babies will be born every year leading to an estimated 10 to 20% boost in China’s demand for infant formula as produced by the likes of Dairy Crest and Arla. The move from the one to two child policy will happen in March 2016.
0.75ppl milk price reduction for Glanbia suppliers – from December 1st (30th October 2015)
This is likely to result in a standard litre price of 20.6ppl.
Glanbia have also announced a review of their volume bonus schedules to apply from April 1st. One or two emails to Ian have suggested that in the current environment a review means a negative adjustment. This is a bold and negative assumption and is by no means automatic.
0.6ppl milk price reduction for Dairy Crest Davidstow suppliers – from December 1st (30th October 2015)
This takes producers standard litre price to 23.24ppl (www.milkprices.com). Note, this reduction comes with a guaranteed price floor until 29th February so no reductions for at least three months.
0.58ppl milk price reduction for First Milk cheese contracted members – from November 1st (30th October 2015)
SMP Intervention almost dried up (30th October 2015)
SMP going into Intervention continues to decline.
A total of 3,116 tonnes entered Intervention in the two week period straddling August and early September and now it’s down to 417 tonnes from France and Lithuania.
The UK has placed 1048 tonnes of the total 23,371 tonnes put into Intervention with the last consignment from the UK in early August. EU wholesale commodity prices are gradually trending north, which will be the key influencing factor.
Arla UK report losses of £88m (30th October 2015)
First Milk certainly aren’t the only UK processor to report losses. Arla Foods UK division clocked up £88million in losses in 2014. Note, that is across a 12,700 farmer pool (of which 3,000 are in the UK) who supply 13.5 billion litres (UK share 3 billion litres). So on a ppl basis it’s tiny.
New Zealand milk production (30th October 2015)
New Zealand has now passed its peak production and nationally output is plummeting with September down 7.2% on September 2014.
Glanbia is unlikely to be good news (30th October 2015)
Glanbia has announced the temporary closure of its state of the art Kilkenny powder plant, which was officially only opened in March. The milk will now be diverted into one of its cheese plants. The move is due to low returns on powder and anticipated better returns on cheese. This means up to 3 million litres of milk/day is now going into Irish cheese although production is much lower and the plant can be used on a seasonal basis, which could be a factor in the shut down.
Let’s hope the move does not result in any more Irish cheese landing at our ports.
First Milk AGM (30th October 2015)
Surprisingly the number of First Milk members who attended yesterday’s AGM was similar to numbers attending in previous years and certainly estimated to be under 40 actual member producing farms.
Another surprise to some was that none of the existing farmer board tendered their resignations or announced they will stand down when requested to do so. However, some are almost certain to recognise they have to shoulder part of the responsibility for the mistakes made and follow Chairman Sir Jim Paice with dignity rather than believe they are candidates for re-election to the new board, which desperately needs commercial experience.
There will be an SGM in December to adopt the new governance proposals following which First Milk aim for a new slimmed down board to be in place for 1st February.
At yesterday’s AGM a new farmer board member, Robert Craig, was elected as a non-executive farmer director and farmer Jim Baird was re-elected to a similar position.
Sir Jim Paice stood down as Chairman to be replaced by Vice Chairman, Nigel Evans, who stands in as interim Chairman. So for the next three months and during the re-negotiation of the banking facilities the First Milk board is more farmer orientated than before, which must be a concern. As one person commented Gallacher desperately needs a board focussed on the business not the farms and farmers.
The Great British Game Fair is born (30th October 2015)
Hot on the heels of the announcement that after 57 years the CLA Game Fair had admitted defeat and closed its doors comes the welcome news that a new 3-day event at Belvoir Castle, Leicestershire will take place on 22nd-24th July.
All of the articles below all relate to First Milk and were posted on our website earlier this week
First Milk’s Accounts and Annual Report are grim reading (30th October 2015)
Ian takes little pleasure in writing about First Milk’s financial results. But its members will take no pleasure from seeing them. On receipt of the accounts he faced two choices:
(1) Take the easy route and skim the results saving a heap of time and money
(2) Take a detailed look and report his observations and the facts as he sees them to his regular readers. His conclusion was to go for option 2 mainly because he feels he owes that to readers, especially the FM members who find the delving challenging as well as depressing. He won’t receive any Christmas cards from either the First Milk Board or Management but the details are there for members to study, and what is in the report needs to be aired.
Below are bullet points relating to the co-op’s accounts to 31st March 2015, which Ian has pulled together with limited commentary highlighted in blue. Note, all comparison figures relate to the changes in the past 12 months. The detail is sobering, nay grim, and should stimulate significant discussion at the AGM this Thursday (29th). For those who want to check the facts Ian urges them to put these accounts before their accountants requesting their comments and questions.
The facts are these
The harsh reality, which most members already realise, is that the likelihood of members receiving any repayment of capital is slim.
Nett pension liability is up from £13.8m to £20.1m and growing at an alarming rate and needs to be funded. According to the accounts, FM are paying £2.3m a year but this simply has to increase or the deficit will continue to increase unless someone can wave a magic wand.
In summary we refer to the auditors report on Page 14: “The Group incurred a loss of £27.5 million during the year ended 31 March 2015 and continued to be loss making for the six month period to 30 September 2015. Additionally, the Group's and the Society's bank facilities are payable on demand and are available until 1 February 2016. As set out in the directors' report and Note 1 to the financial statements, the ability of the Group and the Society to realise their assets and discharge their liabilities in the normal course of business is dependent upon the adequacy of the bank facilities and the continued support of their lenders, achievement of forecast financial performance and securing financing for the period beyond the expiry of the current facility. These conditions, along with the other matters explained in Note 1 to the financial statements, indicate the existence of material uncertainties which may cast significant doubt upon the Group’s and the Society’s ability to continue as a going concern.” This requires no further commentary.
Both the auditors and the directors cast doubt over whether the business can continue as a going concern mainly due to the need to renew the banking facility and to meet its financial performance projections.
Note, Ian is NOT an accountant and no one should rely on this analysis as advice. It is Ian’s assessment based on recent FM publications. No representation or warranty is provided as to the accuracy of the information and it should not be used as a basis to make on farm decisions. However, it could be used by members when questioning the board and management of FM, if they so wish.
Was First Milk’s claim - “Slightly better than break-even” the reality? (30th October 2015)
In its 3rd July members newsletter FM claimed the following:
April & May resulted in a slightly better than break-even position. June is expected to be similar.
P&L is being run at marginal break-even to ensure that milk price is max we can afford.
First quarter results is a critical milestone and demonstrate the impact of changes so far.
Was this the reality, though, and the truth? Or did it make a profit in April, May, and June only to lose more than it made in July, August and September? The report issued today clearly states that the business has continued to be loss making for the six-month period to 30th September 2015. In addition, at that time losses were stated to be around £22m but at the end of the day were 25% greater at £27.5m.
First Milk Board lambasted in Governance Report (30th October 2015)
First Milk has also announced its action plan following its overdue independent review. They key points are:
A 49 page independent review by Greenburn into the governance of First Milk has effectively lambasted its current board. In short it is distressing reading, especially the time line on pages 12 to 15, for FM members but at least the grim facts are now out in the open.
The conclusion is unambiguous in that its Farmer Board is left wanting. The report states “there have been severe short comings in governance both at Board and Senior Management level for a number of years. This includes failure to follow conventional business practice in a number of ways.”
It goes on to say:
“The Board of Directors lacked the collective knowledge and experience to successfully navigate the business forward …..” and it refers to a catalogue of inadequate accounting systems.
“The Board are ultimately responsible for ensuring the co-operative has a strong and sustainable business.”
The authors question whether the Board managed the CEO or was it the other way around? They refer to “The perceived lack of competence at Board level, the Board’s inability to understand the financial information provided and the protracted decision making.”
The report refers to “a lack of leadership from the Board”
This report is set to go down in the UK dairy industry history books along the lines of the famous Myners Report for The Co-Operative. It’s hard hitting and leaves nowhere for those involved to hide. Frankly few, if any, of the current farmers members of the First Milk Board should be up for re-election.
The key recommendations are:
· The board will be reduced from 9 to 7 with an “independent commercial chairman”
· Going forward an elected farmer council of 7 members will represent the farmer owners
· Farmer board members will reduce from 5 to 2 with the aim of bringing in more commercial board members. One of these farmers will be Vice Chairman.
· Given the incompetence of the existing board few, if any, are likely to be required under the new structure as board members.
First Milk continues to fail despite the recommendations of the Governance Report (30th October 2015)
The final insult for FM members is their continued failure to adopt good practices.
Members have been given less than a week to study the accounts and the report ahead of the AGM. One Scottish member spoke to Ian today about this and he was extremely unhappy. Highlighted in the Governance Report it confirms that in May 2015 a review of FM’s financial governance stated that:
“The monthly reporting pack is often released for review too late in the month for there to be any effective analysis done prior to Board meetings.” In some cases only 24 hours before a meeting.
To give farmer members less than a week must surely be inadequate given the state of the finances and the situation their co-op faces.
So where is the good news? (30th October 2015)
The reality is that there is no good news in these reports, other than the fact that that the senior management have gone and a new team are in place. Have they got the skills to turn this business around? Have they got the time? We won’t know until January 2016 when we find out about the financing. There isn’t much time at all.
Snap to it on Snaptags! (30th October 2015)
Ian Potter Associates has, for the last three years, been actively marketing the Snaptag brand of Cattle, Sheep & Pig ear tags. Repeat orders from every customer (OK, with the exception of one) speak for themselves in terms of their quality and durability. Basically they're the bull's / boars / rams nadgers when it comes to tags.
And this, of course, is the bull's nadgers when it comes to dairy bulletins, which we send to you FOC because we're nice people.
There is, though, no such things as getting summut for nowt, and we strive to sell something on the back of it - hence our plugs for these tags, Pinpointpal vehicle tracking devices, and the occasional request for information for our database cleansing so we know who's genuinely a dairy farmer and who's just pretendin'.
So if you've got livestock and are in the market for tags (and even if you aren't - we're not fussy!) then give us a call! Our general tags & sample tags (BVD) are extremely competitive so why not ask us to quote! Go on...you know you want to...
Thank you, and we look forward to your custom and to continuing to be able to send this bulletin out FOC.
Arla to hold its milk price (23rd October 2015)
Arla is to hold its member milk price for November and the price it pays it direct suppliers and organic suppliers for December.
The member standard litre price remains at 23.04ppl for Arla AMCO and Arla Milk Link members. The Arla AMCO Tesco price is 23.74ppl.
In its communication to members Arla states “The outlook for the coming months is mainly stable”, which in itself is a small welcome glimmer of light from one of the European milk processing giants, especially when you consider that UK and European milk supplies continue to increase.
GDT shows 3.1% downward blip (23rd October 2015)
The road to recovery was always going to be a rocky one as demonstrated by this week’s auction results in which the auction average dropped 3.1% on the back of 4 significant consecutive auction rises. The quantity of product on offer was down 1531 tonnes (4.2%) to 34,519 tonnes.
Key results were:
Average price US$ 2735/tonne (-3.1%)
Butter US$ 2850/tonne (-11.1%)
WMP US$ 2694/tonne (-4.6%)
SMP US$ 2178/tonne (-4.5%)
Cheddar US$ 3163/tonne (-2.2%)
All in the global dairy industry expect prices to continue to increase, however, further downward corrections this side of Christmas are equally anticipated.
Muller get green light on Dairy Crest acquisition but ….! (23rd October 2015)
UK Competition & Markets Authority (CMA) have given the green light for Muller Wiseman to acquire Dairy Crest’s liquid business having accepted the undertaking that Medina Dairies will have the facility to toll processes up to 100 million litres of milk a year at Dairy Crest’s Severnside factory in Gloucestershire. The deal will be completed on or before 26th December 2015.
In a statement whilst the £80 million price paid was re-confirmed it was accompanied with a £15 million allowance, which was attributed and dumped on the CMA’s modified undertakings.
This is a staggering figure and in simple terms if Medina were to process the full 100 million litres a year for five years the £15 million deduction equates to 3ppl.
The more likely reason for a sizeable part of the deduction is that in addition to the modified undertakings with Medina, Dairy Crest’s liquid business profits and performance has deteriorated and part of this deduction is due to this hidden factor. However, Dairy Crest will still be delighted at the nett £65 million and to be out of the liquid business by the year end allowing them and others to focus on their cheese business, which is sure to be open to offers in 2016 from European hunters.
Dairy Crest’s shares were under £4 a year ago and on the announcement jumped to £6.55 yesterday.
Medina what next? (23rd October 2015)
Medina will have the facility to use the toll processing for up to 100 million litres of milk but this does not mean they will utilise the full facility during the 5 to 8 year period. However, Medina are ambitious and intend to continue to grow their existing business.
Medina stated to Ian its strategy is find customers 1st, milk sourcing 2nd . Ian believes this is very sound business policy and one some dairy farmers should take note of.
DairyCo/AHDB Dairy yesterday suggested in their commentary that the Medina involvement means Medina “will likely need milk close to the factory to achieve it ….. Farmers should be ready to compare any offers ….”
Medina have confirmed to Ian that this is pure speculation. First job is for Medina’s commercial team to secure new long term sustainable business. They then have the option to process their existing farmers’ milk at Severnside or take milk from Muller Wiseman or a hybrid of the two. Recruitment of new milk suppliers whilst possible is not on their radar so please don’t form an orderly queue because it’s likely to be a long wait.
B price milk watch (23rd October 2015)
Let us have your milk buyers’ current B price on a strictly private and confidential basis. Here are the ones we have been informed about:
Paynes Dairies 11ppl and could alter but not upwards according to Charlie Payne
First Milk 13ppl (+1.5ppl) and trending up
Grahams Dairies 10ppl (September)
First Milk lose Sky contract (23rd October 2015)
CNP which is the sports nutrition company acquired by First Milk has lost its contract to supply product to the British cycling, Team Sky (source: DIN).
New Non-Executive Director at First Milk (23rd October 2015)
Until recently Carl Ravenhall was MD at Muller Wiseman and prior to that MD of Milk Link’s cheese business until the Arla takeover.
He has now been appointed to the First Milk board.
First Milk will be in the news next week in the run up to their AGM next Friday (30th) ahead of which their financial accounts for the year will have to be released as will details of when Chairman Jim Paice will stand down and who will take his place. In addition, the independent review of the co-op’s governance announced on the 1st May is overdue (due summer) and members will expect it on or before next Friday’s meeting and must surely recommend a re-shaping of its board.
1.54ppl extra to First Milk’s Haverfordwest supplier/members (19th October 2015)
First Milk will pay an additional 1.54ppl on supplies of members A litres milk to its Haverfordwest factory representing the Tesco winter cheese supplement paid by Tesco to Adams Foods.
0.365ppl milk price reduction for Dairy Crest formula contracts (19th October 2015)
A premium of 4.9ppl now exists between the formula price and Dairy Crest’s non-aligned milk price.