Dairy Industry news and features

This page was last updated at 19th April 2017 (Press your refresh/reload button for the latest information)

 

 

Our Weekly News Bulletin is available by email. To receive it please email info@ipaquotas.co.uk 

  

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Note, all standard litre prices are those quoted by www.milkprices.com and are based on the following:

The liquid standard litre 4% bf, 3.3% protein, 30,000/ml Bactoscans, 200,000/ml SCC, 1 million litres a year on EODC but before seasonality, monthly profile payments, balancing, B price additions, capital retentions or annual incentive schemes.

The manufacturing standard litre is to exactly the same specification with the exception of 4.2%bf and 3.4% protein.

 

 

 

0.296ppl addition for Muller non-aligned March deliveries retail supplement    (14th April 2017)

Muller’s non-aligned suppliers will receive an additional 0.296ppl on all milk delivered in March

 

No takers at latest Dutch Dairy Commodity auction   (14th April 2017)

According to a report in DIN, the Dutch based dairy auction’s online recorded no sales for a second 2017 auction for a total of 451 tonnes on offer.  The minimum price set for SMP was £1680 tonne.

 

Meanwhile, SMP prices continue to fall with prices, according to AHDB Dairy, trading at €1790 tonne just €92 above Intervention levels.  More SMP has gone into Intervention from Poland, Germany and Lithuania with an additional 1200 tonnes going into already record quantities in store.

 

Arla confirms a 12 million Euro investment in baby powder     (14th April 2017)

Arla has confirmed plans to invest 12 million Euros to produce infant milk formula at its AKAFA site in the north of Denmark.  The facility is planned to be operational by August 2018 and interestingly with technology will only create an additional 2 or possibly 4 jobs.

 

0.32ppl milk price increase for suppliers aligned to the co-op Dairy (Muller) – From 1st May    (7th April 2017)

This increase is for the next quarter May to July inclusive and takes producers standard liquid price to 27.9ppl. (www.milkprices.com)  

 

Crediton Dairy stands on with its suppliers ex-farm gate milk price – until the 1st June which maintains the current standard liquid litre price at 28.5ppl.  (7th April 2017) (www.milkprices.com)

Crediton’s B litre milk price will change from May 1st to AMPE minus 2ppl as opposed to the current AMPE minus 1ppl.

 

1.25ppl milk price cut for Barbers suppliers – From 1st May     (7th April 2017)

This takes producer’s standard manufacturing/cheese litre price to 29.05ppl and 28.85ppl for a standard liquid litre (www.milkprices.com)

 

0.75ppl milk price cut for Pensworth suppliers     (7th April 2017)

This takes producers standard liquid litre price to 26.5ppl. (www.milkprices.com)

 

0.4ppl milk price cut for Meadow Foods suppliers – From 1st May    (7th April 2017)

The reduction results in a standard liquid litre price of 27.15ppl and a standard manufacturing (cheese) litre price of 27.53ppl.

 

Freshways milk price cut is unknown but will be capped at a maximum 0.39ppl for May suppliers       (7th April 2017)

Freshways wrote to its producers on the 31st March informing them of a May price cut claiming that all 5 companies which make up the Freshways current basket have reduced their price. 

 

Ian has requested Freshways clarify which Companies have reduced the basket price because as at the date of the letters Ian believes a maximum of 2 out 5 have reduced their farmgate milk price (Arla and Paynes).  Indeed the attachment with the letter appears to confirm this.  The price cut will not exceed 0.396ppl.

 

GDT Auction average up 1.6%    (7th April 2017)

Noteable movers were:

 

WMP up           2.4% to average US $2924 tonne

SMP down       0.8% to average US $1913 tonne

Butter down     1.8% to average US$4751 tonne

Cheddar down 4.4% to average $3288

 

More SMP goes into Intervention    (7th April 2017)

It’s not encouraging news to hear that 472 tonnes of SMP from Poland has already gone into intervention stores.

 

Southern Irelands February milk production was down 7.8%     (7th April 2017)

Southern Irelands February production was down 22.3 million litres (-7.8%).

 

Award for the most money raised for UK Cancer Charities      (7th April 2017)

 

Ian & Carole scooped the award for being the team (English Bulldogs on Tour) which raised the most money for the two Cancer charities in last weekend’s final Regis Classic car Tour to Holland.

 

So a huge Thankyou to the 62 readers who donated. Note a very significant proportion of the money Ian and Carole raised was directed by readers to fighting Male Cancer.

 

Below is a photograph of Ian & Carole receiving their Awards with organiser Ali Green who has been key to the annual event for 20 years. Please note Ali isn’t as squashed and sandwiched between Ian and Carole as the picture perhaps indicates!  Also attached is a great photograph of the duo in action in their 1963 Mini Cooper S running along the canal between traditional Dutch windmills.

 

Ian will confirm how much they raised when the giving page closes but as at todays date it amounts to £2,575 plus £314 Gift Aid. Total £2,889 with more money received by cheque than on line.

 

Ian & Carole’s giving page will remain open for any last minute bulletin reader donations.

If you haven’t sponsored then please give a little now by donating on line by clicking on: http://uk.virginmoneygiving.com/fundraiser-web/fundraiser/showFundraiserProfilePage.action?userUrl=EnglishMiniBulldogsOnTour&isTeam=true

OR

Send a cheque(s), made payable to either:

“Orchid”  (Fighting male cancer)

Or

“Against Breast Cancer”

Please sponsor Ian & Carole where you can, and don't forget you can increase the amount you donate with Gift Aid (individuals only, not companies).

Also a big thankyou to EDP Photo News UK and Steve Carpenter for taking the photographs and allowing us to reproduce them.

 

 

0.62ppl milk price increase for Tesco (TSDG) suppliers – from May 1st   (31st March 2017)

This increase will apply for the next quarter May to July inclusive.  The resulting liquid standard litre price is provisionally expected to be 29.37ppl.

 

0.33ppl milk price increase for Sainsburys (SDDG) suppliers from 1st April   (31st March 2017)

This increase will apply for the next quarter of April to June inclusive and takes producers standard liquid litre milk price to 27.67ppl (Muller supplier) and 27.55ppl (Arla supplier) (www.milkprices.com)

 

1ppl milk price increase for Mullers Organic suppliers – from 1st May   (31st March 2017)

This takes the organic suppliers standard liquid litre milk price to 40.5ppl (www.milkprices.com)

 

Muller stand on for April & May   (31st March 2017)

Muller’s non-aligned milk price is unchanged through the 2017 flush until at least 1st June at 26.69ppl plus an estimated retail supplement of 0.3ppl will give an estimated paid out milk price of 27ppl.

 

Dairy Crest stand on for April & May   (31st March 2017)

Dairy Crest’s farm gate milk price is unchanged through the 2017 flush until at least 1st June at 28.92ppl on the liquid standard litre price and 30ppl on the manufacturing/cheese standard litre price (www.milkprices.com)

 

Friesland Campina stand on for April   (31st March 2017)

Arla’s biggest European competitor, Friesland Campina, has announced a stand on milk price for April.  When this is adjusted to a www.milkprices.com standard liquid litre this converts to 30.251ppl with its comparable standard litre organic price at 40.334ppl.

 

0.35ppl milk price cut for Paynes suppliers – from 1st April    (31st March 2017)

This takes producers standard liquid litre milk price down 27.45ppl (www.milkprices.com)

 

 

This bulletin comes from Holland due to the fact Ian & Carole are now in Rotterdam raising money for Breast Cancer and Male Cancer.

 

If you value this bulletin and you haven’t sponsored then please give a little now by donating on line by clicking on: http://uk.virginmoneygiving.com/fundraiser-web/fundraiser/showFundraiserProfilePage.action?userUrl=EnglishMiniBulldogsOnTour&isTeam=true

OR

Send a cheque(s), made payable to either:

“Orchid”  (Fighting male cancer)

Or

“Against Breast Cancer”

Background  -  Back in 2015 Ian & Carole travelled to New Zealand and joined the Pork Pie Charity Run (www.porkpie.co.nz) in a classic Mini and raised £6,600 for charity.  This weekend the intrepid duo have taken to the wheel again and have driven Ian’s 1963 Mini Cooper S to Rotterdam for a weekend to raise money in the 20th and final Regis Ladies Classic Car Tour.

100% of your donations will go to the two charities named below, as Ian & Carole are self funding all their own expenses, entry fees and accommodation.

This final 20th Regis Classic Tour is supported by a host of companies and individuals who have donated money, prizes, auction items and services to help this group of ladies finish their 20th annual tour with a bang.  During the past 19 years the tour has raised a staggering £524,000. 

Ian, more than anyone, fully appreciates how difficult the past two years in UK dairy farming have been.  If you can dig deep and find a few spare pounds it will all be very much appreciated.  It’s not a competition who can give the most but if you do value this regular bulletin and Ian’s monthly Dairy Farmer article (now 26 years and still going) then please give a little to show your appreciation.

The event is not a charity challenge, but more of a non-competitive social weekend with like minded classic car enthusiasts aiming to have a spring tour at the same time as raising money for two great charities.  I doubt there is anyone who is reading this bulletin who has not had at least one friend or family member affected by cancer.

So please sponsor Ian & Carole where you can, and don't forget you can increase the amount you donate with Gift Aid (individuals only, not companies).

Please donate on line by clicking on: http://uk.virginmoneygiving.com/fundraiser-web/fundraiser/showFundraiserProfilePage.action?userUrl=EnglishMiniBulldogsOnTour&isTeam=true

OR

Send a cheque(s), made payable to either:

“Orchid”  (Fighting male cancer)

Or

“Against Breast Cancer”

Ian’s target was to raise £1000 but already readers generosity has exceeded £2000 by cheque or by online donations.

Thank you all in advance.

1ppl milk price drop for County Milk Products Limited suppliers – from April 1st   (PRODUCER NOTIFIED)     (24th March 2017)

This is the second consecutive 1ppl price drop by County according to its farmer suppliers.  However, according to one source County are exposed to the ingredients market via Yew Tree Dairy, which has certainly crashed back, especially given the fact the SMP price is now close to Intervention level.  The likelihood of spring milk going into intervention stores to add to the existing 350,000 tonnes of old stock is now almost inevitable for April.

 

County were unavailable to confirm what their 1st April standard liquid litre price would be following the 2ppl reduction, which we will endeavour to report next week.

 

0.79ppl (1 Euro Cent) milk price drop bombshell from Arla – 1st April        (24th March 2017)

Around 2,700 Arla members/ owners  have been notified that from April 1st their milk price will reduce by 1 Euro Cent equal to 0.79ppl.  The reduction will not apply to Arla’s UK organic suppliers although Arla’s mainland Europe organic suppliers will feel the full force of the reduction.

 

Of some comfort is the fact the currency smoothing mechanism will provide a 0.37ppl increase resulting in a net reduction of 0.42ppl.  The reduction reduces the 1st April standard liquid litre price, including the currency smoothing adjustment, to 27.03ppl and for the standard manufacturing litre to 28.13ppl.

 

It’s a big blow to Arla members and regrettably if Arla sneeze others will catch a cold.  Pretty much everyone in the industry had expected (or prayed) for a stand on price for April and May, which with the filtering through of the currency smoothing would have seen farm gate milk price increases.  This cut will hurt.

 

There are strong rumours that a similar reduction is already in the pipeline for May 1st coupled with the belief that Arla have overpaid producers for milk, especially the recent 13th payment.  If another cut happens on May 1st Arla will struggle to deal with their farmer communications to justify a second cut.

 

The Arla cut could easily kick start a trend which others seize if it does it will be the final straw for a number of dairy farmers who haven’t even begun to recover from the last slump in prices.

 

Meanwhile, the Arla brands have been named as recording the largest growth out of the top 100 UK grocery brands achieving growth of £37m in 2016.

 

Arla members are already questioning whether achieving such headline grabbing brand growth is actually delivering a better milk price to the farmer owners given that in cheese some of its competitors are now paying 30ppl for milk, which is going into branded cheese.

 

GDT average up 1.7%  (24th March 2017)

 

The most notable price was the dramatic drop in SMP of 10.1%, which followed a 15.5% drop only 2 weeks ago. 

 

The GDT average price for SMP has crashed by an eye watering 24% in just one month.

 

Key movers were:

 

WMP                +2.9% to average US$1948/tonne

Cheddar            +1% to average US$3406/tonne

SMP                 -10.1% to average US$1948/tonne

 

0.79ppl (1 Euro Cent) milk price drop bombshell from Arla – 1st April     (23rd March 2017)

Around 2,700 Arla members/ owners  have been notified that from April 1st their milk price will reduce by 1 Euro Cent equal to 0.79ppl.  The reduction will not apply to Arla’s UK organic suppliers although Arla’s mainland Europe organic suppliers will feel the full force of the reduction.

 

Of some comfort is the fact the currency smoothing mechanism will provide a 0.37ppl increase resulting in a net reduction of 0.42ppl.  The reduction reduces the 1st April standard liquid litre price, including the currency smoothing adjustment, to 27.03ppl and for the standard manufacturing litre to 28.13ppl.

 

It’s a big blow to Arla members and regrettably if Arla sneeze others will catch a cold.  Pretty much everyone in the industry had expected (or prayed) for a stand on price for April and May, which with the filtering through of the currency smoothing would have seen farm gate milk price increases.  This cut will hurt.

 

There are strong rumours that a similar reduction is already in the pipeline for May 1st coupled with the belief that Arla have overpaid producers for milk, especially the recent 13th payment.  If another cut happens on May 1st Arla will struggle to deal with their farmer communications to justify a second cut.

 

The Arla cut could easily kick start a trend which others seize if it does it will be the final straw for a number of dairy farmers who haven’t even begun to recover from the last slump in prices.

 

Meanwhile, the Arla brands have been named as recording the largest growth out of the top 100 UK grocery brands achieving growth of £37m in 2016.

 

Arla members are already questioning whether achieving such headline grabbing brand growth is actually delivering a better milk price to the farmer owners given that in cheese some of its competitors are now paying 30ppl for milk, which is going into branded cheese.

 

SMP Intervention tenders halved as interest plummets   (17th March 2017)

The latest EU Commission SMP intervention stock tender resulted in just two bids for only 136 tonnes compared to bids for almost 20,000 tonnes in December.

 

The current two tender windows each month will be reduced to one and there seems minimal prospect of any product coming out of store unless the EU Commission significantly reduce their minimum price.

 

First Milk add to their trophy cabinet   (17th March 2017)

Last night First Milk won Nestle UK’s Supplier of the Year Award as well as a Nestle Quality Award, both collected by Mike Gallacher.  Both are viewed as further ringing endorsements that the co-op and its members are on the right track with its major customer.

 

50 Muller suppliers to battle it out for 21 forum places    (17th March 2017)

Healthy competition is the order of the day in some of the Muller farmer forum regions with 50 candidates competing for 21 places.  Ballot packs will be sent to members next week with the elected board to be insitu next month when their task will be to represent 1900 Muller suppliers.  Let’s hope the 21 selected have ability to represent their area and it’s not noisy ones with confidence but little ability.

 

TWO DAIRY CEO’s STEP DOWN WITHIN DAYS OF EACH OTHER    (15th March 2017)

 

1.     Mike Gallacher steps down as First Milk’s CEO – Turnaround Job Done    (15th March 2017)

Mike Gallacher is to step down as First Milk’s CEO and turnaround guru in April and into his shoes will step Shelagh Hancock.

 

It’s a near as damn it 2 years to the day since Gallacher was parachuted into First Milk and at the time the co-op was on life support and at best only weeks away from the life support machine being turned off.  It wasn’t quite as bad as DFOB but it was looking like a sick dog which needed putting out of its misery.  The dairy industry’s vultures were circling all eager to pick over the carcase but none wanted to be first to swoop in.  It was a badly run business and the one thing the First Milk board did get right was to re-shape, re-group and give Gallacher a free hand.

 

As Gallacher leaves, he hands over a very different business and whilst it will still have to operate profitably in a challenging environment it’s a fact today there are other UK dairy businesses in worse shape than First Milk.

 

It’s unusual to see dairy CEO’s involved in a smooth planned succession but this is one such case.  Normally it’s a sacking dressed up with lots of spin. 

 

Gallacher’s successor, Shelagh Hancock, has 25 years of experience having been involved with the First Milk business for almost 12 months.  She has previously worked for Glanbia, been a key figure in Milk Link until the Arla takeover and latterly Medina Dairies.

 

Shelagh is essentially a co-op person and will steer First Milk on the same course Gallacher has set with little, if any, need for a change in direction.  There is already at least one new opportunity on her desk for her to explore and plenty of stuff to keep her occupied.

 

It’s almost 2 years to the day since Gallacher took charge and he certainly can claim to have turned around the First Milk business much to the relief of its members who have seen their co-op go from life support to being discharged and sent home in less than 2 years.

 

Next week the two commence on a GB member meeting tour to inform members of the turnaround results, direction of the business, current milk field issues (especially the Tesco field connected to the Haverfordwest factory), farm contract developments/ideas and the opportunity to meet their new CEO.

 

2.     Ronald Kerrs to leave Muller   (15th March 2017)

The departure of Ronald Kerrs as CEO of Muller and the arrival of Uwe Sommer doesn’t appear to have been on the cards for months and part of a smooth succession plan.

 

Kerrs came to Muller in 2012 initially as Head of Muller UK before taking the position of group CEO in 2015.  He has certainly made his mark so far as the UK dairy industry is concerned having been involved in the Dairy Crest liquid business takeover as well as building a new butter plant at Market Drayton.  On May 1st Sommer steps into one of the most important dairy roles in Europe having left his role as Head of International Marketing at Lindt Chocolate.

 

GDT auction price crashes back 6.3%    (13th March 2017)

Tuesday’s GDT auction results were very sobering with an average all products drop of 6.3% (to average $3512 tonne) on top of the 3.2% fall only two weeks ago so heading towards a 10% fall in two weeks.

 

Key prices were (all in US$ not NZ$)

 

SMP                 down     15.5% to average $2118 tonne

WMP                down     12.4% to average $2782 tonne

Cheddar            down     4.2% to average $3435 tonne     

 

Traders anticipated a further weakening of prices, particularly for WMP and SMP but the double digit drop came as a shock.  The auction prices were the lowest recorded for over 5 months and for many New Zealand dairy farmers the price for WMP is now at or below their breakeven COP if the auction price is a good barometer.

 

Total tonnage traded was up 9% to 22,328 tonnes, which undoubtedly contributed to the dramatic drop, especially given the fact the quantity on offer at the same auction in previous years has declined.

 

0.74ppl February retail supplement for Muller non-aligned farmers     (13th March 2017)

 

£3.5m investment programme by Medina   (13th March 2017)

The £3.5m investment programme has already commenced at Medina’s Watsons liquid dairy facility in Hampshire, where 96 farmers supply milk to a factory employing 95 staff plus an additional 25 or so new jobs to be created during the coming 6 months as a result of the upgrade.

 

First Milk extend its Nestle supply contract    (13th March 2017)

First Milk has confirmed it has concluded an extension of its exclusive Nestle liquid milk contract.

 

The contract has been in the custody of First Milk for more than 14 years (2003) and not doubt there were numerous resident cuckoos keen to kick First Milk out given half a chance, because they appear to be raiding other nests with feathers flying as Ian writes this piece!

 

Arla confirm the 13th payment @ £9000 per GB farmer member   (7th March 2017)

Arla have confirmed that its 2500 GB members will receive a 13th payment averaging £9000 into their bank accounts this Friday.

 

Unfortunately, the Arla press release referred to the £31 million distribution as a “windfall” and a “cash bonus” which has certainly prompted an instant response from several Arla members.  As one said, “this choice of words (windfall & cash bonus) suggest that this is money for nothing”. 

 

The payment is actually a return on farmers’ investment in the co-op and the straight forward facts appear to be as follows:

 

Average fully paid up Arla member producing 1 million litres has 7.5ppl invested      £75000.00

His average 13th payment paid this Friday                                                 £  7300.00

Return                                                                                                               almost 10%

 

Conclusion – This part of the Arla model works in terms of return on the money invested and a benefit of being a member.  That’s the simplified message and let’s hopes that.

 

We sincerely hope that DEFRA and AHDB ensure last year’s fiasco is not repeated. Last year in early April Ian described the joint effort involving AHDB and DEFRA as irresponsible and misleading when the February average farm gate milk price was published as rocketing up by 2.48ppl.

 

This was achieved because DEFRA allocated the entire £22million 13th payment to Arla members to February’s milk price rather than spreading it over the 12 months as Arla do. It was a move which was lambasted by both Ian and the TFA.

 

0.25ppl milk price increase for Arla directs – from March 1st     (6th March 2017)

This takes producers’ standard liquid litre price to 25ppl (www.milkprices.com)

 

0.2ppl milk price increase for First Milk’s Midlands & East Wales producers – from March 1st     (6th March 2017)

This takes producers’ standard liquid litre price to 26.25ppl (www.milkprices.com)

 

Average January producer price 27.1ppl  – According to AHDB   (6th March 2017)

 

New cheese plant on the cards for North Wales     (6th March 2017)

Ronald Akkerman (AKA The Flying Dutchman) is back on the UK dairy industries radar this time to design, build and operate a 40 million litre a year capacity state of the art cheese factory in North Wales on behalf of a group of around 20 spring grazing farmers who intend to form a co-operative

 

The initial plant is expected to be up and running by spring 2018 (?) with plans to expand towards 100 million litres.

 

The output from the plant will be focussed on domestic consumption rather than exports with all sales through Bradburys  who have an unrivalled 130 years experience in selling cheese.  Further details are anticipated in the near future.

 

Muller to offer futures contracts   (6th March 2017)

A Muller Ingredients Contract is to be launched to suppliers this summer to its 800 or so non-aligned farmers.

 

The contract will give farmers the opportunity to lock into a margin on up to a quarter (25%) of their milk production by fixing their milk price based on the ww.milkprices.com/FC Stone published prices/UK Milk Futures Equivalent (UKMFE). 

 

Volumes available will be limited to the physical quantities Muller can secure back to back contracts with its ingredients customers.  In other words, all Muller’s farmer’s contracts will be backed off with reciprocal contracts with customers.

 

ASDA launches a free range milk/Pasture Promise branded milk    (6th March 2017)

ASDA is the first of the UK’s big retail giants to launch a branded free range milk with the promise that the milk comes from herds which spend at least 180 days and nights grazing.

 

ASDA has launched with an initial 70,000 litres week going into more than 100 ASDA stores priced at £1.50 for 2 litres.

 

RABDF outlines its future focus and industry event    (6th March 2017)

Following the disappointing decision in October last year by Holstein UK when it rejected working with RABDF with a view to holding one national dairy event, RABDF has reviewed and re-grouped and today announced its plans for the future.

 

There will be no Livestock Event at the NEC on September 6th 2017. Instead there will be a smaller annual Dairy Technical Event at Stoneleigh Park in February.

 

There is no disputing that technology is transforming our lives and changing all businesses worldwide, including dairy farming.  The RABDF event will focus on new technology with technology themed seminars and speakers from across the world.  The event will examine the potential of new technologies and how dairy farmers might take advantage, benefit and profit from the latest developments and innovations.  RABDF’s focus is to transfer the latest technological ideas to grass roots dairy farmers with an event in central England.

 

In addition, RABDF will continue its influencing and lobbying role utilising its links to politicians, policy makers and the trade as well as focussing on encouraging youth into the industry.  To this end a youth board will be formed and RABDF’s work with Women in Dairy initiativeand its conference will continue.  There is even a rumbling that the once sold out and popular RABDF Farmer Conference might emerge from the ashes in middle England, where there is currently nothing similar available in England or Wales.

 

Medina declares improved financials for year ending 30th April 2016    (6th March 2017)

Revenue £160.9m (£156.8m 2015)

Profit £1.15m (£890,000 loss in 2015)

In addition, Medina will be utilising around 50% of its 100 million litre toll processing facility with Muller once its additional litreage to Iceland starts at the end of this month.

 

This world isn’t big enough for the both of us – there’s only milk that’s going to win!    (6th March 2017)

The Australian dairy industry has declared war on non-dairy alternatives to milk such as soy, almond, coconut and rice stating they should not be called milk because they do not have anything close to the nutritional health protein or vitamin benefits of animal milks.

 

They claim its mis-labelling and that these alternatives should be labelled and branded to ensure consumers know exactly what they are putting in their shopping baskets or what’s going into their “almond plant liquid lattes”.

 

It’s time there was a crack down.  Come to think of it what’s all the nonsense about vegetarian sausages, vegetarian burgers and vegetarian rashers of bacon!

 

Studies show soy milk can destroy your thyroid     (6th March 2017)

Soy milk is recognised as coming almost exclusively from GMO which are high in pesticides and an alarming list of properties leading to claims that you simply should STOP consuming it.

 

In a recent study it’s claimed “soy milk causes severe health problems, including colon cancer, ulceration, gastrointestinal inflammation etc.”

 

WANTED BY A MATE – All must be in good condition and ready to go to work       (6th March 2017)

1.    Land Rover Defender 110 2.5 TD5 pickup with or without a back or canopy cover

 

2.    Tractor 110 to 120hp with or without a loader on.  Happy to buy a loader separate

 

3.    Good loader for above tractor

 

Email details to ianpotter@ipaquotas.co.uk

 

0.38ppl milk price increase for Arla members – from 1st March     (24th February 2017)

This takes producers standard liquid litre milk price to 27.45ppl and their standard manufacturing/cheese litre milk price to 28.55ppl.  The standard liquid litre price for Arla Tesco farmers is 28.87ppl with the Arla organic standard liquid litre holding at 41.1ppl.  (www.milkprices.com)

 

No joy in GDT auction results    (24th February 2017)

The average all price index at Tuesday’s GDT auction recorded a 3.2% drop compared to the result achieved only two weeks earlier.

 

Notable movers were:

 

Cheddar            down     5.3% to average US$3590 tonne

SMP                 down     3.8% to average US$2574 tonne

WMP                down     3.7% to average US$3189 tonne

  

Muller unveils its single supplier milk contract  (24th February 2017)

Around 1900 Muller will soon receive the final version 2 of the processors supply contract and it’s clear that Muller have taken on board producer feedback from last November’s farmer meetings and revised the offering.

 

There is no doubt one single contract for all its suppliers is the way forward and whilst the new offering will see some farmers win and some lose it is claimed the overall package is cost neutral to the business.

 

The forecast accuracy tolerance has been increased from 5% to 7.5% prior to any penalty.  That relaxation should be welcome news; however, Muller’s intention is for the few farmers who fall outside of the 7.5% threshold to have one to one support from Muller’s Agriculture team to help ensure all 1900 farmers are under the penalty threshold.  Surprise milk volumes are certainly not an issue confirmed to Muller.

 

The butterfat penalty has been reduced from 0.035ppl in version 1 of the contract to 0.025ppl for every 0.01% less than 4% and identical payment of 0.025ppl for every 0.01% above 4%.

 

The contract notice period is only 3 months following a price change or contract variation compared to the old Dairy Crest 12 month notice period.

 

If a farmer wants to expand by more than 10% he simply needs to have prior (that means prior to spending any £) early engagement with Muller so both parties know when the extra milk will materialise.

 

Milk payments into the bank will be around the 18th of each month and this is a midway point between the current Muller and ex-Dairy Crest payment dates.

 

Finally, individual farmers can utilise the online modelling software to check how the contract affects their individual production.

 

The new contract starts on May 1st with the target sign up date of April 21st.

 

Overall Ian has failed to find any trip wires or traps and the likelihood is most producers will sign the new contract if they feel it is fair and they want to join Muller on its ambitious UK journey and are inspired by Muller’s vision.  If any Muller farmers believe Ian has overlooked any key points please email him.

 

Arla hunting for milk but Arla’s CEO claims rising milk supply keeps prices in check    (24th February 2017)

Arla has written to its UK members stating it requires more milk, initially from existing members.  The letter has produced a very mixed response from Arla members who have contacted Ian today.  In summary, most state they have not even started on the road to recovery following almost 2 years of low milk prices at below COP and have minimal appetite to ramp up production in case prices ease again. 

 

Its certainly a confusing message from Arla with its CEO Pedar Tuborgh stating

 

"Milk prices are currently at a level that is sustainable for the whole business, including our farmers," he said.

 

And according to one report he has also stated

 

“a rising supply of milk on world markets is likely to rein in further gains in prices that have increased nearly 50 percent since a slump last year.”

 

Its certainly a mixed and confusing message from Arla HQ and Arla UK which members are trying to sieve through.

 

That’s an individual decision but from Arla’s point of view if they do require extra milk existing members must be offered the chance to fill the gap.  Failing that Arla will presumably move to Stage 2 and open the door to new recruits to see what the appetite is.

 

Arla UK sales and revenue down    (24th February 2017)

Arla’s largest market, the UK, has seen its 2016 calendar year results weigh in with a 12% drop in revenue to £1.86billion (€2.2billion) down from the 2015 numbers of £2.2billion (€2.5billion).

 

Within the numbers Arla’s UK branded products saw sales volumes rise by an encouraging 7.6% with branded liquid milk growing by 12%.

 

Morrison’s Milk for Farmers accounted for 15% of sales within its competitors on the shelf and Arla’s yoghurt sales were up 116% more than double but from a standing start in 2015.

 

Arla Foods as a European co-op saw net profit grow by a healthy 20.7% to €356m.

 

 

NFU launches a new contract checking facility     (24th February 2017)

The NFU, in conjunction with its panel of legal firms, has launched a contract checking service for members in the hope they use the facility prior to signing a new contract.

 

The service comes in three stages:

 

·         A free initial discussion with the NFU’s CallFirst Specialist Advisers’ team, available to all NFU farmer members

·         An initial report produced by an NFU legal panel solicitor considering members’ requirements, reviewing the contract and explaining what it means

·         A more detailed review with advice on how to renegotiate the contract terms.

 

The service covers areas such as milk contracts, grazing licences and tenancy agreements.  It’s an opportunity for NFU members to seek professional help and guidance prior to signing on the dotted line.  It’s not free but the first 50 LAS subscribers who take up the offer will be given a £100 voucher towards the fee.

 

At this week’s Dairy Breakout Session during question time Ian suggested that given the fact 1900 Muller farmers are about to receive a contract to sign and that the NFU Dairy Board Chairman had commented that it seemed to be a reasonable and fair contract and agreed that it demonstrated that Muller had listened to its Producers, would the NFU  consider putting out a press release specific to this contract rather than having dozens or possibly 100’s of farmers individually contacting them for an opinion.  The idea is understood to be under consideration and the NFU are expected to give some help to the Muller farmers with their general view of the new contract.

 

NFU Conference     (24th February 2017)

Brexit dominated this week’s NFU Conference and whilst those negotiating on behalf of UK agriculture will battle for our industry to receive the same level of support post Brexit as we receive today, most are bracing themselves for a haircut and a sea change in who receives help and how it’s delivered.

 

The Environment Secretary, Andrea Leadson, was keen to point out that

 

“there will be support for our vital food and farming industry after we leave the EU”

 

but she didn’t confirm what sort of support, how much support or for how long it would last.

 

With 86,000 farmers receiving BPS payments and these payments representing 50% of the average farmers’ income it’s a near certainty that such payments will not continue at this level going forward in the next decade.  The CAP payments were worth £3.5billion to the UK in 2016 and will be very challenging to defend post Brexit.

 

The loss of these payments would trigger significant consolidation at farm level as many farms become unviable and unsustainable.  There were a number of reasons to view the post Brexit dairy industry with enthusiasm and optimism, especially for those who are low cost milk producers wanting to expand because if the BPS payments are cut or even axed more land is sure to become available.  Some were privately licking their lips at the prospect.

 

RABDF future announcement    (24th February 2017)

The RABDF have called a press briefing on Monday 6th March to announce the future of the organisation and presumably the future for its 6th September 2017 Livestock Event.

 

0.98ppl Muller non-aligned retail supplement for January  (20th February 2017)

In addition, the Muller February retail supplement prediction currently stands at 0.82ppl

 

Friesland Campina (FC) guaranteed farm gate milk price increases for February  (20th February 2017)

The FC price is the one most, if not all, milk purchasers monitor.  Its February producer/supplier price increased by 0.5 cents per kg (0.484ppl), which converted to a UK standard liquid litre equates to 28.98ppl.  The average FC producer price for the last 6 months converts to 27.26ppl (www.milkprices.com)

 

Dairy Crest’s 9 months trading statement – to 31st December 2016           (20th February 2017)       

In its latest trading update the additional costs experienced by DC, particularly the increased farm gate price it paid for milk (+38%) has led to the statement that net year end debt for the business is expected to be higher than anticipated by 31st March 2017. 

 

DC’s share value fell 5.77 and is at that value today but was down to 565p this morning.

 

Muller’s new farmer representative structure is in train and the elections are set to be very competitive    (20th February 2017)

Having taken on board feedback from a nationwide series of meetings last November, Muller has launched its new farmer representative structure ahead of confirming any changes to its single contract launch.

 

Democratic representation appears to be what all parties want and to that end these are the nuts and bolts of the structure.

 

A Muller Farmer Forum of 21 supplying farmers will be elected by its 1900 or so farmer members, which will be roughly 1 per 90 farmers.  This is split in proportion to the aligned v non-aligned farmers as follows:

 

9 non-aligned farmer forum representatives

11 aligned farmer forum representatives

1 organic farmer forum representative

21

 

The positions will be for a 3-year period by rotation.  The forum will have complete responsibility for deciding the future representative structure with nothing ruled out and they could even consider setting up a DPO.  Basically the 21 farmer members start with a clean sheet of paper.

 

On the subject of annual subscription to fund development, training and independent advice it will be up to the newly elected 21 forum representatives to decide on what level this should be set at, if any, although it’s clear if independent advice is required it needs to be funded.  Muller has confirmed that initial start up funding will be provided by Muller until additional funds flow into the forums bank account.

 

Once in place this forum will elect a board of 7 MMG Board representatives to work closely with the Muller management.

 

For obvious reasons of continuity an interim board of 7 will be put in place and it will take 3 years before the forum can say all board members were put in place by the forum.  However 3 of the existing MMG Board members will immediately by rotation stand down in June of this year followed by 2 in 2018 and 2 in 2019.

 

The eventual outcome should be much better communication from grass roots farmers to senior management.

 

It’s time for Muller farmers to put up (or shut up) and those interested in standing need to throw their names in to the hat by March 3rd for a nomination form to be returned by 13th March and by early April the forum members should be in place.  Whilst Muller is tight lipped over the number of nominations they have already received they have confirmed that there will be elections in several regions, which is a healthy prospect and bodes well for the future.

 

Code of Conduct with advance notice of interest rate changes needed for Bankers (spelt with a B)    (20TH February 2017)      

The UK dairy industry has committed a lot of effort and energy into ensuring all milk purchasers abide by a Voluntary Code and give advance notice of price movements and move away from discretionary milk pricing.

 

The same does not appear to apply to our bankers following the recent decision by Investec Bank to retrospectively cut its deposit interest rates.  In fact, in their terms and conditions it states “Interest rates may, at our discretion, change.”

 

And we all thought the banking world has cleaned its act up.

 

.5ppl milk increase for Arla directs – from 1st February    (3rd February 2017)

This takes producers standard litre price to 24.75ppl.  These producers appear to be the poor relations but at the end of the day they were never likely to be anything other having taken the decision to remain outside of the co-op’s membership.

 

1ppl milk price increase for Pattemores suppliers – from 1st February  (3rd February 2017)

This takes producers standard liquid litre price to 27.5ppl. (www.milkprices.com)

 

1ppl milk price increase for Pensworth suppliers – from 1st March  (3rd February 2017)

This takes producers liquid standard liquid litres price to 27.25ppl. (www.milkprices.com)

 

0.85ppl to 0.95ppl A milk price increase for First Milk Members – from 1st February  (3rd February 2017)

Details as follow:

            Midlands & East Wales Pools + 0.95ppl   26.05ppl liquid standard litre

            Haverfordwest                      + 0.90ppl   28.23ppl liquid standard litre & 29.16ppl manufacturing  

            Lake District                         + 0.90ppl   27.11ppl liquid standard litre   & 28.04 ppl manufacturing

            Scottish Mainland                 + 0.85ppl   26.09ppl liquid standard litres

 

The figures in brackets are the www.milkprices.com standard liquid and manufacturing litre prices.  Note the Haverfordwest standard litre price includes the estimated 1ppl Tesco group cheese payment.

 

Stand on milk prices for March 1st (3rd February 2017)

            Muller                           (26.69ppl)

            Crediton Dairy    (28.5ppl)

 

With volumes increasing almost daily, cream prices back almost 25% in just over a month, the weakening of butter prices and SMP prices combining all of these with a half decent Spring its likely March 1st increases will be the last for a while. Most farmers will be praying the surge in production is curtailed because the way these markets are heading the next price move could easily be South. Current spot prices for milk are around 26ppl and hovering and if any producer is not already on 30ppl it’s a near certainty they won’t be for many months to come.

 

Milk production is still down   (3rd February 2017)

Whilst daily milk production is estimated to be down 3.8% compared with 12 months ago at around 32 million litres a day (source AHDB) milk is now starting to flow and impact on forecast deliveries and on European commodity buyers appetite to purchase.

 

Welcome pay-out for First Milk members  (3rd February 2017)

After a difficult and challenging two years First Milk has announced that its monthly milk payments to members will revert to “normal terms” meaning members receive 6 weeks milk money during February.

 

The delayed payments for January deliveries for which part would have been part paid in February and part in March will now all be paid in full in February.  Sorting the payments has cost First Milk £6 million in total.

 

The deferred payment started in January 2015 when First Milk had to use farmer’s money to manage cash flow and paid 50% on the 24th of the month following supply and 50% on the 10th of the month after.

 

It’s another encouraging sign as to how the Co-ops fortunes have improved and CEO Mike Gallacher has commented that this “draws a clear line under the turnaround process for First Milk”. Job done – not really but its now down to the mundane day to day stuff.

 

Arla to invest £37.5 in the UK (3rd February 2017)

Arla is to invest a further £37.5 million (€44 million) in its 13 UK sites/logistics in 2017 representing a 50% increase compared to its 2016 commitment.  The figure is part of a £285 million global Arla investment.

 

The goal for Arla is to “move more milk from bulk into brands and improve the profitability of the farmer owners”

 

1.25ppl milk price increase for Grahams Dairies (Scotland) suppliers – from February 1st      (27th January 2017)

This takes producers’ standard liquid litre price to 26.75ppl (www.milkprices.com)

 

1.1ppl milk price increase for Freshways suppliers – from February 1st      (27th January 2017)

This takes producers’ standard liquid litre price to 27.5ppl (www.milkprices.com)    

 

0.76ppl (1 Euro Cent) milk price increase for Arla members – from February 1st     (27th January 2017)

This takes producers standard liquid litre price to 27.07ppl (non-aligned) and 28.49ppl (Tesco aligned).  The standard manufacturing litre price will move up to 28.11ppl (www.milkprices.com)

 

Lack of SMP sales from intervention stores is concerning     (27th January 2017)

Everyone admires a strong seller, especially when it’s someone like the European Commission.  However, their recent third tender involving 7,500 tonnes once again resulted in no sales of intervention SMP and it looks as if they could have completely mis-read the market.

 

During three tenders the Commission have only succeeded in selling 40 tonnes out of a total public stock of more than 351,000 tonnes.

 

Ian has been informed that there is a shelf life for the SMP and that significant quantities will have to be sold shortly and if that combines with a levelling off in SMP prices, or even a dip, the Commission could quickly turn from being a strong seller to an emergency seller, which will result in most ex-farm gate milk prices catching a chill, including those in the UK.

 

Not to mention that its not impossible that there could be calls for further intervention this spring if the market suddenly dives.

 

Dairy markets have passed 12 o’clock with spot prices down to 26 to 27ppl     (27th January 2017)

Following a period of rapid upward movement in dairy trading prices, spot milk prices and futures contract prices its clear commodity prices are at best levelling off and potentially about to head south.  Spot milk, which is only a barometer with relatively small quantities traded is down from 40/41p to 26/27ppl.

 

Dairy commodity prices have eased as on farm deliveries show signs of increasing not to mention the firming of currency and the fact cream is struggling to find homes.

 

Freshways have confirmed a rumour that one or more of its producers under notice to leave them on February 1st has, at the 11th hour, contacted Freshways in a bid to rescind his (their) notice within days of ceasing to supply the firm.

 

It will be very interesting to follow whether farm gate milk prices continue to increase in coming months.  Several milk purchasers gave reasons why there was a lag in prices moving up so will the same lag apply to prices levelling off or coming down?  A levelling off and period of stability for all involved will be no bad thing at this stage, especially if that stability comes with a farm gate milk price around 28 to 30ppl.  The biggest fear is that we get an early spring with oceans of milk, which will exert serious pressure on farm gate milk prices.  Where this market will end up is anyone’s guess but on today’s evidence it’s easily passed 12 o’clock and looking like it could be about to head south.  You have been warned.

 

Changes at Muller     (27th January 2017)

Lyndsay Chapman has stood down from her roll as Agriculture Director of Muller by mutual agreement.  Lyndsay joined Muller from Dairy Crest a year ago when Muller acquired Dairy Crest’s liquid division.

 

Rob Hutchinson has taken over the position with immediate effect.

 

1.5ppl milk price increase for suppliers to Paynes Dairies – from 1st February     (20th January 2017)

 

1ppl milk price increase for suppliers to Meadow Foods – from 1st February      (20th January 2017)

This takes producers’ liquid standard litre price to 27.55ppl (www.milkprices.com)

 

New MD at Medina    (20th January 2017)

After one year out of the UK dairy industry’s front line Mike Sheldon, former MD of Dairy Crest Dairies is back, this time as MD of Medina Dairy.

 

Sheldon was a casualty of the Muller acquisition of Dairy Crest’s liquid business and the move to Medina looks a perfect fit for both parties.  His 22 years of experience with Dairy Crest is likely to bring new ideas to the Medina board meetings.  He was instrumental in Dairy Crest’s adoption of a DPO and the Dairy Crest formula contract both of which have been axed by Muller.

 

Meadow results are impressive   (20th January 2017)

Meadow Foods Limited have published their annual report and financial statements for the year ended 31st Mach 2016 and the financials are impressive in a year when the majority of Meadow’s 550 supplying farmers and most non-aligned producers were unable to cover cost of production having to eat into any available cash reserves.

 

Given the worldwide collapse in dairy product values there is no surprise in the fact that Meadow’s turnover was down 40% from £376million to £228million, however, profit before tax was only down 15% from £14.2million to £12million (£22,000 per Meadow supplier).

 

However, Meadow’s profit margin increased from 3.8% to 5% which is some achievement to maintain your margin in a collapsing market.

 

The dividend pay-out to shareholders of £3million means MD Simon Chantler for the second consecutive year or more appears to be the best paid person in the UK dairy industry with a total pay-out for the year of £2.3million slightly down on the previous years packet by £20,000.  No one could confuse him with the nursery rhyme character “Simple Simon”.

 

These results no doubt encouraged Paine & Partners to make their significant investment in Meadow in September 2016.

 

Details will come out in future published accounts; however, based on these numbers one knowledgeable bean counter is speculating the total value of the Meadow business at the time of the Paine & Partners deal could have been in the region of £100million.

 

  Simple cost effective farm accounts package wanted    (20th January 2017)

An unusual request, however, if any readers have a fairly simple farm accounts package, which is good value for money, could you please email us with the name and version.  Thanks, Ian

 

2ppl milk price increase for suppliers to Helers Cheese – from February 1st     (13th January 2017)

This takes producers’ manufacturing standard litre to 27.33ppl    

 

1ppl milk price increase for suppliers to Belton Cheese – from February 1st     (13th January 2017)

This takes producers’ manufacturing standard litre price to 28ppl and their liquid standard litre price to 27.25ppl (www.milkprices.com)

 

1.6ppl milk price increase for suppliers to Wensleydale Creamery – from 1st January (PRODUCER NOTIFIED)    (13th January 2017)

 

Iceland, Medina, Buckleys and FFA     (13th January 2017)

There were a couple of inaccuracies in last week’s story connected to the decision by Iceland to switch litreage from Arla to Medina from 1st April 2017

 

The actual literage involved is 35 million into Iceland, London and not the 100 million litres Ian was told from two sources. This means from April 1st Medina’s total literage contracted to Iceland increases to 60 million.

 

Secondly, Medina, along with several other milk purchasers who use basket pricing, have seen  their suppliers find it extremely difficult to cope with the one month time lag before farm gate prices have moved up.  Consequently Medina injected more money into supplying farmers’ pockets, including Buckleys farmers.  Note, the same time lag benefitted farmers when prices dropped much slower.  Medina have confirmed that like others they are reviewing their basket pricing.

 

The basket price for December deliveries to Buckleys was 21.42ppl to which Medina added a further 1ppl support to give 22.42ppl.

 

For January it will be 23.48ppl plus 1ppl to total 24.48 with the February basket already at 25.77pp and hopefully rising.

 

 

In a nut shell the claim made to Ian that Buckleys paid 20ppl or less for December deliveries and by default one of the lowest farm gate milk prices in the UK was inaccurate. In addition none of the Milk for the enlarged contract will come from Buckleys Suppliers and will come Medinas Southern sources.

 

We apologise for this inaccuracy and hope this clarifies the position and correct numbers.

 

Note, this clarification and apology does not impact on David Handley’s planned meeting with Iceland

 

Iceland, Medina, Buckleys and FFA   (11th January 2017)

There were a couple of inaccuracies in last week’s story connected to the decision by Iceland to switch litreage from Arla to Medina from 1st April 2017

 

The actual litreage involved is 35 million into Iceland, London and not the 100 million litres Ian was told from two sources. This means from April 1st Medina’s total litreage contracted to Iceland increases to 60 million.

 

Secondly, Medina, along with several other milk purchasers who use basket pricing, have seen  their suppliers find it extremely difficult to cope with the one month time lag before farm gate prices have moved up.  Consequently Medina injected more money into supplying farmers’ pockets, including Buckleys farmers.  Note, the same time lag benefitted farmers when prices dropped much slower.  Medina have confirmed that like others they are reviewing their basket pricing.

 

The basket price for December deliveries to Buckleys was 21.42ppl to which Medina added a further 1ppl support to give 22.42ppl.

 

For January it will be 23.48ppl plus 1ppl to total 24.48 with the February basket already at 25.77pp and hopefully rising.

 

 

In a nut shell the claim made to Ian that Buckleys paid 20ppl or less for December deliveries and by default one of the lowest farm gate milk prices in the UK was inaccurate. In addition none of the Milk for the enlarged contract will come from Buckleys Suppliers and will come Medinas Southern sources.

 

We apologise for this inaccuracy and hope this clarifies the position and correct numbers.

 

Note, this clarification and apology does not impact on David Handley’s planned meeting with Iceland.

 

2ppl milk price increase for First Milk members – from 1st January   (6th January 2017)

 

This takes producer’s liquid standard litre price to:-

1.     27.33ppl Haverfordwest Creamery (including the Tesco Cheese supplement) and 28.25ppl on a manufacturing standard litre.

2.     26.21ppl Lake District Creamery and 27.13ppl on a manufacturing standard litre

3.     25.24ppl for Mainland Scotland

4.     25.10 Midlands and East Wales

 

1.5ppl milk price increase for Crediton Dairy suppliers – from 1st February   (6th January 2017)

 

This takes producers liquid standard litre price to 28.5ppl for a non aligned contract and extremely close to that paid by Tesco/TSDG

 

1.5ppl milk price increase for Pattemores – from 1st January

This takes producer’s liquid standard litre price to 26.5ppl (www.milkprices.com)   (6th January 2017)

 

 

1.5ppl milk price increase for Yew Tree Dairies liquid contracted suppliers – from 1st February  (6th January 2017)

 

This takes producer’s’ liquid standard litre price to 27.5ppl (www.milkprices.com)

 

In addition, Yew Tree Dairies December B price has been confirmed at 27.32ppl.

 

1.5ppl milk price increase for Arla Directs – from 1st January   (6th January 2017)

 

This takes producers liquid standard litre price to 23.25ppl www.milkprices.com

 

1.25ppl milk price increase for Muller non-aligned suppliers from 1st February  (6th January 2017)

 

This takes producer’s standard liquid litre price to 26.69ppl (www.milkprices.com) excluding an estimated 0.82ppl February retail supplement.

 

1.25ppl milk price increase for Pensworth suppliers – from 1st February  (6th January 2017)

 

This takes producers liquid standard litre price to 26.25ppl – www.milkprices.com with the indication that the company anticipates a similar increase a month later if anticipated and current trading conditions continue.

 

1ppl milk price increase for Glanbia Cheese suppliers – from 1st February  (6th January 2017)

 

This takes producer’s manufacturing standard litres to 28ppl www.milkprices.com

 

1.65ppl milk price increase for Wyke Farms producers – from 1st January (PRODUCER NOTIFIED)    (6th January 2017)

 

 

GDT auction prices soften by 3.99% but…..      (6th January 2017)

 

This week’s GDT auction results saw prices ease by 3.99% to average$3463, with the fall triggered by a significant fall in WMP prices.

 

Key movers were:

 

WMP                down 7.7% to average $3294 tonne

Butter               up 0.5% to average $4308 tonne

Cheddar            up 1.4% to average $3894 tonne

SMP                 up 2.3%to average $2660 tonne

 

Despite the fall many bean counters and economists continue to firmly back a positive outlook for 2017 and remain upbeat.

 

Oxford Farming Conference accused of snubbing British potato growers   (6th January 2017)

 

Whilst Ian did not attend this weeks conference the key point relayed to him from the day’s events related to the lunch menu and nothing from the coach load of ministers, MPs, SNPs and industry bigwigs’ who took the stage.

 

Instead of offering delegates a lunch with a humble British baked potato (or similar) the Conference caterers were alarmingly permitted to offer couscous, which has its origins in Israel with pasta shaped rice grains you simply add water to.

 

The offering might be healthy but if the caterers had wanted something you add water to they should have put out a real British potato product and offered the delegates and earth people Smash – “For Mash Get Smash”

 

The aliens and earth people catering at The Oxford Real Farming Conference were left smirking at this gaffe knowing they served British potatoes to British farming delegates at their Conference.  Come on Oxford you could have done better.

 

1.51ppl milk price increase for Arla members – from January 1st   (22nd December 2016)

This takes producers standard liquid litre price to 26.31ppl

 

1.5ppl milk price increase for suppliers to Paynes Dairies - from 1st January   (22nd December 2016)

 

Only 40 tonnes (0.18%) out of 22,150 tonnes of SMP sells    (22nd December 2016)

A pitiful 40 tonnes of Intervention SMP have been sold of which 20 tonnes were sold in the UK at a minimum EU price of €2151 tonne (£1810) or more. A second tender period is now open.

 

0.75ppl milk price increase for Arla Organic suppliers – from January 1st    (22nd December 2016)

This takes producers standard liquid litre price to 41.1ppl

 

Pattemores correction   (22nd December 2016)

Our late reporting of the 1ppl milk price increase for suppliers to Pattemores was actually on top of an additional 0.75ppl increase so the total 1st December increase amounts to 1.75ppl. Apologies for this missive and many thanks to one of our regular readers for spotting the error.

 

Christmas Dairy Pantomime Fun    (22nd December 2016)

A very talented and well briefed 12 year old has produced a series of GB dairy industry pantomime cards, which should bring a smile to many of you and perhaps even to most of the characters featured.

 

To view the range click on:    www.dairypantomimes.yolasite.com

 

 

1.5ppl milk price increase for suppliers to Paynes Dairies - from 1st January      (19th December 2016)

 

Pattemores correction    (19th December 2016)

Our late reporting of the 1ppl milk price increase for suppliers to Pattemores was on top of an additional 0.75ppl increase so the total 1st December increase amounts to 1.75ppl. Apologies for this missive and many thanks to one of our regular readers for spotting the error.

 

2ppl forecast milk price increase for First Milk members – from January 1st       (16th December 2016)

No longer are First Milk waiting for the likes of Arla to declare before they announce price increases.  At the moment it’s only a forecast but the likelihood will be for it to be confirmed before the New Year.

 

1ppl milk price increase for supplies to Pattemores – from 1st December  (16th December 2016)

This takes producers’ standard litre to 25ppl. 

 

We were notified of this increase on the 30th November and apologise for missing it from previous bulletins.

 

First Milk’s half year results are encouraging    (16th December 2016)

In the space of 20 months under the captaincy of Mike Gallacher, First Milk has seen a dramatic turn around in its fortunes having moved from a position of how many weeks will it continue before it’s the next DFOB, Westbury or Amelca to ranking its member milk prices alongside and indeed in some instances ahead of its main competitors e.g. Arla and Muller.

 

Its six month trading results to 30th September released this week include the following:

 

Operating profits up to £9.2 million (compared to £1.2m 2015)

Profits before tax were up to £6.8 million (compared to a loss of £2.4m in 2015)

Bank debt had fallen to £26.1 million (vs. £46.1m in the prior year)

 

Once appointed, Gallacher immediately got his surgical instruments out and sold First Milk’s loss making side lines and subsidiaries including Glenfield Dairy, CNP Professional and its stake in Westbury Dairies to focus on making quality cheese.  That’s what First Milk’s future depends on because the big hit items have been dealt with and it’s down to the day to day work in which any cheesemaker with a batch of down graded cheese costs serious money.  Having said that, in times of shortages, like today, rejects in the cheese world will be scarcer.  According to First Milk and others, the quality of cheese First Milk are producing is consistently high and long may this continue.

 

According to First Milk in the period since Gallacher took the reins to cut out the dead wood and loss making areas his programme has delivered £33m improvement in business performance including a £2.3m reduction in its wage bill.

 

RPA claim 68% (£822 million) of SFO already paid   (16th December 2016)

According to the RPA in the first 10 banking days of December it paid 59,000 English farmers a total of £822 million with the aim of paying 90% of eligible claims (this word eligible leaves some wriggle room) by 30th December.

 

Direct Milk DPO (Muller) formula contracts end at 31ppl plus    (16th December 2016)

Having operated since April 2013 the Direct Milk DPO formula contracts adopted by some Muller non-aligned come to an end on January 31st at between 31.378ppl and 31.188ppl following a January 1st 1.298ppl increase.

 

Following a decision by  Muller to serve  12 months notice on producers to end the formula options as soon as they acquired the Dairy Crest liquid business almost a year ago.

 

Over the period of almost four years the formula has paid producers on average 29.03ppl based on a liquid standard litre which represents an uplift of 2.5ppl over the equivalent non-aligned average price of 26.55ppl.

 

More importantly the January formula price is within only 0.3 to 0.2ppl of the current AMPE price of 31.5ppl.

 

It’s a blow to non-aligned who signed up to it because it was an option they had rather than having to rely on discretionary pricing?  New ideas, opportunities  and alternatives for Muller non-aligned are sure to emerge in 2017.

 

From 1st February those on the contracts will revert to the Muller standard litre price of 25.44 (January price) plus any retail supplement.

 

GDT auction prices up 3.5% with WMP up 4.9%  (9th December 2016)

Tuesday’s GDT auction results produced more positive moves.  Key movers were:

 

All products average up 3.5%

 

WMP                +4.9% to average US$3593/tonne

Cheddar            +2.2% to average US$3752/tonne

Butter               +1.7% to average US$4262/tonne

SMP                 +1.4% to average US$2570/tonne

 

2.15ppl milk price increase for suppliers to Meadow Foods – from 1st January    (9th December 2016)

This takes producers’ standard litre price to 26.55ppl.

 

2ppl milk price increase for suppliers to Grahams Dairies – from 1st January    (9th December 2016)

This takes producer’s standard liquid litre to 25.5ppl on all litres delivered having abandoned the A&B pricing (see below).  In addition Graham’s supplier receive a retailer supplement.

 

 

2ppl milk price increase for suppliers to Belton Cheese – from 1st January    (9th December 2016)

This results in a standard manufacturing litre milk price of 27ppl and standard liquid litre 26.25ppl (www.milkprices.com)

 

1ppl milk price increase for suppliers to Joseph Heler Cheese – from 1st January               (9th December 2016)

 

Spot milk prices soften    (9th December 2016)

The 41ppl spot price has now softened to 37 to 38p and in some cases a shade lower as we approach the Christmas period.

 

Grahams Dairies abandon A&B pricing and return to pool pricing    (9th December 2016)

Having operated A&B pricing since February 2015 following recent consultation with its farmer suppliers Grahams have abandoned A&B pricing from December 1st in favour of a return to the traditional pool pricing.

 

Nick Holt Martyn sums up the situation in two sentences    (9th December 2016)

In The Dairy Group’s latest release headed “Farmgate Price Is Lagging Too Far Behind the Market” – Nick Holt Martyn wrote the following, which requires no further comment:

 

“On a monthly basis the gap between markets and the farmgate is as wide as at any time.  With markets getting to 32ppl a recovery to 28ppl is now overdue ……….  Failure to pass on market returns is doing serious damage to farmers businesses and will set back farmer/processor relationships.”

 

AHDB Dairy apologise for their major mess up   (9th December 2016)

Following widespread publicity and criticism AHDB Dairy have issued an apology following their unjustified criticism of Morrisons Milk For Farmers:

“Milk for Farmers

Published 2 December 16

Recent AHDB analysis on Morrisons’ Milk for Farmers range, which was used in an article in The Grocer, may have given the impression that AHDB was critical of efforts by Morrisons and Arla to improve returns to dairy farmers.

AHDB would like to apologise if this was the case, and would like to state it welcomes any retailer initiative that benefits farmers and aids consumer choice. AHDB’s usual internal checks and balances were not followed on this analysis due to an internal error.  This in no way reflects on the journalistic standards of the Grocer and we apologise for any misunderstanding.”

Whether the matter is closed and filed depends on the outcome of further meetings involving Morrisons, Arla and the Arla AMBA Board all of whom intend to hold AHDB to account and it will be a miracle if the above apology is the end of the matter.

 

More cheap milk   (9th December 2016)

Around 60 plus Bestway Cash & Carry outlets have Country Life Milk supplied by Muller on offer at 79p for 2 litres in semi-skimmed and whole.

 

Cows and Catastrophes – The Flights and Fancies of a Cornish Dairy Farmer by Brindley Hosken   (9th December 2016)

It’s the story of one dairy farmer’s 35 years of milking cows but it certainly doesn’t feature my old friends, Doom & Gloom, and does have some witty farmer humour and is well worth reading.

 

In 2010 Brindley took the heart breaking decision to sell his herd and in the book he talks through the family emotions of that decision as well was the effects of TB.  When asked, would he start dairy farming again?  “I’d rather stick pins in my eyes.”

 

It’s a worthy stocking filler and the print is fairly large, £9.95 from Old Pond Publishing.

 

http://www.oldpond.com/cows-and-catastrophes.html

 

British Cheesemakers turn up trumps with Chelsea Pensioners   (9th December 2016)

The Annual Ceremony of the Christmas Cheeses at the Royal Chelsea Hospital for Ian signals the start of Christmas celebrations.  It’s a very special event the Dairy Council has been involved with for more than 50 years and its roots date back to 1692.

 

Full marks to all our UK cheesemakers who provided a record 250kg of cheese for this Wednesday’s event.

 

Also full marks to The Dairy Council for involving the Military Wives Choir, and babies, to ring in the start of the festive season for the pensioners.

 

4ppl milk price increase for suppliers to Dairy Crest Davidstow   (2nd December 2016)

The 4ppl is split as follows:

 

2ppl on January 1st

2ppl on February 1st

 

The increases result in the following standard litre prices: (www.milkprices.com)

 

1st January         liquid standard litre price 26.92ppl and on the manufacturing standard litre price 28ppl

1st February       liquid standard litre price 28.92ppl and on the manufacturing standard litre price 30ppl

 

2.5ppl milk price increase for Muller non-aligned - from 1st January    (2nd December 2016)

This takes producers’ liquid standard litre price to 25.44ppl, excluding the retail supplement, which is expected to reduce to 1.1ppl.  (www.milkprices.com)

 

Another 2.5ppl milk price increase for suppliers to South Caernarfon Creameries - from 1st January    (2nd December 2016)

This takes producers’ manufacturing standard litre price to 28.03ppl (www.milkprices.com)

 

2.5 & 2ppl milk price increase for First Milk members - from December 1st    (2nd December 2016)

The increases are as follows:

2.5ppl increase for First Milk’s Midlands & East Wales contracted producers from 1st December

2ppl increase for First Milk’s other pools from 1st December

 

The increases result in the following standard litre prices:

Haverfordwest                25.17ppl (including the Tesco Cheese Group payment of 0.84ppl)

Lake District/Aspatria     24.21ppl

Scottish Mainland          23.24ppl

Midlands & East Wales 23.10ppl

 

All B litres will be paid at 25ppl for December.

 

1.71ppl milk price increase for suppliers to Glanbia cheese - from 1st January   (2nd December 2016)

This takes producers’ standard manufacturing litre price to 27ppl and the liquid standard litre price to 26.11ppl  (www.milkprices.com)

 

1.5ppl milk price increase for liquid contracted suppliers to Yew Tree Dairies - from 1st January    (2nd December 2016)

This takes producers liquid standard litre price to 26ppl (www.milkprices.com)

 

1ppl milk price increase for Arla Direct – from 1st December    (2nd December 2016)

This takes producers’ liquid standard litre price to 21.75ppl

 

Mirror Mirror on the Wall, who is the fairest of them all?    (2nd December 2016)

Here is a snap shot of several key liquid standard litre prices as gathered together by us at the 1st December.  Note, that’s money in the bank in mid January!

 

Barbers                                                 26.7ppl

First Milk Haverfordwest                          25.17ppl for 90% of the milk with additional B litres paid at 25ppl

(including the Tesco Cheese Group payment of 0.84ppl)

Freshways                                            25.05ppl

Lactalis/The Fresh Milk Company            25.0ppl

Dairy Crest Davidstow                            24.92ppl

Paynes                                                 24.8ppl

Arla members                                        24.63ppl

Yew Tree Dairies Liquid              24.5ppl

Glanbia                                                 24.46ppl

Meadow Foods                                      24.4ppl

First Milk Lake District/Aspatria              24.21ppl for 90% of the milk with additional B litres paid at 25ppl  

Grahams Dairies                                    23.5ppl excluding the retailer supplement

First Milk Scottish Mainland                    23.24ppl for 90% of the milk with additional B litres paid at 25ppl  

First Milk Midlands & East Wales           23.10ppl for 90% of the milk with additional B litres paid at 25ppl  

Muller                                                   22.94ppl excluding the retailer supplement (see above)

Arla Direct                                             21.75ppl

 

Muller pause for thought on new contract and representation    (2nd December 2016)

Muller have now completed their first 2016 nationwide series of meetings and have received some thought provoking feedback on its proposed new milk contract and farmer representation particularly from its non aligned farmers.

 

The turnout has been around 1,000 of the 1900 farmers supplying the Company and some of the views have been described by Muller as strong and for sure Muller are now more in touch with the views of their suppliers.  Consequently they have taken note and have decided to delay introducing the new contract until into the New Year with the expectation that farmers will sign from February onwards. Some non aligned clearly wanted Muller to pull back but at least a pause and reflect means changes might be factored into the final version.

 

There are still numerous important questions to be answered and addressed both with the proposed new contract detail and the new representation structure which will hopefully become clearer during this month.

 

Undoubtedly one of the issues Muller has faced has been the timing of the two changes given the fact the non aligned Muller farmers are rather frustrated and aggrieved at the slow pace of upward movement in their milk price which for December is a standard litre price of under 23ppl (22.94ppl) excluding retail winter supplement payment estimated to be 1.4ppl.

 

Muller is the official milk of the British Athletics Team  (2nd December 2016)

In addition to its role as an official supporter of the British Athletics Team it is also the official milk for the team

 

Very cheap milk 2 litres for 75p!    (2nd December 2016)

From Dhamecha Cash & Carry outlets in London and the Midlands with this promotion declared as running until at least the end of January. Milk packaged and suppled by Muller.

 

Improve Rural Broadband by making ISP's more accountable for poor Download Speed   (2nd December 2016)

Rural Broadband speeds in Rural areas  are unacceptable. There is no incentive for Internet Service Providers to improve performance - (they get paid the full monthly fee whatever the download speed) - they are not accountable and need government intervention to improve.

In many rural areas rural business, farms, pubs, shops and private homes endure download speeds of less than >1mbps. In this day and age in our digital world this is disadvantaging rural business and communities. Our children are set school homework on-line and cannot access broadband to research it. Our businesses cannot operate

Click this link to sign the petition which was kick started by Ben Watts of Kite Consultancy:

https://petition.parliament.uk/petitions/173803/sponsors/Rh41NvlGPOLxt7AUScX

1.49ppl (2 Euro Cents) milk price rise for Arla members – from 1st December (25th November 2016)

This takes producers standard litre price to 24.63ppl.

 

The price increase, whilst welcome, will be significantly below what many had hoped for and to that end disappointing to remain one of the lowest in the UK.

 

In an unusual move Arla have declared that they anticipate similar upward price improvement for January 1st.  Such forward projections are unheard of and indicate that negotiators have made their point that prices have to rise and clear signals sent to farmer members.

 

1.49ppl (2 Euro Cents) milk price rise for Arla Organic members - from December 1st     (25th November 2016)

This takes producers’ organic standard litre price to 40.18ppl.  

 

3ppl milk price increase for suppliers to Freshways – from 27th November    (25th November 2016)

This takes producers’ standard liquid litre price to 25.05ppl.

 

However, the plan is that any Freshways producers who have served notice to leave and supply another processor (mainly Yew Tree Dairies AKA Woodcocks) will not receive the 3ppl and will remain on the old Freshways basket price contract assuming they don’t rescind their notice.  Clearly during 2017 and at the earliest opportunity Freshways intends to abandon a farm gate milk price set by a basket of competitors some of whom today are dragging their feet big time!

 

This approach is nothing new and was taken by First Milk in 2010 when then Chairman Bill Mustoe stated “we should recognise the value of committed volume and therefore future price increases will only apply to members who are not under resignation”.

 

At that time there was lots of talk about discrimination, unfair trading practices and it being unreasonable but according to Ian’s notes nothing came of it and to be fair Mustoe had a point reference loyalty and commitment.

 

The fact those who rescind their notice will be offered the extra money is considered a bribe by at least one Freshways producer who is under notice.  Needless to say he is furious.

 

2.5ppl milk price increase for suppliers to The Fresh Milk Company (Lactalis) – from 1st January    (25th November 2016)

This takes producers’ standard manufacturing litre price to 28.47ppl.  (www.milkprices.com)

 

28.47ppl guaranteed minimum 2017 farm gate milk price from The Fresh Milk Company (Lactalis)    (25th November 2016)

Lactalis have nailed their colours to the 2017 farm gate milk price most having underwritten the minimum milk price the company will pay producers at 28.47ppl based on a manufacturing standard litre.

 

If prices head further North, producers will benefit and at least the move provides some welcome stability for the full 12 month period.  On a liquid standard litre price the equivalent guarantee is 27.5ppl.  The move has no doubt been triggered by the resignation of several FMC producers who are heading to supply Yew Tree Dairy (AKA Woodcocks).

 

2.5ppl milk price increase for members of Dale Farm plus a 2ppl winter bonus    (25th November 2016)

Dale Farms 2.5ppl increase is backdated to include October deliveries.

 

The additional 2ppl winter bonus will be paid over the 3 months of October, November and December.

 

2.25ppl milk price increase for suppliers to Pensworth Dairy (Southampton) – from January 1st    (25th November 2016)

 

2ppl milk price increase for suppliers to Wyke Farms – from 1st December (PRODUCER NOTIFIED)    (25th November 2016)

This takes producers’ standard manufacturing litre to 27.95ppl (www.milkprices.com)

 

1ppl milk price increase for suppliers to Crediton Dairy – from January 1st    (25th November 2016)

This takes producers’ standard liquid litre to 27ppl.  (www.milkprices.com)

 

GB milk deliveries down 10.1%    (25th November 2016)

Latest data in Dairy Market Weekly indicates in the 2 weeks to 12th November GB milk deliveries were down 10.1%.

 

Intervention store sales to start next month    (25th November 2016)

The European Commission intends to commence the offloading some of its 335,000 tonne record SMP intervention stock with an initial 22,150 tonnes which is likely to cool upward market movements.

 

The plan is for tendering for the 22,150 tonnes to start on the 13th December.

 

Muller faces frothing in its non-aligned milk pool  plus  Muller makes cost savings a major focus as losses reach £106 million    (25th November 2016)

Two headlines from two different articles in The Grocer Magazine, which numerous Muller non-aligned and many others claim are linked.  Muller lost £97.8m with its UK & Ireland business in 2014 and in 2015 those losses have increased to £106million.

 

Note, the additional losses cannot be attributable to the acquisition of Dairy Crest’s liquid business which didn’t complete until only 5 days from the year end on 26th December 2015.

 

Many are now pointing the finger to the suspicion that Theo Muller understandably wants a return on his investment and has sharpened his teeth.

 

There will be limited scope for Muller’s much loved retailer aligned contracts to reverse the losses given they are effectively toll processors for the supermarkets.

 

So that leaves the poor non-aligned farmers fearing they will be the weakest link and the ugly sister who will face further downward pressure including significant contract changes currently on the table.

 

Some farmers are claiming that Muller producers will stand up and be counted and have their say but history suggests they will huff and puff but they are unlikely to stop a determined Muller army of generals and puppets.

 

Muller Milk Group (MMG) Farmer Board member prosecuted    (25th November 2016)

According to an article in the Carmarthen Journal, Grant Hartman, who is one of 7 MMG Farmer Board members has been prosecuted, fined and given a conditional discharge for 18 months for moving cattle whilst the farm was under TB restrictions.

 

Farmers milk to be sold by ASDA from Dale Farm    (25th November 2016)

ASDA is the first supermarket to sell branded farmers milk giving consumers the option to pay an extra 25p per 4 pint carton with all the additional money going directly to 1300 dairy farmer members of Dale Farm.

 

The new milk went on sale in 16 ASDA stores on Monday of this week in both whole and semi skimmed.

 

How long will it be before AHDB’s market intelligence plus any other industry vermin put pen to paper criticising and belittling this latest initiative.  Heaven knows AHDB have caused unnecessary carnage with their criticism of the Morrison Milk for Farmers, which has now negatively attracted the attention of The Telegraph and The Express and The Times.

 

Arla launches branded organic milk     (25th November 2016)

Arla UK has launched a new brand Arla Organic Farm Milk, which is un-homogenised so customers will see the cream line at the top of the carton/bottle.

 

EU report talks of victims and unfair trading practices    (25th November 2016)

Ian doesn’t go big on reports originating from the European Commission, however, the one released this week by its Agriculture Markets Task Force titled “Improving Market Outcomes – Enhancing the position of farmers in the supply chain is worth a mention”

 

A large number of GB farmers currently facing new contracts and/or significant variations in their contractual terms as well as those on low milk prices should try to find time to read the report or at least the opening 4 page Executive Summary.

 

It looks at the realities of the new post milk quota world, which is labelled as a “more market-orientated” CAP.  It goes on to flag up and confirm the well known fact “there is a concern that farmers …… are becoming the main shock absorber in the supply chains as regards market risks such as price volatility or prolonged periods of low prices”.

 

A number of non-aligned liquid producers would say they are the last domino in the pack and first to fall over.

 

The report also highlights what it calls “the fear factor” farmers face if they wish to complain about a milk purchaser and the suggestion that victims of unfair trading practices (dairy farmers) should be able to lodge anonymous complaints.  If that happens Ian won’t receive all the juicy information because it will be directed to the Commission!

 

To see the report and its Executive Summary click on : https://ec.europa.eu/agriculture/agri-markets-task-force/improving-markets-outcomes_en.pdf

 

2ppl milk price increase for suppliers to Grahams Dairies (Scotland) – from 1st December  (18th November 2016)

 

2ppl milk price increase for suppliers to Paynes Dairies – from 1st December   (18th November 2016)

This takes producers standard liquid litre price to 24.80ppl (www.milkprices.com)

 

Muller under fire from its non-aligned suppliers  (18th November 2016)

Ian has been somewhat alarmed to receive a large number of emails this week from Muller non-aligned farmers who were very keen to report back from 4 of the first 5 regional producer meetings.  Rarely, if ever, has Ian received so much feedback, in fact. Given the fact there are several more meetings during the next 10 days Ian has decided to wait to see what comes in next week, and will discuss the comments and Muller’s proposals in the next bulletin, so please continue to send in your comments.

 

The meetings have certainly welded opinion in the Muller non-aligned producers and several have subsequently hit the keyboard. Literally. Several will now have big holes where the letters M,U,L,E and R once were.

 

The Muller staff and board members present at the meetings have certainly been given some very direct messages. The general view from the emails received is that the non-aligned see the contract changes as being nothing more than a price cut, heaping further pain and unfairness upon them. 

 

Ian will also comment on the proposed new producer representation structure and whether it is a step forward, particularly with reference to the non-aligned producers representation within the group of 21 and whether they will be represented, which the board of this group will select.

 

The Grocer Magazine on-line has summed up the situation with a very forthright article, written by Kevin White, with the headline “Muller facing frothing in its non-aligned milk pool”. The article points towards Muller pushing more of its own risk on to its 800 non-aligned farmers with the new contract. With Muller purchasing 30% of Britain’s milk this is a big issue and there will be many column inches written on the subject over the coming weeks and months.

 

GDT auction up 4.5%   (18th November 2016)

Tuesday’s auction produced another set of encouraging results with the overall product index up 4.5% compared to that recorded two weeks ago.  All products delivered increased in value, however, note the volume on offer was down 13.8% to 23,902 tonnes to that traded two weeks earlier.

 

The reduction is mainly attributable to Fonterra’s confirmation that milk volumes have plummeted during October (-14% and November)

 

Notable movers

Cheddar            +11% to average $3697 tonne

SMP                 +9.8% to average $2562 tonne

WMP                +3.2% to average $3423 tonne

 

Ian Potter, Grahams Dairies and the A & B deduction scheme   (18th November 2016)

During the past two of weeks I have commented on the A & B contracts, in particular in relation to processors who make milk price deductions to producers who, for various reasons, fail to deliver their full A litre allocation in a particular month.  With the decision by Freshways to abandon A litre deductions the focus moved north of the Border to Grahams Dairies, in Scotland. In late October I was quoted in The Scottish Farmer saying that Graham’s suppliers were given no notice of the A litre deductions. Grahams has asked me to clarify that it did give notice that there could be A litre deductions when they introduced the scheme in 2014 and the fact that A deductions were on the cards was also mentioned in a letter to Producers dated 17th August.  I accept this point and have offered my apologies to the company for inferring otherwise.

 

My comment regarding the lack of notice centred on the information that Graham’s suppliers were not notified that A litre deductions were on the cards for October deliveries until a letter was posted in mid October. However I have now been told that there will be no October deductions. This is excellent news for Grahams suppliers and a very positive step forward.

 

I also stated that the Grahams B Price was cut to 7ppl which was what Grahams told me it would be in July 2015. However having made enquiries I am now informed that the lowest price paid was actually 10ppl.

 

As part of Grahams robust defence of the business in the face of negative publicity I was provided with milk pricing figures from the company. The figures stated that the net average paid out to its farmers (including A and B prices) from October 2015 to September 2016 was 23.61ppl compared to its main Scottish competitors, Arla, Muller and First Milk who, according to the numbers I was given, ranged between 22.77ppl and 17.47ppl. I duly had these other figures checked by independent dairy analyst Chris Walkland, who has confirmed that the Grahams figure is accurate and the Arla and Muller figures, while not an exact match to his, are close enough. He did not analyse the First Milk figure.

 

Thus Grahams have, overall, paid what appears to be the highest 12 month average nett pay-out to dairy farmers in Scotland   even with the B scheme. Graham’s claim that the A & B scheme has succeeded in protecting their farmers’ milk price does, therefore, have merit.

 

However I believe that, despite this, the A & B scheme has not been well communicated by any of the companies who adopted it, including Grahams, and that the scheme has too many negatives attached to it. This is especially the case when compared to the simplicity of other companies who pay a single price for ALL of the litres, even if their headline price is not be as high as the A price would be. The effectiveness of the A & B deduction scheme can also easily be disproportionate across different farmers, with major unintended negative consequences on their businesses, again not helping the image of the scheme.

 

A & B contracts were believed to be ground-breaking when they were first conceived in 2014 but back then no one envisaged the current scenario whereby A litre deductions of 7 to 8ppl or more could be applied. A lot of time and effort went into the development of the new contracts but I believe that it is time to evaluate the pros and cons and either refine them significantly or revert to alternative mechanisms. The risk of bad press and farmer discontent on an A or B price deduction outweighs the value. Grahams have today confirmed to Ian that they are reviewing their A and B contracts on a one to one basis with producers to canvass their thoughts which is a positive time consuming move by the company which will give farmers the opportunity to have their say.

 

The bottom line is Grahams, like all other milk purchasers, have to balance supplies against sales and in the space of 14 months the spot price has varied from 10p to 41p making balancing extremely challenging. For Grahams the variation for them in that period has been from 20% (2 million litres) of milk above the A volumes (AKA B milk) to now, where production is 8% (1 Million litres plus) below A volumes.

 

It is a priority for the industry that a long-term solution to these swings must be found. But it is my view that the A & B system requires further reform if it is to have a role in that going forward.

 

Dairy farmers in Northern Ireland vent their anger  (18th November 2016)

An estimated 250 or so dairy farmers in Northern Ireland have had enough and have agreed to strike.  Part of their frustration is the lack of upward movement on farm gate milk prices in addition to anger at the stances taken by Dairy UK in connection with its decision to cease engagement with the Ulster Farmers’ Union.

 

The group stated “After the news this week that Dairy UK (NI) have blocked future engagement with the UIster Farmers’ Union over their criticism of the failure of co-ops to pass on better milk market returns to farmers, the contempt and arrogance that milk co-ops now have for their producer members is totally unacceptable and should result in co-op farmer board members requesting their co-ops withhold levies for now.”

 

Strong words but the only surprise is perhaps that it has taken this long to boil over.

 

30ppl for Direct Milk DPO (Ex-Dairy Crest liquid non-aligned) (11th November 2016)

In what is the penultimate monthly price calculation before Muller bin the mechanism and the DPO on 31st January 2017 producers will receive a standard litre price of 30ppl following a December 1st increase of 1.272ppl.  The details are:

 

Simplified & Core Formula          (29.89p)

Core Formula                             (30.08p)

 

In comparison the standard non-aligned liquid December milk price for Direct Milk DPO members is 22.675ppl.

 

These formula prices are the highest on record since November 2014.

 

2.25ppl milk price increase for Meadow Foods suppliers – from 1st December    (11th November 2016)

This takes producers standard liquid litre price to 24.40ppl (www.milkprices.com).  The Meadow Foods B price for November has been confirmed at 32ppl.

 

1.78ppl milk price increase for Dairy Crest Davidstow suppliers – From 1st December  (11th November 2016)

This takes producers standard manufacturing litre price to 26ppl www.milkprices.com

 

1.5ppl milk price increase for Yew Tree contracted liquid suppliers – from 1st December  (11th November 2016)

This takes producers’ standard liquid litre to 24.5ppl (www.milkprices.com)

 

0.75ppl milk price increase for Arla Direct suppliers – from 1st November   (11th November 2016)

This takes producers’ standard liquid litre price to 20.75ppl (www.milkprices.com)

 

Friesland Campina (FC) milk price for November deliveries @ 28.85ppl  (11th November 2016)

According to numbers crunched by Steve Bradley, the latest 3.75 Euro Cents per kg price increase from FC for November results in a www.milkprices.com standard litre equivalent of 28.85ppl.

 

Dairy Crest profits up 19%  (11th November 2016)

Dairy Crest’s half year adjusted profit before tax to 30th September 2016 is up 19% to £19.1 million compared to £16 million in the same period a year earlier.

 

Ornua Foods profits up 34% (11th November 2016)

Ornua Foods Ingredients (UK) (which includes the Adams of leek family and was and previously known as the Irish Dairy Board) have declared a 2015 operating profit up 34% to £1.85 million.

 

6ppl milk price rise takes Barbers price to over 30ppl   (4th November 2016)

Cheese maker Barbers have announced a thumping market-moving 6ppl milk price rise to its farmers, split into three increases as follows:

 

2.5ppl - 1st December

2.0ppl - 1st January

1.5ppl - 1st February

 

The increases will take the Barbers standard litre price to 30.30ppl on 1st February for its 130 farmer suppliers.

 

3.6ppl milk price increases for Freshways suppliers   (4th November 2016)

This is split into 2 parts:

 

The original 1.5ppl increase for October has been lifted to a 2ppl increase from October 1st

 

The original 1.1 ppl increase for November has been lifted to 1.6ppl from November 1st

 

In addition, a proposal will be put to Freshways customers that one of the farmer representatives be allowed to attend future meetings and negotiations.

 

 

2ppl milk price increase for suppliers to Belton Cheese - from 1st December    (4th November 2016)

 

2ppl milk price increase for Muller suppliers - from December 1st     (4th November 2016)

 

2ppl milk price increase for suppliers to Helers Cheese - from December 1st     (4th November 2016)

 

2ppl milk price increase for Muller Direct (ex-Dairy Crest) suppliers - from December 1st     (4th November 2016)

This takes producers standard liquid litre price to 22.93ppl (www.milkprices.com)

 

First Milk’s A litre milk price increases for November confirmed    (4th November 2016)

From 1st November First Milk’s A price increases will be as follows:

 

Midlands plus 1.41ppl

Haverfordwest & Lake District plus 1.33ppl

Scotland plus 1.2ppl

 

1.25 ppl increase for suppliers to Pensworth Dairies - from December 1st    (4th November 2016)

 

1ppl milk price increase for suppliers to South Caernarfon Creameries - from December 1st     (4th November 2016)

 

1ppl milk price increase for suppliers to Glanbia Cheesefrom December 1st(4th November 2016)

    

WMP GDT auction average jumps by 20% in 2 weeks    (4th November 2016)

The world’s barometer of demand for dairy products, the GDT auction, has clocked up an eye watering 19.8% average for WMP to average US$3317 tonne.

 

SMP average was up 6.5% to average US$2329 tonne and the overall all products average for this week’s auction was up 11.4%.  Let’s hope it’s a sustainable upward trend and not a spike.

 

Freshways abandon A litre undersupply penalties leaving Grahams exposed   (4th November 2016)

Freshways and its farmer representatives have agreed that under the present circumstances all A litre under supply penalties will be cancelled and they have backdated this to 1st October, which has been extremely well received by its 180 or so farmer suppliers and its customers. Note, this is not a temporary amendment to the contract but a permanent change.

 

Freshways have recognised that when the A & B contract was introduced a situation whereby some farmers could suffer huge financial penalties was never planned or envisaged. The move to scrap it has sent a clear message to Freshways suppliers that the firm is listening to farmers and keen to retain their supply by supporting them. Good on Freshways.

 

According to our records this leaves Grahams Dairies of Scotland as the only UK milkprices.com listed milk purchaser who, from October 1st, is penalising/deducting significant amounts of money from any of its farmers who fail to fulfil their A litres by what is currently an eye watering several pence per litre figure. There is a real possibility that there will be more on this story, as the issue is sure to run and run with a lot of questions being asked by Grahams suppliers, competitors who wish to seize on the controversy and potentially try to mop-up any disaffected suppliers, and by customers who are keen to see their processors treat their farmers fairly and well.

 

Our roving reporter is in Sicily, so this is a briefer report than usual & when he returns normal service will be resumed with some hard hitting facts etc  (4th November 2016)

 

1.5ppl milk price increase for suppliers to Paynes Dairies – from November 1st     (26th October 2016)

This takes producers’ liquid standard litre price to 22.8ppl (www.milkprices.com)    

 

1ppl milk price increase for suppliers to Dairy Partners Limited (Wales) – from December 1st     (26th October 2016)

This takes producers’ standard manufacturing litre to 25.7ppl (www.milkprices.com)

 

1ppl minimum price increase for all First Milk members – from November 1st    (26th October 2016)

First Milk have announced they will pay a minimum 1ppl increase on it’s A litres to all its non-aligned producers from November 1st.

 

Its B milk price will increase by 5ppl to 25ppl for all pools.  First Milk’s A price for November will be finalised and announced within the next 7 days.

 

Graham’s producers claim the goalposts have been moved   (26th October 2016)

Graham’s Dairies Scotland were last featured in this newsletter when they dramatically dropped their B milk price to only 7.5ppl and in doing so sending a very clear message to its suppliers that it simply did not want any B litres.  Farmers instantly responded by culling cows, cutting feed and cutting milk production.  In the past week, some have claimed that they also signed up to the EU milk reduction scheme, which started on 1st October.  And now another shock has come because Graham’s producers have received a bombshell letter - AFTER the 1st October! -  informing them that FROM October 1st any producer who failed to fill their A litres would be financially penalised!

 

For some it appears to be the final straw, who are still getting A litres at 22p, which is below their cost of production.  Some were furious and arranged a get together to meet fellow suppliers and to send a clear message to the Graham family as to how they feel about the treatment they are receiving.

 

Freshways are struggling with angry loyal producers    (26th October 2016)

According to numerous emails Ian has received, Freshways also have significant numbers of dissatisfied suppliers, many of whom claim to have already handed in their notice.  In summary, most, if not all, claim they are not being treated fairly and are being held to ransom by a combination of their milk buyer and their contract.

 

Most claim they are selling A litres at below COP, however, Freshways will not allow them to cut their losses and exit the industry with dignity, instead insisting they must give a minimum of nine months notice.

 

So irrespective of whether it’s ill health, poor profitability, old age, or simply that the farmers have had enough of what they call exploitation, its producers cannot stop milking.  No longer, apparently, can the Freshways farmer decide when he can sell his cows and even a TB breakdown is not a valid reason to exit dairy farming. And yet Freshways can serve notice when they like, as happened a few months ago!

 

In addition, along with Graham’s Dairies (see above), Freshways are one of only two dairies we know who penalise farmers for failing to fulfil their A litres. 

 

One claimed that when his A price penalty was added to his A milk price he is still receiving 18ppl for October deliveries.

 

It’s clear that Freshways are approaching a crisis and that they will not retain their current 180+ suppliers and could find it very challenging to attract new replacement producers. 

 

Non-aligned aggrieved producers – What can they do?    (26th October 2016)

The discontent among non-aligned farmers is growing significantly. But what can they do about their position? In simple terms they can bite the bullet and resign and that’s possibly the only language some processors will understand.  They shouldn’t pay lip service to their neighbour threatening to resign if things don’t improve, they should resign themselves, and resign now!

 

If you feel you are being exploited and/or treated unfairly by your milk buyer, take charge of your own destiny and do something about it.  Please don’t let your milk purchaser demoralise you and your family any more.  Don’t let them cripple your business further and under no circumstances let them promise you jam tomorrow.

 

If the trust has gone and the relationship broken down, change buyers or get out - even if it means you have to sell your milk for a slightly lower price for the time being to a milk purchaser who you trust and thinks is fair.

 

It’s jaw dropping that individual, hard working, honest dairy farmers who are considered the backbone of the countryside cannot chose whether they exit the industry.  Even some of those who opted for the EU milk reduction programme now find that the money is simply going to their milk purchaser in the form of A litre penalties, which is surely not as the EU Commission planned and from a moral and ethical point of view has to be questioned.

 

We are in yet another crisis and as I have said before, don’t fall for promises of jam tomorrow or little tweaks to your contract, because it’s gone beyond that with some buyers.

 

It’s demoralising and it’s exploitation. If some milk purchasers are now concerned over their future milk supply then I have no sympathy.  They have made their bed and need to be made to lie in it.

 

One farmer has even informed me that his milk purchaser suggested that his single farm payment would soon be in the bank suggesting that that would be his saviour.  Little did he realise that all of that money is already spoken for.

 

It’s time the Government got stuck into the tactics of some GB milk buyers and looked in to their contracts in detail.  Whether it’s a job for the Groceries Code Adjudicator or for someone else is one for the future but some producers need urgent help to ensure fair play. And that requires a referee in one form or another.

 

Australia’s milk production continues to plummet   (26th October 2016)

Australia’s milk production is plummeting and was down 10.2% in both July and September with August down 9.2%.  Meanwhile, UK milk production is now running at around 8.2% below the same time last year.

 

Meg wins in a man’s world      (26th October 2016)

Congratulations to Meg Elliott for winning the British Farming Award’s award of Auctioneer of the Year 2016, and many thanks to all those who voted for her. Auctioneering was largely a man’s world, once, but Meg has broken the mold and all credit to her.

 

30ppl October milk price Yew Tree Dairies (AKA Woodcocks)   (17th October 2016)

Yew Tree has confirmed suppliers on its ingredients contract will receive at least 28ppl for September deliveries and 30ppl plus for October milk.

 

4ppl total milk price increase for suppliers to The Fresh Milk Company (AKA Lactalis) from 1st November & 1st December   (17th October 2016)

The precise reasons behind The FMC’s seismic price increases could be debated but the fact is its producers should be pleased with the latest announcement.

 

The total November 1st increase has been increased to 2ppl with an additional 2ppl from December 1st.  This is the 6th consecutive monthly increase amounting to 8.5ppl since July.

 

The business is optimistic for further 2017 farm gate milk price increases assuming returns for its cheese continue to improve.

 

The increases result in the following manufacturing standard litre prices (www.milkprices.com)

 

23.8ppl November & 25.88ppl December

24.37ppl November & 26.46ppl December under FMC’s profile option

 

2ppl milk price increase for South Caernarfon Creameries Limited suppliers – from November 1st    (17th October 2016)

They still require new suppliers to join their co-op.  This takes producers’ standard manufacturing litre price to 24.53ppl (www.milkprices.com)

 

2ppl milk price increase for Barbers suppliers – from November 1st     (17th October 2016)

This takes producers’ manufacturing standard litre price to 25.04 (www.milkprices.com)

 

1.366ppl milk price increase for Muller Direct formula contracted milk – from November 1st    (17th October 2016)

This results in a liquid standard litre price of 28.616ppl (simplified formula contract) and 28.808ppl (core formula contract).  The formula has delivered 4.237ppl in the past 4 months and with only two months left until Muller axe both contracts it looks like the contracted price could finish up at 30ppl or more which will be them going out on a high!

 

1.25ppl + 0.25ppl milk price increase for suppliers to Joseph Heler Cheese – from 1st November    (17th October 2016)

The increase is 1.25ppl which will be boosted by an additional 0.25ppl for producers who submit a monthly milk price production forecast by the 15th of each month.

 

1ppl milk price increase for Meadow Foods suppliers – from November 1st     (17th October 2016)

This takes producers’ standard liquid litre to 22.15ppl (www.milkprices.com).  In addition, Meadow’s September B litre milk price will be 26ppl and for October will be 30ppl.

 

1ppl milk price increase for 105 Dairy Partners suppliers (Newcastle Emlyn) – from November 1st   (17th October 2016)

This comes on the back of a 3ppl October increase

 

1ppl milk price increase for Pensworth Dairies suppliers – from November 1st     (17th October 2016)

This takes producers’ standard liquid litre price to 21.5ppl (www.milkprices.com)

 

1ppl milk price increase for suppliers to Grahams Dairies – from November 1st  (PRODUCER NOTIFIED)   (17th October 2016)

This takes producers’ liquid standard litre price to 21.5ppl (www.milkprices.com)

 

Sooty & Sweep are under attack from their non-aligned poor relations   (17th October 2016)

A group of enterprising and active Muller non-aligned farmers have kick started a campaign based on the fact Sooty and his three friends on the MMG Board, all on aligned contracts, are failing to represent their interests and appear to only be accountable to Muller.

 

Clearly they do not intend to sit back and take what’s gratefully thrown their way.  Those wanting to join the group are asked to email mullernonaligned@gmail.com

 

As one industry leader commented to Ian “This is a smart move by Muller non-aligned who are taking their own initiative due to the complete absence of consultation and/or leadership from Sooty & Friends.”

 

Minimal co-operation from Holstein UK   (17th October 2016)

Negotiations to merge the RABDF’s Livestock Event and UK Dairy Day into one National Dairy Event (identical to the one RABDF ditched) have sadly ended in no resolution after 15 months of discussions.

 

The fact two of our dairy organisations have failed to agree on a way forward to hold one national event is damming.  As one industry leader emailed to Ian, “what hope is there for the UK dairy sector when even out own internal organisations are unable to co-operate!”

 

From the evidence presented to Ian, Holstein UK’s board slammed the door shut in RABDF’s face last Tuesday.  Statements made by Holstein UK as to the reasons they have terminated discussions are rather limp and at best good excuses.

 

For example, it’s a bit rich for Holstein UK’s CEO Richard Jones to detail one of the main reasons for Holstein UK pulling out being concerns about RABDF’s financial position given Holstein UK’s former CEO was found guilty of pocketing £240,000 of its funds and sentenced to 2 years in prison.

 

The RABDF’s planned September Event is likely to need life support but it will be exhibitors who have the final say as to which event, if either, succeeds.  Will they support the RABDF at the NEC or will they support the aggressive upstarts in Holstein UK?  It seems inevitable we will only have one September Dairy Show and to that end Holstein UK may be successful but it’s a very sad state of affairs the two organisations couldn’t agree.

 

Nick Everington exits as RABDF CEO with no retirement party   (17th October 2016)

There was no surprise at the announcement that Nick Everington had left his position as CEO of RABDF after 15 years, however, the notice to members was jaw dropping and contained more spin than a child’s spinning top.

 

According to RABDF, Mr Everington has retired but the announcement allegedly came some time after he had left his desk for the last time.  Few, if any, will believe this is retirement and most will be convinced that his determination to move the very successful Dairy Event to a July Livestock Event date, which spectacularly bombed, is the main reason for his sudden “retirement”. 

 

Had RABDF stuck with a National Dairy Event in September there is little doubt former events co-ordinator, Richard Evans, would not have gone to Holstein UK to set up a rival Dairy Day.

 

One area Nick Everington can claim to eclipse Holstein UK on is the matter of show fixing.  Everington was shoulder to shoulder with the Great Yorkshire Show on the matter whereas Holstein UK appear to bow to pressures from breeders with serious financial interests in showing and insisting on the ability to fix and cheat at shows both home and abroad.

 

The image of the UK dairy industry will be seriously damaged one day if Holstein UK continue to turn a blind eye to fixing and fail to police their own show rules.

 

Ridiculously Cheap Milk   (17th October 2016)

Spa shop on Cowpen Road, Blyth has 2 litres of Paynes Dairies milk for 50p, yes 25ppl and get this they expect the promotion to run for 6 months!

 

1.5ppl milk price increase to Muller non-aligned suppliers – from 1st November    (30th September 2016)

This takes producers’ standard litre liquid price to 20.94ppl.  The November retailer supplement is estimated to be 2ppl taking the total non-aligned price to an estimated 23ppl.

 

1.25ppl milk price increase for suppliers to Belton Cheese – from 1st November   (30th September 2016)

This takes producers’ standard manufacturing litre price to 23ppl.

 

1.25ppl milk price increase for suppliers to Glanbia Cheese – from 1st November    (30th September 2016)

This takes producers’ standard manufacturing litre price to 24.29ppl.

 

1ppl milk price increase for Arla Directs – from October 1st    (30th September 2016)

This takes producers’ liquid standard litre price to 20ppl

 

1ppl milk price increase for suppliers to The Fresh Milk Company (Lactalis) – from 1st November PRODUCER NOTIFIED    (30th September 2016)

This takes producers’ standard manufacturing litre price to 22.77ppl.

 

Clock this AMPE = 28.5p & MCVE = 32.4p    (30th September 2016)

According to the latest figures from AHDB MCVE stands at 32.4ppl and AMPE at 28.5ppl.

 

This means the MCVE value is up 60% (12.1ppl) in 12 months and AMPE is up 67% (11.5ppl).

 

40% less dairy farmers in Western Europe by 2026   (30th September 2016)

One of the outcomes presented at the recent IFCN Conference in Holland predicts the next 10 years will result in 40% of Western European dairy farmers exiting the industry.

 

In addition, ICFN predict an increase of 25% in the global demand for dairy products in the same 10 year period, which means an annual demand increase of 2.3%.

 

European milk reduction scheme almost 100% taken   (30th September 2016)

The Commissions surprise move to introduce a milk reduction scheme paying farmers 12ppl for reducing milk production between October 1st and 31st December has seen a 98.9% uptake for the first periods allocation.

 

In total 52,000 farmers applied, including almost 13,000 from France, 10,000 from Germany, with the UK coming in 3rd place with applications for 112 million litres from 1,800 farmers, which represents 10% of the total EU uptake.

 

Of the total 1,800 UK farmer applications, 154 came from Scotland. 

 

It is now clear that some milk purchasers have left it too late to reverse the fall in winter milk production, currently running at 7.7% down on the same period a year ago, and with spot prices almost at 40ppl few will have any sympathy with processors who have completely mis-read the market signals.

 

Meeting Notice    (30th September 2016)

Speaker                        David Handley on the GB Dairy Industry

Date                             Tuesday next (4th October)

Venue                           Hadlow College Boardroom, Nr Tonbridge, Kent

Time                             12 noon

 

2ppl milk price rise for First Milk non-aligned members – from October 1st    (23rd September 2016)

This is First Milk’s largest single monthly milk price increase in 9 years (November 2007).  The 2ppl increase comprises of 1ppl from customers/the market mechanism and a further 1ppl as part of the internal performance supplement.

 

2ppl milk price rise for suppliers to Paynes Dairies (AKA Charlie Payne) – from October 1st    (23rd September 2016)

In addition, Paynes have re-opened their recruitment doors.  

 

This takes producers standard litre price to 21.2ppl (www.milkprices.com)  

 

1.6ppl milk price increase for all Arla members – from October 1st    (23rd September 2016)

The increase comprises of 1.5ppl (2 Euro Cents) milk price increase plus a further 0.1ppl from the currency adjustment.  The increase applies to all members, including those supplying the organic pool.

 

This takes producer non-aligned standard litre price to 21.65ppl.

This takes producer organic standard litre price to 37.2ppl.

 

1.5ppl milk price increase to Dairy Crest Davidstow suppliers split over two months   (23rd September 2016)

The split is:

 

1ppl from October 1st to give a manufacturing standard litre price of 23.72ppl

0.5ppl from November 1st to give a manufacturing standard litre price of 24.22ppl  (www.milkprices.com)

 

28.61ppl for Tesco aligned producers – from November 1st   (23rd September 2016)

Tesco’s half yearly review sees a small reduction of 0.1ppl with a new standard litre price of 28.61ppl, which should put a smile on all of the producers who are involved.

 

GDT auction runs out of steam   (23rd September 2016)

This week’s auction was tipped top continue its recent price increase rally with some analysts predicting the key product WMP would lift by a further 10 to 11%.

 

As it was, the WMP price was almost stand on and SMP was up 3% and the overall all products price index up 1.7%, which is the highest level since March 2015.

 

Notable movers were:

 

Butter               +3.6% to average US$3892 tonne

SMP                 +3.0% to average US$2293 tonne

Cheddar            +2.2% to average US$3518 tonne

WMP                -0.2% to average US$2782 tonne

 

Fonterra increases its forecast farm gate milk price   (23rd September 2016)

Fonterra has announced a 50 cents forecast farm gate milk price to $5.25 per kg of milk solids.  This is welcome news, especially given the breakeven figure for New Zealand farmers is currently publicised as $5.05 per kg.

 

Muller pledge an additional £100 million investment in 18 months as part of its 2020 vision    (23rd September 2016)

Muller has confirmed it plans to invest an additional £100m in its UK facilities, innovation and marketing.

 

In a statement Muller comment:

 

“What underpins all of this is our desire to increase consumption of valued added dairy products, which are made in Britain from milk produced by British farmers.”

 

It’s part of Mullers’ 2020 vison plan to unlock an additional £700m of potential category growth in the UK dairy sector by 2020.

 

To put the £100m into perspective it’s more money than Muller paid for Dairy Crest’s liquid business.  The area of product innovation is perhaps one of the most exciting areas Muller plan to invest in with the aim of bringing to shelves new ways for consumers to consume our British dairy products.  

 

12.23ppl to cut milk production  (16th September 2016)

Details of the European Union’s dairy package have been publicised, in particular, the €150 (£127 million) incentive for producers to cut production at a rate of 12.23ppl.

 

It’s very tight for producers to apply for the first window, which closes on Wednesday next, 21st September at 11am, and will be for a 3 month reduction period 1st October to 31st December 2016 with other windows to follow until the money is fully subscribed.  According to Dairy Market Weekly, any farmer who applies for the first reduction period may also apply for the fourth period assuming there is still money in the pot.

 

With many producers facing an October milk price of under 20ppl if they do qualify it looks like a case of less = more.  Less milk = less work = less invoices = less pain and more money.

 

The total £12.7 million fund has a maximum subscription literage of 1.04 billion litres across all member states.

 

Applications are via the RPA website https://www.gov.uk/guidance/milk-production-reduction-scheme-how-to-apply

 

Spot milk at 37ppl and rising but Arla say no to 5ppl winter premium  (16th September 2016)

There are really only two forces in the current extremely hot GB spot milk market.  The two buyers who are hoovering up virtually all available spot milk are Muller and Arla.

 

Both deny they have any short or medium term supply problems yet both are buying up spot milk like it was the last in the world.

 

To farmers supplying either of them at 19ppl to 20ppl this will be a big disappointment to learn that both processors find it economical to fill any shortfall with spot milk as opposed to paying a higher winter milk price to encourage existing suppliers to churn out more milk.

 

Spot milk is currently around 37ppl and tipped to hit 40ppl by the end of September.

 

So far as Arla members are concerned it is now confirmed that its farmer BOR put forward a proposal in July for the co-op to pay a 5ppl winter supplement on the additional litres a farmer delivered over and above the litres delivered in the corresponding month last year.

 

This was done in the full knowledge Arla were on course for a winter milk supply shortage.  Guess what?  The idea was thrown out by the Arla board on the basis one country’s producers could not be seen to receive such an incentive and that it was better to deal with supply problems via high prices in the spot market.

 

As several Arla members are calling for national pricing convinced the one size fits all with a single Arla farm gate milk price is unsustainable.

 

Yew Tree Dairy (AKA Woodcocks) launch their farmers milk futures trading  (16th September 2016)

Ian has been involved in discussions concerning the benefits of dairy futures contracts since 2009 and it’s taken until this week for a farmer futures trading contract to be made available.

 

Out of a crisis usually comes some good and solutions and there can be no doubt that the Woodcock families dairy farming experience , the fact they have milked cows and their close relationship with many farmers who have turned to Woodcocks to save their dairy farming business has spurred them to look for alternatives.  Remember when many farmers were dumped by their existing milk purchaser and had nowhere to go, Woodcocks pledge was to offer a home for their milk.

 

That’s part of the Woodcock family offer.  They have alternative outlets for milk from retail to commodity and ingredient outlets and now its supplying farmers have the option to lock into a margin and trade a percentage of their milk on futures. The bulk of the work to get to this stage has come from a team  effort involving Stephen Bradley of www.milkprices.com ,  FC Stone and  Carl Woodcock.

 

This week farmer suppliers listened to presentations from both Stephen and Carl and the opportunity for farmers to trade and lock into a margin  is expected to commence in early October.

The meetings were well attended particularly the one in Ayr which was standing room only and Stephen Bradley commented that it brought back memories of the huge interest generated when the DCD  Formula contracts were launched

Some farmers may be large enough to take out single contracts however it is expected that the majority of Yew Tree suppliers will see Woodcocks group farmers together into squadrons in order to fill futures contracts.  All contracts will be backed off at farm level in order to protect a farm margin it is recommended a futures feed contract is taken out.

 

Farmers decide what percentage of their milk they forward sell and it’s clear that doing nothing and making your dairy business suffer the pain of recent months is a huge gamble but trading futures and locking into a margin is a safety belt. For some this way of doing business could potentially be a life line.

 

Now it’s a case of ensuring the Yew Tree farmers who are keen to trade are futures ready and that’s in hand.  We believe it will work and the likelihood is that other processors will be forced to offer similar schemes to help insulate their farmers from some of the price volatility extremes.

 

It’s a big project but the Woodcock family are never phased by the size of the project and only focus on the outcomes.  All eyes will be watching how their famers get on as we move into 2017 with what is a new, exciting and different way to lock into a margin for future months/years.

 

In the US, dairy farmers have to use these risk management tools to justify expansion and investment and to demonstrate they are globally competitive.

 

 

Vote for the female who takes control of farmers for breakfast (16th September 2016)

When I was livestock auctioneer I worked with a young girl called Meg Elliott.  When she stood on the pig rostrum with me she told me she wanted to become a livestock auctioneer – I was sceptical and curious as to how she would get on in what was a man’s world.

 

During the past 25 years she has gained, particularly dairy farmers’ trust and respect.  She is an inspiration to other women to step onto the rostrum with a gavel and to take charge of an auction.

 

So it came as no surprise to me when I heard Meg was one of five auctioneers shortlisted for the Auctioneer of the Year Award.

 

I hope as many of my readers of this free weekly dairy bulletin will spend 30 seconds and click on this link and simply tick the box to vote.  The top vote is Meg Elliott and with your help that’s where she will be when voting closes at the end of this month.

 

Please vote now because in Ian’s eyes she is not only the number 1 British female livestock auctioneer, she is now on course to top trump four men and rise to the very top of her profession by winning this award.

 

Click now on http://mth2016voting.questionpro.com

 

Paine & Partners buy a significant share of Meadow Foods   (12th September 2016)

A significant share of Meadow Foods is now owned by US private equity firm Paine & Partners, who have purchased the 35% shareholding owned by the Pickering family plus part of the Chantler family’s 65% shareholding.  The deal has taken around 12 months to conclude following an initial approach to Simon Chantler from Paine’s.

 

For the staff, management and executives at Meadow Foods it’s business as usual with all staff retained under the same managerial control.  For the Meadow Foods farmer suppliers it’s also business as usual. 

 

For the business it will be a major game changer because Meadow Foods are now catapulted into the big boys playground when it comes to acquisitions and expansion given the capital backing and fire power Paine & Partners bring to the table. 

 

It will be interesting to see where the new business makes its first big move but for sure Meadow Foods and Paine & Partners are going to figure in the UK and European dairy news frequently from now on as the business grows and possibly at a rate few had previously contemplated.

 

The challenge for Paine & Partners, Meadow staff and executives will be to try to maintain the personal one to one family relationship Meadow have cultivated with their 550 producers, whilst embarking on its ambitious expansion plans.  In addition to continue to pay a leading ex-farm gate milk price to retain existing loyal suppliers and attract new recruits and not give the impression that the new private equity investors want more than a fair return on their capital at the expense of farmer suppliers.

 

Paine & Partners website www.painepartners.com is agriculturally impressive and claims current assets of $2.7 billion (£2 billion) having been set up only 9 years ago.  They are certainly a very professional and ambitious operation and the only question is where will their next UK dairy acquisition be.

 

Meadow currently handle around 650-700 million litres, (including Selky Vale), of GB milk each year and are the 4th largest UK owned dairy processor.

 

The only way is up as GDT auction results show   (12th September 2016)

All eight product categories on this week’s today’s GDT auction showed gains compared to the result achieved only 2 weeks ago, particularly SMP, which shot up by a staggering 10% and butter top trumped it at 14.9%.

 

The overall all products average was up 7.7% to average US$2920.

 

Notable movers   (12th September 2016)

Butter               +          14.9% to average US $3764 tonne

SMP                 +          10% to average US $2070 tonne

Cheddar            +          9% to average US $3436 tonne

WMP                +          3.7% to average US $2793 tonne

 

The quantity of product sold was 36,748 tonnes similar to that sold at the previous auction.  However, the number of successful bidders was up 10% and the number of bidders who bid was up 12.5% to 199.

 

2ppl milk price increases for suppliers to Barbers Cheese   (12th September 2016)

Split into two stages                   +1ppl    1st September

                                                +1pp     1st October

 

The total 2ppl increase takes producers’ manufacturing standard litre price up to 22.98ppl by October 1st (21.95ppl September 1st) (www.milkprices.com)

 

1.15ppl milk price increase for suppliers to Meadow Foods – from October 1st   (12th September 2016)

In addition, Meadow have confirmed their September B price will be 26ppl and that the October B price will be at least 27ppl and likely to be more.

 

1.247ppl for Muller Direct (Dairy Crest) DPO liquid formula contracted suppliers – from October 1st   (12th September 2016)

The increase comes predominantly from the continual upward movement in cream prices.

 

This takes producers’ standard liquid price under this contract to 27.33ppl (www.milkprices.com)

 

The only way is up as GDT auction results show  (6th September 2016)

All eight product categories on today’s GDT auction showed gains compared to the result achieved only 2 weeks ago, particularly SMP, which shot up by a staggering 10% and butter top trumped it at 14.9%.

 

The overall all products average was up 7.7% to average US$2920.

 

Notable movers:

Butter               +          14.9% to average US $3764 tonne

SMP                 +          10% to average US $2070 tonne

Cheddar            +          9% to average US $3436 tonne

WMP                +          3.7% to average US $2793 tonne

 

The quantity of product sold was 36,748 tonnes similar to that sold at the previous auction.  However, the number of successful bidders was up 10% and the number of bidders who bid was up 12.5% to 199.

 

2.5ppl milk price increase for Glanbia Cheese suppliers – from October 1st      (5th September 2016)

This takes producers’ manufacturing standard litre price to 23.04ppl (www.milkprices.com)

 

2ppl milk price increase for suppliers to Wyke Farms – from September 1st   (5th September 2016)

This takes producers’ manufacturing standard litre price to 23.07ppl

 

1ppl milk price increase fro supplies to Pattemores – from September 1st  (5th September 2016)

Including re-instatement of the West Country premium the new liquid standard litre price from 1st September is 20.25ppl.

 

2.25ppl milk price increase for suppliers to South Caernarfon Creameries Limited (SCC)    (5th September 2016)

In the last bulletin we referred to a 2.5ppl milk price increase from SCC as 0.5ppl from September 1st plus 2ppl October 1st.  The 0.5ppl September 1st increase is on top of the previous 1.75ppl increase announced at the end of July taking producers’ total September increase to 2.25ppl.

 

This takes producers’ manufacturing standard litre price to 22.53ppl.

 

0.85ppl milk price increase for suppliers to Pensworth Dairy – from 1st October   (5th September 2016)

This takes producers’ liquid standard litre price to 20.5ppl

 

1ppl milk price increases for Arla Direct suppliers – from 1st September     (5th September 2016)

This takes producers’ standard litre price to 19ppl.

 

1ppl average milk price increase for Muller non-aligned suppliers – from October 1st    (5th September 2016)

The 1ppl follows the identical Arla increase announced a few days earlier but paid to non-aligned farmers a month later.

 

The actuals are 0.9ppl increase for Muller non-aligned and 1.189ppl for the former Dairy Crest non-aligned now badged Direct Milk.

 

This takes producers’ liquid standard litre prices on the 1st October to:

 

Muller Milk Group                       19.56ppl            (www.milkprices.com)

Direct Milk                                 19.19ppl            (www.milkprices.com)

 

The Muller price increase press release left those who read it and understood it close to speechless.  Amongst the all time gems was the line from the Chairman of the Muller Milk Group (MMG) farmer board, Roddy Catto.

 

“Nevertheless, this has been extremely painful and challenging period for Muller suppliers.”

 

Now come on Mr Catto you are on a Tesco aligned contract and the other 3 out of 3 fellow MMG board members are also on aligned contracts.  I don’t think anyone reading your statement will believe any of you on aligned contracts have found 2015/16 extremely painful.  The quote should have stated for Muller non-aligned suppliers.

 

0.5ppl milk price increase for Wensleydale Creameries (Hawes) suppliers – from 1st September (PRODUCER NOTIFIED)  (5th September 2016)

This takes producers’ manufacturing standard litre prices to 21.20ppl (www.milkprices.com)

 

First Milk’s September milk price increases – Round 2   (5th September 2016)

Within only 3 working days of announcing its September milk price increases co-op First Milk announced further increases.

 

The revised increases are as follows:

 

Milk pool

Sept price increase (ppl)

Sept business performance supplement (ppl)

Total Sept price increase (ppl)

Sept A price (ppl)

Sept B price (ppl)

Scottish Mainland

1.04

0.25

1.29

18.02

20.00

Lake District

1.42

0.25

1.67

18.88

20.00

Midlands & East Wales

0.75

0.25

1.00

17.19

20.00

Haverfordwest (includes Tesco supplement)

1.42

0.25

1.67

19.91

20.00

 

Who’s having all the cream?   (5th September 2016)

Spot milk prices are now 35ppl and rising with most traders anticipating 40ppl in the near future.

 

In this week’s Provision Trade Federation, Chris Walkland highlights some astonishing facts on cream, which prompted Ian’s headline.

 

The cream price is almost twice what it was in May and currently stands at around £1.70 and it’s still heading north.  This means to a processor cream is worth 8.5ppl to 9ppl the highest amount since December 2013.

 

AHDB point to the fact that “for liquid processors, fat as a by-product has increased in value by around 4ppl since April.  This improvement is cream returns is not currently flowing through into farm gate prices for those supplying the liquid market.”

 

However, if that wasn’t enough the killer statistic is that “normally” the ratio between the cream income and farmers milk cheques is 25% of the milk price received at farm gate level.  Now it’s 45% for the non-aligned.

 

Farmers and their so-called negotiators would have to be stupid not to realise who is banking all of this extra cream income.

 

2.5ppl milk price increase for suppliers to South Caernarfon Creameries Ltd (SCC)   (26th August 2016)

The increase is split into two parts:

 

0.5ppl from 1st September

2.0ppl from 1st October

Note SCC continue to recruit new producers in Mid and North Wales 

 

1.5ppl milk price increase for suppliers to Joseph Heler cheese – from October 1st (26th August 2016)

 

1ppl First milk price increase for Arla members – from 1st September   (26th August 2016)

The actual Arla increase across all members is 1.25 Euro Cents, which converts to 1ppl and takes the standard liquid litre price to 20.05ppl (www.milkprices.com)

Whilst a welcome increase the quantum will be a disappointment to many Arla members who simply cannot come anywhere close to balancing the books at 20ppl.  As Ian’s school report stated “Could do better”

 

1ppl milk price increase for suppliers to Belton Cheese – from 1st October     (26th August 2016)

This takes suppliers manufacturing standard litre price to 21.75ppl (www.milkprices.com)

 

Various milk prices increases for First Milk Members - from September 1st   (26th August 2016)  

The increases vary from 0.77ppl to 1.25ppl and note the additional 0.25ppl business supplement.

 

Milk pool

Sept price increase (ppl)

Sept business performance supplement (ppl)

Total Sept price increase (ppl)

Sept A price (ppl)

Sept B price (ppl)

Price rise since June for combined A&B (ppl)

Scottish Mainland

0.75

0.25

1.00

17.73

20.00

2.36

Lake District

1.00

0.25

1.25

18.46

20.00

2.94

Midlands & East Wales

0.52

0.25

0.77

16.96

20.00

2.15

Haverfordwest

1.00

0.25

1.25

19.521

20.00

3.10

1 Note the Haverfordwest increase includes the Tesco cheese group payment estimated at 0.94ppl for September

7.5ppl milk price increase for suppliers to Dairy Partners (Cymru Wales) Limited – in four months  (26th August 2016)

Dairy Partners increases to its 100 or so suppliers are now confirmed as follows:

 

July 1st                         +1.5ppl

August 1st                      +1.5ppl

September 1st                                +1.5ppl

October 1st                    +3.0ppl

 

Total                             +7.5ppl

 

Longley Farm Dairies    (26th August 2016)

Often under the radar but Longley Farm Dairies from Holmfirth, Yorkshire operate an A & B system with their producers and it appears to be operated in a more producer friendly and fairer way than is the case with one or two other processors.

 

Both Longley’s A & B prices are currently 26.5ppl and that was the same in July.

 

Both prices are for a standard litre and not for the Jersey milk they take it, which attracts a significant constituent premium.  One of its producers described it simply as fair pricing for all parties where there is total trust.

 

1ppl milk price increase for suppliers to Meadow Foods – from September 1st    (19th August 2016)

The takes producers’ A litres (80% of deliveries) standard liquid litre price to 20ppl

 

Meadow Foods August B price will be 22ppl.  Note, only 3 months ago the Meadow B price was only 11.25ppl (see below).

 

1ppl milk price rise for suppliers to The Fresh Milk Company (AKA Lactalis) – from 1st October PRODUCER NOTIFIED   (19th August 2016)

This take producers’ manufacturing standard litre price to 21.73pl (www.milkprices.com)

 

Whole milk powder auction price rockets up 19% in 2 weeks  (19th August 2016)

This week’s GDT auction produced some eye-wateringly cheery results.  The all products average jumped a whopping 12.7% (US$295) to average US$2731/tonne and this increase comes on the back of a 6.6% increase only 2 weeks ago.  This is the highest average price since October and is up 45% compared to that recorded 12 months ago. 

 

Analysts in New Zealand are now suggesting markets are heading towards delivering an average break even price for New Zealand farmers at near NZ$5.

 

All products lifted in price and notable movers were:

 

WMP                +18.9% to average US$2695/tonne

Butter               +14.1% to average US$3274/tonne

Cheddar            +8.9% to average US$3157/tonne

SMP                 +3.0% to average US$2028/tonne

 

The quantity sold was up at 37,766 tonnes and more important was the fact 177 bidders participated of which 119 purchased.

 

Woodcocks (Yew Tree Dairy) and Freshways targeting a 1.5ppl October milk prices increase  (19th August 2016)

Yew Tree Dairies have announced to their suppliers that they expect a 1st October farm gate price increase of 1.5ppl or close to it.

 

Freshways have declared a minimum 1.5ppl farm gate A milk price increase for October.  Note, Freshways July B price was 25.21ppl and for August Freshways anticipate its B price could be knocking on the door at 30p.  In comparison Meadow Foods B price for July was 17.5ppl and its August B price has been announced at only 22pl.  So comparing the two B prices the difference for July and August is likely to be 7.5ppl.

 

However, headline grabbing B prices don’t relieve the pain of low A prices and a number of Freshways producers are grumpy.

 

The smaller guys are certainly no longer waiting for the big players! – quote from www.milkprices.com

 

Some middle ground milk processors claim to be pushing customers for immediate price increases and frequently they are quickly kicked back with words like but Arla and Muller haven’t increased farm gate prices yet.  Well come next Wednesday Arla are expected to take the lead on Muller with a member price increase for September following which Muller will have to follow.

               

Milk supply is dropping worldwide and has tipped the supply and demand balance upside down in a matter of months and processors need to realise it will only continue to fall irrespective of any delayed upward movement in ex-farm gate milk prices.  Some have overcooked it and robbed producers blind.

 

Is this all fair or is there evidence of tactical moves?  (19th August 2016)

Some processors are claiming they work on basket prices, which include the likes of Muller and Arla and until they move their farm gate milk prices up they can’t move theirs up.  It’s what is called hanging on the shirt tail.  Muller know that their refusal to lift prices in September catches out a number of their smaller competitors because their farmers are screaming for more money and customers are resisting until the likes of Muller move on price.

 

On top of that some liquid processors are guilty of packing milk for customers at ridiculously low prices.  They were desperate to retain volume so they dropped their trousers and pants to keep existing customers and to smash and grab new ones at unsustainably low prices.

 

The problem here is they did it using a milk into powder price of 14p so the odd penny more and they thought they were slightly better off.

 

But those cheap contracts are still running and they could cripple the processor alternatively the processor cripples their farmer suppliers with low or non-existent milk price increases.  Either way the farmer pays for the fact some processors have completely mis-read the market and are now under serious pain just as their farmers are.  The worry is whether all processors can weather the storm and still retain their milk field.  Notices to leave some buyers milk should now be flooding in because they understand that language.  Sadly, it will be a miracle if all survive and some farmers need to remember processors who didn’t and don’t play fair.

 

July retail supplementary payment is 2.894ppl   (19th August 2016)

The Muller payment for July deliveries is slightly down from the previous months 3ppl to 2.894ppl.

 

Holstein UK’s Chief Executive pocketed £240,000 of Society funds   (19th August 2016)

The RABDF is clearly not the only one with some challenging financial issues to get to grips with, now the future of its (once) cash cow the Livestock / Dairy Event is in doubt.

 

During his tenure Holstein UK’s former Chief Executive Greg Watson managed to illegally trouser a cool £240,000 from the organisation, and he might have got away with it if it wasn’t for the determination of the then board and its chairman John Edge.

 

They ensured justice was done and in Greg Watson has been sentenced to two years in prison and ordered to repay the money.  Let’s hope the organisation and its trustees have learned their lesson and that proper independent accountability of activities prevails going forward.

 

This has to rank as one of the biggest financial scandals any UK dairy organisation has allowed to happen.

 

State of the art Cheddar processing and packing facility   (19th August 2016)

Dale Farm – the successful farmer owned processing arm of United Dairy Farmers officially opened its £7million expansion of its cheese processing and packing facility in Co. Tyrone, Northern Ireland, creating 60 additional jobs.

 

1ppl milk price increase for suppliers to Pensworth Dairies – from 1st September  (12th August 2016)

 

1.172ppl milk price increase for Muller Direct liquid Milk DPO formula contractsfrom 1st September    (12th August 2016)

The increase applies to the ex Dairy Crest  formula suppliers and is the largest price increase the formula has delivered and takes both standard litre prices to over 26ppl and is the second consecutive monthly increase.

 

The main influence has been the significant lift in bulk cream prices which are up by almost 75% since April worth 3.37ppl on the milk price.  Sadly for the farmers involved come the 1st February 2017 the formula pricing mechanism will be axed by Muller. 

 

The new liquid core formula standard litre price will be 26.2ppl compared to the comparable 1st September no aligned standard litre price of only 18ppl (www.milkprices.com).   

 

0.5ppl milk price increase for suppliers to Pattesmores – from 1st August (PRODUCER NOTIFIED)    (12th August 2016)

 

Muller defends their corner & attempt to dig themselves out of a PR grave  (12th August 2016)

CEO of Muller UK Ronald Ker’s has responded to mounting criticism on his firms refusal to move non aligned farm gate milk prices up with a letter to his producers.  It states the case for the defence and in bold letters once again claims he is building Britain’s Biggest and Best Dairy Business.

 

 The letter is clear that Muller prices will not go up until “we actually realise these higher returns within our business”.  Clearly Muller haven’t achieved that for August or September which is a worry and some believe this is because Muller have forward sold quantities of milk which now look vey cheap and could be holding prices back.

 

Where the letter is silent is with reference to the question asked by Michael Oakes, NFU Dairy Board Chairman last week which was for Muller to explain why farmers have received some of the extra cream money (see above). 

 

However analyst and journalist Chris Walkland has commented he does not blame Muller for not moving the price up in September.  He points the finger to the incredible lack of lobbying of milk buyers like Muller sooner which if it had happened might have persuaded Muller to move its non aligned price for September 1st.  The evidence points to a very limited number of complaints about the Muller no aligned milk price from its own farmers.

 

To be fair the letter does make some valid points several of which were mentioned in this bulletin last week in addition there are a couple of irritating ones.  No matter what the defence is the reality is that heading into winter on a farm gate milk price of 18 to 18.6ppl is painful, unstainable, disappointing and will not promote additional production.

 

Finally the letter should ideally have gone out at the end of July with the announcement that milk prices for Muller non aligned were frozen.  At the same time it could have addressed where the extra cream returns money Muller has received has gone.

 

Arla Farmer Milk Brand broke the 1 million litre barrier in two weeks   (12th August 2016)

Arla’s farmer’s milk sales in Asda stores have broken the 1 million litre barrier in just over two weeks since its launch at the Great Yorkshire Show.  An extra 25p from each 4 pints sold will be paid to Arla members, so that’s an extra £250,000 to kick start.

 

Cheap Milk   (12th August 2016)

Booker cash and carry in Cardiff is selling Muller Wiseman milk 8 litres for £2.35 and this incredible offer runs for 2 months until the 4th October.  That’s 29.4ppl!  

 

2ppl milk price increase for Glanbia Cheese suppliers – from 1st September  (5th August 2016)

This takes producers’ standard manufacturing litre to 20.54ppl (www.milkprices.com)

 

2ppl milk price increase for Arla Direct Suppliers – from August 1st   (5th August 2016)

This takes producers’ standard liquid litre to 18ppl (www.milkprices.com)

 

1.55ppl plus milk price increase for suppliers to Paynes Dairies Limited – from August 1st  (5th August 2016)

This takes producers’ standard liquid litre price to 19.2ppl (www.milkprices.com)

 

The increase comes in two parts with 1ppl on the basic milk price, in addition producers no longer face the balancing charge deduction, which is equivalent to an additional 0.55ppl so total increase of 1.55ppl.  On top of that the promise that if Paynes ongoing discussions with customers deliver results there could be a further backdated increase on top of the 1ppl.  However, the reality is that with Muller holding until at least October 1st those discussion will be extra challenging.

 

1ppl milk price increase for suppliers to Dairy Crest Davidstow – from 1st September  (5th August 2016)

This takes producers’ standard manufacturing litre to 22.72ppl (www.milkprices.com)

 

First Milk milk price increases including 5ppl on B litres   (5th August 2016)

First Milk has increased the price it pays for B litres by 5ppl to 20ppl for August.

 

In addition, the following A price increases have been announced by the co-op, spread across August and September.

 

                                    August/September Increase                                1st September Standard Litre

Haverfordwest                1.25p                                                                18.74p

Lake District                  1.25p                                                                17.71p

Scotland                       0.70p                                                                17.08p

North of England            0.70p                                                                16.90p

Midlands                       0.50p                                                                16.34p

 

First Milk  are not moving mountains but each and every snippet of news is encouraging for  a large group of co op farmers who just over a year ago feared the Co op would be the next DFOB, Amelca or United Milk.

 

The   B price above the standard litre A price is exactly how A and B should operate with the two ratcheting up and the B price sending a clear signal to members that more milk is required by First Milk.

 

It wont be enough for some but it will provide encouragement and optimism for many especially in the full knowledge that First Milk are no longer paying a milk price they cant afford just to keep up with other milk purchasers as happened under the previous management.

 

WMP auction prices jump 10%   (5th August 2016)

Tuesday’s GDT auction saw WMP prices increase by 10% compared to a fortnight ago and the overall average all products price was up 6.6% to average US$2436, which was significantly more than analysts anticipated.

 

Key movers were:

 

WMP                averaged           US$2265 tonne +9.9%

Butter               averaged           US$2871 tonne  +6.6%

SMP                 averaged           US$1965 tonne  +2.1%

Cheddar            averaged           US$2889 tonne  -0.8%

 

AMPE & MCVE rocket up   (5th August 2016)

AHDB’s AMPE & MCVE values for July have rocketed up and in one month AMPE has increased by 24% (to 23.4ppl from 18.9ppl) and MCVE is up by 20% (to 23.5ppl from 19.6ppl)

 

Muller under attack for announcing no price increase before October 1st   (5th August 2016)

This week’s dairy news and chatter has been dominated by Muller’s announcement its non aligned suppliers will not see any increase until at least October 1st.  There was talk of a possible mid September rise, however, Muller have subsequently ruled this out.

 

The announcement attracted widespread criticism, particularly from NFU Dairy Board Chairman Michael Oakes who certainly sharpened his teeth and let go with both barrels in a press release.

 

His language was unusually strong for an NFU press release but his frustration was understandable.

 

In the NFU’s release Michael Oakes refers to Muller’s 3ppl retailer premium with a hint that Muller could be using this as a reason not to increase producer prices in September.  He commented:

 

Müller’s non-aligned suppliers will no doubt be dumbfounded by Müller’s decision to hold. The decision is an insult to its suppliers and is completely out of line with recent positive market movements which are bringing some confidence to the industry at last.

 

I’m sincerely hoping that Müller isn’t hiding behind the retail supplements paid by Lidl, Aldi and Morrisons, rather than reacting to the market realities we are seeing in cream incomes, wholesale prices and volume reductions. Cream incomes to a liquid retailer have increased by a whopping 77% since Müller last increased its base price and current daily deliveries of milk are down 10.2% on this time last year. This stand on milk price also makes a mockery of the support retailers gave, and continue to give, dairy farmers in minimum farm gate pricing.”

 

Similar comments came from Graeme Kilpatrick Chairman of NFUS with:

 

“I can think of no justifiable reason why Muller has chosen to ignore the market and leave their non-aligned suppliers languishing with an unsustainable milk price.  I sincerely hope that Muller isn’t hiding behind this retailer supplement and using it as an excuse for not lifting prices now.”

 

Farmers for Action are equally ignited and protests are on the radar (see below)

 

The Muller Milk Group Chairman and former board have come under attack with the group collectively described as impotent as well as Muller messengers rather than negotiators.  In addition the fact it doesn’t affect most of the Muller farmer board because they are on retailer aligned contracts has not gone unnoticed.

 

Did this group prepare their case for an increase if so why did they agree to the stand on or were they simply told that’s the position? They claim to represent 1200 plus farmers and will know that Muller have pocketed money on the cream price alone.

 

Muller have certainly received additional income, particularly from cream and questions are being asked whether they have retained it or given part or all of it away to retail customers rather than passing it back to farmers.

 

To be  balanced it has to be remembered that like Arla Muller have paid one price for every litre and not introduced A and B pricing with which comes the opportunity to create chaos in the liquid market  by playing smash and grab with competitors customers using B milk bought for as little as   6 or 7ppl. Muller have had to defend those predatory prices and retain customers.  In reality they cut prices slower and by smaller amounts than they could have and that’s perhaps one explanation as to why upward price movements aren’t coming as quickly as some producers desperately need it to.

 

The move leaves Muller non-aligned farmers on only a 18.66ppl standard litre price and the ex-Dairy Crest producers on only 18ppl.  Note, when Muller do decide to move up on milk prices they will equalise both the Muller Milk Group (18.66ppl) and Direct Milk (ex-DC 18ppl) milk prices, which is undoubtedly a factor in their equations and decision to hold producer prices.

 

The NFU’s release concluded with “Müller is throwing its support to the British team at this year’s Olympics and it’s about time it showed similar support to its non-aligned farmers who deserve improved milk prices.”

All eyes now point towards Arla and whether their member milk price increases for September 1st.  If it does increase by a useful amount it won’t help Muller in its bid to be both the biggest and best GB milk processor.  If Arla don’t move the NFU will have to sharpen their teeth for the second time in a month.

 

Farmers for Action go back out on the picket lines this Sunday   (5th August 2016)

Predominantly in response to the Muller stand on price announcement FFA are planning direct action.  For details log onto www.farmersforaction.org latest news.

 

A demonstration will take place this Sunday 10th at Market Drayton at 8pm according to FFA’s website posting today.

 

5000 entries from 31 countries means Nantwich the biggest in the world   (5th August 2016)

The Nantwich Cheese Show continues to grow and it is without doubt the biggest cheese show in the world where this year 5000 cheeses came from 31 countries with 53% of the entries from UK processors.

 

Champion UK cheese went to Arla Foods’ Taw Valley Creamery Double Gloucester.

 

The Tesco Red Leicester Trophy was awarded to First Mill’s Haverfordwest Creamery, which is good news given Haverfordwest’s close relationship with Ornva Foods (AKA Adams) and Tesco.  It means Tesco are buying the champion cheese.

 

Haverfordwest also won the best Extra Mature Cheddar against a class of almost 100 entries.

 

 

2008 1.4 Petrol Manual Mini One in Pepper White with Black Stripes (5th August 2016) 

 

Good condition inside & out.

 

Fabric Seats (note, the passenger seat has a tiny hole smaller than a 5 pence piece), Electric Windows, CD Player, Height Adjustable Driver's Seat & Passenger Seat. Folding Rear Seats. Alloy Wheels, Power Steering, Central Locking, Alarm Immobiliser, Service History & it had an MOT in early June, hasn’t been used since. Mileage 94,860

 

In May it had an oil change, new oil, air and pollen filter. I am selling the car because I have had a baby boy, Bobby, and unfortunately the car is not quite big enough for both me, Bobby and the two British bulldogs. That means Ian is now a Grandad for the first time!!!

 

It is a great little reliable car and viewings are more than welcome.

 

£3,000 ONO

 

Any questions please email me on lydia@ipaquotas.co.uk pictures are available on request. 

 

4.8ppl record breaking milk price increase to suppliers to Bowland Fresh (Lancashire) – from 1st August (PRODUCER NOTIFIED) (28th July 2016)

This takes producers’ standard litre price from 17.2ppl to 22ppl.

 

The price increase is a headline grabber but needs to be balanced out with the pain Bowland suppliers have endured, particularly in recent months.

 

Bowland operated an A & B pricing mechanism with historical deliveries ratcheted back to 80% paid on an A price of 16.2ppl in April, May & June and the remaining 20%+ paid on the jaw dropping B price of 6ppl in April & May and 8ppl in June.  Is this the lowest B price paid to producers?  If any readers know of a lower B price, please email Ian.  By our calculations Bowland’s blended A & B milk price paid in April & May would be around 14.2ppl.  Note, producers supplying Bowland believe that the A & B mechanism will be abandoned by Bowland from 1st August.

 

4.5ppl milk price increase for suppliers to Lanchester Dairies – from 1st August (28th July 2016)

After 1st August Lanchester acknowledge the serious financial implications and pain farmers have taken and that unless seismic increases are confirmed now supply bases will be further decimated.

 

Along with SCC (see below) Lanchester are one of two milk buyers who have re-opened the doors to new recruits.  Lanchester are seeking farmers ideally situated in an area roughly between the Yorkshire Dales & Moors, up to the Scottish Borders.

 

1.75ppl milk price increase for suppliers to South Caernarfon Creameries – from 1st September  (28th July 2016)

In addition, SCC is now recruiting new suppliers in North & Mid Wales as they ramp up production in their new factory.

 

1ppl milk price increase for suppliers to Belton Cheese – from 1st September  (28th July 2016)

This takes producers standard manufacturing litre to 20.75ppl (www.milkprices.com)

 

1ppl milk price increase for suppliers to Joseph Heler Cheese – from 1st September  (28th July 2016)

 

Joseph Heler Cheese hit the nail on the head  (28th July 2016)

In a letter to producers notifying them of the 1ppl increase, Mike Heler opens up with a very thought provoking paragraph:

 

We are very aware that some milk purchasers are increasing milk prices particularly those who are paying market related or A/B prices.  This has to be welcome news however we are concerned that some milk purchasers are introducing penalties for under supply and are encouraging increased milk production direct from farms.  The UK is not short of milk and milk buyers should be careful and diligent in encouraging producers to increase supply if we are to see a sustained recovery.”

 

The final sentence should be studied by all dairy farmers.

 

No change for Arla members’ milk price for August at 19.05ppl  (28th July 2016)

One must surely come for September!

 

Spot Milk @ 31ppl - if you can find it!   (28th July 2016)

The 30ppl spot milk barrier has been broken but it is very scarce. In March some milk buyers told suppliers they wanted less milk and had no home for all the milk they were receiving. Consequently, farmers responded and cut production, in some instances turning cows into meat.

 

However, whilst spot milk price headlines are sensational the total amount of spot milk traded in GB accounts to a maximum of 1% of total production.  It is however, an important barometer of daily supply & demand. 

 

According to www.milkprices.com, if farmers deduct 2.5ppl from the headline spot price it will give them an approximate farm gate equivalent milk price. 

 

Milk prices are moving up but no news from the big guns yet  (28th July 2016)

Price increases are coming through but there is still no positive news from either of the two GB liquid big guns, namely Arla and Muller, other than the fact both have declared that their member milk price will not increase before 1st September.

 

GB milk production is now down almost 11% (3.7m litres a day) compared to the same weeks in 2015, and GB in 2016 has seen the biggest fall in production compared to the other 27 EU member states. In Holland the corresponding 6 months of 2016 has seen production drop by 8.6% compared to 2015.

 

To be fair to Muller and Arla they were not guilty of crashing their producer price as quickly or by as much as many other processors did. This is an area were the likes of the NFUs should be doing some analysis to see who went down quickest and who is hanging back and slow to increase.

 

Is the Freshways A & B system working as it should?  (28th July 2016)

Freshways have written to its farmer suppliers and confirmed to Ian that farmers who produce below their agreed weekly litres are likely to be penalised.  Freshways do regularly trade in the spot market and will now be facing a 30ppl+ price for any top up milk they require. They do however anticipate that their July B milk price is likely to be heading towards 25ppl, which if paid, leaves a huge gap between themselves and the likes of Meadow Foods whose estimated B price for July is only 17.5ppl.

 

If Freshways do pay a B price in the region of 25ppl they will be able to claim that their operation of A & B pricing is exactly how it was designed.

 

Note, in reality some milk buyers could say they will pay 40ppl or 50ppl for B milk in the full knowledge that their producers are unable or unwilling to produce any B litres in that particular month.

 

Unless some processors start to operate the A & B pricing mechanism as it was designed its image is likely to be tarnished for life.

 

€500m dairy aid package has missed the low point   (28th July 2016)

The latest €500m additional EU dairy aid package announced last week indicates that the Commission is definitely out of touch with the direction of travel of milk prices. 

 

Of the €500m a total of €350m will be allocated in the form of a national envelope handled by each member state with the UK down to receive £25m (€30m). The Commission say that member states can match fund this taking the total compensation for the UK to £50m.  But if anyone believes our Treasury will put £25m into dairy farming they are likely to still believe in the tooth fairy.

 

The remaining €150m will be paid as an incentive to producers for cutting milk production based on milk they do not produce in a 3 month period compared to the same 3 months period production in 2015.  Exact details are still to be confirmed, however, the rate is expected to be around 12ppl for each litre not produced and rather surprisingly the payment will be available to retired farmers as well as on farm processors.  This extra money takes the total paid by the Commission to over €1 billion during the crisis.

 

Holstein UK statement on Dairy Day (for the decoded version see below)   (28th July 2016)

Following the disastrous Livestock Show Holstein UK has issued a statement on its UK Dairy Day. The full statement reads:

 

UK Dairy Day - Media Statement

 

 

Richard Jones, Holstein UK Chief Executive, commented;

“Holstein UK acted on behalf of its members and the dairy industry to ensure that there was a dedicated dairy event held in the UK every September. We are determined that UK Dairy Day will continue to showcase the very best of British dairying and feature all cattle breeds from all over the UK. The one day event is tailored for the dairy sector and has established itself as the leading event for dairy farmers to network, meet industry suppliers, share knowledge, innovations and ideas – and this will continue until at least 2020.

In response to recent speculation surrounding RABDF and Livestock Event, with plans to change the date of this event to early September, Holstein UK can confirm that discussions with RABDF have occurred, but there are many issues to be resolved before any joint activity can be confirmed. Our foremost priority is to protect our members and the financial security of Holstein UK and the current framework for UK Dairy Day already achieves this very successfully.

The positive reaction that UK Dairy Day has received over the last two years demonstrates Holstein UK’s understanding of exactly what the dairy industry needs. In 2015 visitor numbers exceeded 7,000 and this is expected to grow. The variation on offer for dairy farmers and those related to the industry, from topical seminars, new product competitions, college and charity displays – to leading cattle shows and over 300 businesses represented provides a diverse, informative and valuable business event.

UK Dairy Day 2016 takes place on Wednesday 14th September at the International Centre in Telford. In response to the challenges currently facing the industry, UK Dairy Day has made important changes for the 2016 event to support farmers by offering free visitor entry, and free car parking onsite and off-site. We’re also extremely appreciative of a new partnership with Anglia Farmers which is enabling free entry for all show cattle.”

That Holstein UK statement on Dairy Day – decoded  (28th July 2016)

Holstein UK acted on behalf of its members and the dairy industry to ensure that there was a dedicated dairy event held in the UK every September.” = RABDF, in moving its event to July and renaming it Livestock made a huge balls-up.

“We are determined that UK Dairy Day will continue to showcase the very best of British dairying and feature all cattle breeds from all over the UK. The one day event is tailored for the dairy sector and has established itself as the leading event for dairy farmers to network, meet industry suppliers, share knowledge, innovations and ideas” = Our event is better than yours now so the second word is off, RABDF.

This will continue until at least 2020.” = There ain’t gonna be a merger of events for at least three years.

Our foremost priority is to protect our members and the financial security of Holstein UK and the current framework for UK Dairy Day already achieves this very successfully.” = We make a profit out of UK Dairy Day and we are going to continue doing so.

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

 

(www.milkprices.com)

                           

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 enquiries@freerangemilk.net 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 ian@ipaquotas.co.uk

 

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 with www.milkprices .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.