Dairy Industry news and features
Milk Quota Available (3rd February 2012)
445,320 litres 3.79% @ 0.2ppl
neg
650,501 litres 3.89% @ 0.15ppl
1,500,000 litres 3.94% @ 0.15ppl
2,850,000 litres 4.06% @ 0.15ppl
Should
you require any information or prices on available milk quota, please contact Jacquey@ipaquotas.co.uk
Muller resignation floodgates open (3rd February 2012)
A
significant number of Muller Dairy UK’s largest direct suppliers to their
Market Drayton factory have tendered their resignation prior to the 1st
February all for one obvious reason namely Mullers bold decision to drop
producer milk prices by 0.5ppl from February 1st.
Ian
has received confirmation that five neighbouring farmers out of 6 in one area
have resigned and that number 6 is reported to be wavering. The resignations certainly
amount to at least 10 farmers who account for a minimum 30 million litres plus
of milk supply with other farmers on the brink of also jumping ship.
As
one commented “Muller have spent 15 years working with farmers, building up a
relationship and a tight secure milk field and they wreck it with one stupid
move and poorly worded letter.
Other
buyers have been quick to smell blood with Meadow Foods, First Milk, Medina,
Freshways, Dairy Crest and Fayrefield all out hunting.
Muller
(or is it Viseman?) may well be the third biggest dairy processor in the
Stable prices at global dairy
auction (3rd
February 2012)
This
week’s Fonterra Global Dairy Trade Auction produced an all products average of
$3666/tonne a minimal reduction of $35 tonne or less than 1% with cheese, SMP
and WMP all easing a shade.
Dairy Crest statement see share
value fall to 52 week low (3rd February 2012)
The
initial city reaction to Dairy Crest’s (DC) nine month Interim Management
Statement on Monday was a drop in share value to only 311p representing a 52
week low. Since then DC’s share price
has improved to around 320p today.
In
the statement DC stated they “remain on track to deliver our targeted annual
cost savings of £20 million this year.”
Under
the sub heading of Dairies driving
efficiencies but trading difficult they state “Trading remains difficult in
our dairies business where a combination of high milk purchase prices and lower
cream realisations is adversely affecting profitability. Our focus remains on reducing the cost base
as the best way to restore long term profitability”
Clearly,
on paper, DC’s liquids division is at best breakeven and this needs to be
rectified,.
Farmers
supplying milk to DC will be hoping a reduction in their milk price is not part
of DC’s reducing cost base master plan.
Powerful
milk advertising in the USA (3rd February 2012)
An interesting milk promotion from the US
which caught the eagle eye of one of our regular bulleting readers and
contributors -
See
the Super Bowl ‘Milk Moustache’ ad
For 16 years now, a Milk Mustache ad
has graced the pages of USA Today just prior to the Super Bowl.
This year’s installment features Wes
Welker, wide receiver for the New England Patriots, and Hakeem Nicks, wide
receiver for the New York Giants.
The winner of Sunday’s game will appear
in his own solo Milk Mustache ad in USA Today on Monday.
Today’s ad copy reads, "This Sunday,
we're pouring it on. The biggest game of our lives deserves the best breakfast.
Milk's got the nutrients we need to start our day off right, and to fuel up to
play 60. But sharing the trophy? That's another story." To see the
full ad, click here.
Welker and Nicks participate in
Fuel Up to Play 60, a program that encourages kids to eat right and be active
for at least 60 minutes every day.
Milk Quota Available (27th January 2012)
413,830 litres 3.72% @ 0.25ppl
neg
1,000,000
litres 3.99% @ 0.20ppl
2,850,000
litres 4.06% @ 0.20ppl
Should
you require any information or prices on available milk quota, please contact Jacquey@ipaquotas.co.uk
0.15ppl milk price increase
for Lactalis/Caledonian cheese suppliers – backdated to 1st
January. This takes their standard litre
to 29.16ppl. (27th January 2012)
The 2012
GB Milk Price Movement tally is as follows: (27th January 2012)
THE BAD GUYS
Price drop from Muller 0.5ppl from 1st
February
Many claim Arla implemented a 0.5ppl drop on 1st
January with the introduction of the new so-called investment.
THE GOOD GUYS
Meadow Foods 0.5ppl increase from 1st
January.
Lactalis/Caledonian Cheese 0.15ppl increase from 1st
February.
Muller
hoover up 67.2% of Wiseman shares (27th January 2012)
Muller UK has updated the city to confirm they have
acquired, received valid acceptances or irrevocable undertakings for 67.2% of
Wiseman shares.
Auction
results ease (27th
January 2012)
This week’s United Dairy Farmers’ monthly milk
auction saw 44 million litres average 28.15ppl.
This is a slight fall of 1.3% (0.36ppl) on the 28.51ppl December auction
average. The January 2011 auction
average was 29.16ppl.
David Dobbin, CEO of United commented “With weakening markets, a strengthening pound and increasing milk supplies we expected lower prices; but good demand from processors helped keep the auction on the right side of 28 ppl.”
“Market returns have eased in the past month with EU markets under pressure from lower prices on international commodity markets, especially for butter, and a further weakening in the Euro exchange rate. Since October the Pound has risen by 6 Euro cents to around £1 = 1.20 Euro, equivalent to about 1.5 pence per litre of milk.”
“A year ago
very strong demand from
United Dairy Farmers’ base milk price for December
2011 was – 28.25ppl
Surprise
hurdle for
Candidates for the forthcoming NFU elections recently
completed an intense week touring
Evidently, Temple was informed late this Tuesday that
the NFU’s constitution had been amended/reviewed, following legal clarification
in October, the result of which Temple requires 75% of the votes to oust Gwyn
Jones, which is a very tall order, if not mission impossible. The reason is the rule that office holders
who have held the position for four years or more require 75% of councils votes
evidently applies to past leaders like Temple, who whilst he did not serve four
years in the position, he was elected for four years. It’s a twist evidently President Peter
Kendall was unaware of.
Bar a miracle that efficiently rules
He commented to Farmers Weekly “I was a little surprised to be so far through the election process and then to be told of an amendment made in October last year which brings this 75% rule into play in my particular situation.”
“Having said
that, if only serves to strengthen my belief that the NFU needs change at the
top table, and to reach a different generation with new ideas. My focus, as nominated by my region, is on
the deputy president’s position.”
In addition the NFU, for reasons best know to them,
are playing down the importance of the elections. The February edition of Farmer & Grower,
which is the only NFU publication which goes to all NFU members, talks about
the Conference but fails to even mention the elections which are less than a
month away. Is this deliberate to assist
the incumbents? All council members Ian
has spoken to certainly acknowledge the need for young blood to shake things
up, the question is will council make that move in 2012 or wait until 2014?
Milk Quota Available (20th January 2012)
413,830 litres 3.72% @ 0.25ppl
neg
1,641,770
litres 3.99% @ 0.20ppl
1,264,642
litres 4.03% @ 0.25ppl
Should
you require any information or prices on available milk quota, please contact Jacquey@ipaquotas.co.uk
Muller’s cash bid for Wiseman
is accepted (20th January 2012)
Following the dramatic rally in Wisemans share value last Friday, Wisemans confirmed on Monday morning that they have accepted an offer of 390p per share from Muller. The cash value of the deal is £289million.
Wisemans
share value closed at 244p on the Thursday before the deal, and the cash offer
represents a massive £1.44 (+ 60%) lift in one trading day.
First
Milk have also accepted the offer, having signed a letter of intention to sell
the shares. That, together with the Wiseman family and staff shares, means that
Muller are left with their offer having been accepted for 55% of the total share
holding. First Milk
hold 7.162million Wiseman shares which at 390p per share will net them
close to £28million. At this week’s Semex conference Ian asked First Milk’s
Kate Allum whether she had any ideas what she would do with the £28m to which
she answered, simply, "yes". Much to the disappointment of everyone
in the audience she refused to elaborate!
It
is perhaps not the ultimate deal for the
Semex turn towards tomorrow (20th January 2012)
This
week’s Semex Conference title was “Turn Towards Tomorrow”, and the company did just
that with a great new hotel venue for the conference and an excellent first day
speaker line-up. This resulted in a record delegate turn out of over 200
people, all of them enthusiastic for the future of dairying. Oh, apart from one
young whinging farmer who complained about the milk price and clearly expected
the world to owe him a living.
Popular
farm minister Jim Paice was first to take to the platform and was quick to
highlight the opportunity presented by the Commission to allow dairy farmers to
come together to create large producer organisations. Jim commented that these
PO’s would significantly bolster dairy farmers’ bargaining power. He emphasised the fact that TB was likely to
cost cash strapped UK taxpayers an eye watering £1billion during the next 10
years if nothing was done. He said it
was money they could not afford and therefore the status quo was not an option
– hence the cull.
First
Milk’s Iron Lady, Kate Allum, told her story as to where First Milk are today
and her view of the dairy industry. “We
cannot seal the borders and be immune from what happens in the rest of the
world”. Allum then fired a shot directly
at the NFU, DairyUK, Government and DEFRA and hit the targets: “I guess none of you have a post milk quota
plan” she commented, and from the deathly silence she was right. The talk around the bar and the tea cups was
very much that the day of the GB co-ops is dawning with numerous retailer
aligned and farmers supplying liquid processors publically and privately
stating they intend to join a co-op. To listen and see Kate in action click on
the link http://www.youtube.com/watch?v=74Y7LgptyPU&feature=youtu.be
Arla’s
Mr Charming, Ash Amirahmadi, gave an excellent presentation convincing most, if
not all of the audience, that Arla and, in particular himself, wanted to engage
with their farmers and he’s looking to the future, Ash only just fell short of
publically stating that his long term aim was to see Arla GB farmers with full
shares in Arla.
European
milk price analyst, Willem Koops confirmed what everyone in the audience
already knew, concerning how GB farm gate milk prices compare with the other 27
member states. “ We were at the bottom of the European league in 2010 and
whilst numbers are crunched for December it’s highly likely we’ll be at the
bottom in 2011, if not we are certainly in the relegation zone.”
More
on the Conference will appear in Ian’s next Dairy Farmer article but without
doubt the overall delegate and speaker mode was one of optimism where the
majority saw a bright future for the
World Dairy Auction prices firm
again (20th
January 2012)
This
weeks Fonterra global dairy auction saw prices for SMP, WMP and cheese all
increase with the overall all-products average increasing by 1.3% to average
$3701 per tonne.
Milk Quota Available
413,830 litres 3.72% @ 0.25ppl
neg
644,416 litres 3.92% @ 0.20ppl
1,175,650
litres 4.03% @ 0.25ppl
Should
you require any information or prices on available milk quota, please contact Jacquey@ipaquotas.co.uk
Muller’s cash bid for Wiseman
is accepted (16th January 2012)
Following the dramatic rally in Wisemans share value on Friday Wisemans have this morning confirmed that they have accepted an offer of 390p per share from Muller Dairy UK.
Wisemans share value closed at 244p on Thursday and the cash offer represents a massive £1.44 (+ 60%) lift in one trading day.
First
Milk have also accepted the offer having signed a letter of intent and together
with the Wiseman family and staff shares Muller are left with their offer
having been accepted for 55% of the total share holding. First Milk hold 7.162million Wiseman
shares which at 390p per share will net them close to £28million. At today
The cash value of the deal is £289million.
It’s perhaps not the ultimate deal because it still leaves three major GB liquid milk processors. Equally it will not be the end of GB processor consolidation. Will the new business be named Viseman?
Wiseman shares rally as Muller Dairy
takeover bid is confirmed (13th January 2012)
At
noon today a call from a city share analyst and regular bulletin reader alerted
Ian to the fact Wisemans shares had jumped 30p and were still rising. Thursday’s price closed at 244p, but just
after 1pm on Friday they were 290p, representing a 46p jump or close to a 20%
lift. As this bulletin went to print the
price had risen to 331p (+87p) or +3% equal to a 36% rise in a day.
In
accordance with the disclosure rules, the Wiseman board issued a statement to
the city confirming that discussions involving a cash offer for the business
were ongoing with Muller Dairy UK Limited. Muller must decide by February 10th
if it wants to make a bid.
The
value of Wisemans on Thursday was around £173 million and at 330p had risen by
almost £61 million to £234 million.
It
is widely believed that Muller taking over Wisemans would revolutionise the
liquid milk business. “Little fruit or crunchy chocolate corners on the sides
of modern polybottles is just what’s needed,” a senior dairy analyst is not
reported as saying. If a deal is concluded it will be the Germans and English
taking over the Scots!
Another
thought is that perhaps if First Milk had retained its full stake in Wisemans
it would have had more of a say in whether the takeover goes ahead
Production Figures (13th
January 2012)
December
milk deliveries for the UK provisionally stand at 1.095 billion litres, which
represents a 23.3 million (+2.2%) increase on December 2010 production. Cumulative production for the year (not
butterfat adjusted) is 10.118 billion litres, an increase of 72.6 million
litres (+0.7%) on 2010.
Butterfats
continue to head rapidly North with December’s weighing in at 4.20% compared to
4.15% in December 2010 and year to date butterfat is up 11 points to 4.04%
(2010 was 3.93%).
Tesco ditch First Milk deal (13th
January 2012)
For
almost three years Tesco have had First Milk on the hook with the carrot for the
retail giant to acquire the co-op’s existing Campbeltown Creamery on the Mull
of Kintyre. Having sold the site the
plan was to proceed with ScotGov backed plans to build a new purpose built
state of the art creamery. Tesco have
now decided to drop the deal, which means no new out of town creamery for
Campbeltown.
As
a result First Milk have announced plan B, which is to invest in the existing
site and move forward, forgetting what might have been if the Tesco deal had
been cemented. ScotGov were very
supportive over the move to a new site and are equally supportive over the
upgrading plan with a £2m contribution.
The
original deal was announced in July 2009 when the intention was to build a new
state of the art creamery with funding coming from the sale of the existing
site to Tesco, First Milk together with £3.9m from ScotGov.
The
creamery is the heart of the remaining 38 Mull of Kintyre dairy farmers’ future
plans as well as the 100 plus jobs it supports.
Whilst it is a disappointment not to see a new creamery built, dairy
farmers and those employed should be delighted that the investment is going
ahead and that First Milk has confidence in the future potential the Mull of
Kintyre brand.
NFU election runners, riders and
handicaps declared (13th January 2012)
The
bi-annual NFU top table office holders’ election’s are usually good fodder for
speculation and spice and this year is no exception.
These
are the declared runners and riders:
President Peter Kendall.
Deputy
President Meurig Raymond, Paul
Temple, Kevin Attwood
Vice President Gwyn Jones, Paul Temple, Alistair Mackintosh, Kevin
Attwood, Adam Quinney, Jonathan Brant, Anthony Rew
One
of the main talking points amongst farmers and some NFU Council members is the
apparent u-turn by Meurig Raymond not to challenge Peter Kendall for the top
position. Two years ago Raymond left the
Council in no doubt that if he was re-elected as Deputy President he would
challenge
This
leaves Kendall unopposed and under little, if any, pressure in next month’s
elections, which is a pity because a bit of competition would have been healthy
for the NFU, for democracy, and gossip columnists alike.
Technically
Kendall still requires at least 75% of the ballot votes, which should be a
breeze, however, many years ago one President failed and the elections were
thrown open for nominations. It’s
unlikely, but possible.
Also
note that Raymond requires 75% of the votes on the final ballot and Gwyn Jones
will require 50% of the votes to retain his position.
So
Raymond is content to do a further two years, which would take his total run as
No. 2 to Kendall to an eight year span with the aspiration to stand for
President in 2014, assuming Kendall stands down. But that is not automatic.
Some
have commented with CAP Reform it’s perhaps an advantage not to have a Welshman
in charge at the NFU. Others have
attempted to compare Raymond and Kendall with Gordon Brown and Tony Blair,
suggesting they have agreed a cosy pact, which will end as it did for Gordon
Brown.
If
the status quo prevails and all three retain their top table positions it may
be deemed safe, but it equally smacks of a stagnating organisation lacking
serious candidates prepared to challenge for the top job and that’s not
healthy. Only Derek Mead and David
Handley have dared to challenge Kendall in recent years. Perhaps one or more of the fresh faces up for
election will succeed and become a future presidential candidate. The NFU Council needs to look 4, 6, 8, 10
years ahead for its leaders.
Farmers
weekly are running their own poll where the votes are as follows:
Deputy
President Meurig Raymond 53%, Paul
Temple 33%, Kevin Attwood 14%.
If
that were to be replicated in Council Paul Temple would be the next Deputy
President.
Vice
President Gwyn Jones
and Adam Quinney both in joint 2nd place 13%. Paul Temple in front
with 34%.
Congratulations
to milk processor Medina who scooped the Best Family Business Award at the 2011
Food & Farming Industry Award Ceremony.
Milk Quota Available (6th January 2012)
413,830 litres 3.72% @ 0.25ppl
neg
956,086 litres 3.99% @ 0.25ppl
1,592,008
litres 4.01% @ 0.25ppl
Should
you require any information or prices on available milk quota, please contact Jacquey@ipaquotas.co.uk
New Year bombshell from Muller (6th January 2012)
In the letter Muller were
keen to stress the company is strong and in a good position despite 2011 sales
figures “below historic levels and our market share has declined.”
The bottom line is Mullers
main raw material cost viz: farmers
milk, is not sustainable (for Muller) so producers have to suffer a 0.5ppl
deduction, taking the standard litre price to 28.7ppl, which to be fair is
still a top quartile price.
The bit which is really
rattling Muller producers and Ian is the letters reference to “softening commodity
prices and recent falls in the AMPE index.” Frankly this is a poor unconvincing
excuse.
For the record AMPE hit
35.2ppl in June 2011 and its lowest point in 2011 was 29.5ppl in January
2011. By Decembbber it had eased to
29.9ppl. If Muller use the AMPE index as justification for this and future
price drops they should track AMPE and when it’s going up. They don’t so please
Muller don’t chose indicies when it suits you.
The customary winter fall in
cream prices is certainly not an excuse for milk purchasers like Muller to drop
farm gate milk prices.
According to DairyCo cream
prices recorded are as follows:
December 2011 £1450
December 2010 £1450
Note, cream prices peaked in
June 2011 at £1,800.
Whilst the method used by
DairyCo to gather cream prices leaves room for improvement they do indicate the
trends even if they are not always on the ball.
All business like milk
purchasers forward contract sales of bulk cream to iron out some of the
volatility hence minimal spot bulk cream is traded so any fall in spot cream
post Christmas is not really a major influencing factor on buyers returns and
certainly not a plausible excuse to drop producer prices.
Remember back in this
bulletin dated 30th April, Ian wrote:
“Yoghurt maker Muller is the only GB milk buyer to
reduce its ex-farm gate milk price since 1st December with two price
drops, totalling 1.5ppl the most recent being the 0.5ppl, which was announced
immediately after the Tesco drop. There
could well be unique problems faced by Muller, possibly best summed up in the 3
letters of NOM, as retailers switch from Muller branded yoghurts to own label
yoghurts.”
So Muller were the last milk
processor to implement a
Tesco dropped its price in
April 2010 by 0.47ppl and Muller followed with a 0.5ppl. Perhaps the truth is that Muller are guilty
of attempting to keep up with the Tesco milk price and as a result have become
uncompetitive.
Therefore, Ian concludes
that the main if not the sole reason for Muller dropping its farm gate milk
price is because they are paying more for their milk than they can profitably
process it in to yoghurt.
On the 2nd
December we reported news of 52 job cuts at Market Drayton when Muller stated
they needed to reduce their workforce to remain competitive
Having adjusted their
staffing costs Muller have now turned to adjust the price they pay their
farmers for their basic raw material to remain
competitive. Their choice of words to justify the move has been described as
“clumsy” and blaming cream, butter, commodity prices and AMPE falls is “a red
herring.”
If Ians theory is correct
Mullers move to drop producer prices by 0.5ppl from 1st February
2012 is unique to Muller and a one off
and no basis for a snowball of producer milk price cuts. Even if one or two
liquid processors are almost gagging to reduce producer prices to improve
catastrophic profit margins.
Meadow Foods report very healthy
results (6th
January 2012)
Meanwhile the last milk
purchaser to announce a milk price increase, in fact the only one to push one
through in 2012, Meadow Foods has reported a healthy set of year end results.
Note they are also the main milk supplier to NOM yoghurt dairy.
Pretax profit £8.8million
compared to £5.5m in 2010 so + 60% (£3.3m)
Turnover £301million
compared to £263m in 2010 so + 14.4% (£38m)
Net borrowings reduced by
£3.4m in 12 months.
Meadow collect and process
milk from 500 producers whose average production is in excess of 1million
litres per farm and they employ 260 staff. Meadow have an ongoing investment
programme which will necessitate selectively recruiting new farmer suppliers in
2012.
Minimal change in 1st
2012 Global Dairy Commodity auction prices (6th January 2012)
This weeks first Fonterra
Global Dairy Trade Auction produced on all products average of $3654/tonne
which was a mere $34/tonne (-0.9%) down on the auction two weeks earlier which
averaged $3688/tonne.
WMP averaged $3554 compared to $3589 two weeks
earlier
SMP averaged $3269 compared
to $3312 two weeks earlier
Cheese averaged $3598
compared to $3601 two weeks earlier
Arla move into Wisemans back yard (6th January 2012)
Arla have announced plans to
open a new distribution depot in Bellshill, Glasgow, which is as near as damn
it in Wisemans’ back yard. That is
recognition that the Wiseman brothers back in 1988 certainly picked the right
location for their Bellshill factory.
Arla plan to ramp up
production at the Lockerbie site by 40%.
We wonder whether Arla will copy Milk Link and claim to have
Merry Christmas & Happy New Year to all Readers
Unless something sensational
happens next week the next bulletin will be issued on Friday 6th January.
Note: Our offices are closed on Monday 26th December¸ Tuesday
27th December and Monday 2nd January. All
other working days it is business as usual, 8.30am to 5.00pm
Final 2011 Milk Auction comes off the boil(23rd December 2011)
United Dairy Farmers’ final 2011
milk auction saw 46 million litres average 28.51ppl slightly down on the
29.02ppl recorded a month ago.
David Dobbin CEO of United
commented, “This is
a good start to the 2012 year with prices 1.5 pence per litre better than at
the same time last year. The price in
this month’s auction was half a penny down on last month, which was not unexpected given the sharp fall in the
value of the Euro, and the higher volumes of milk now available for sale,” said
David.
“The Pound is now at its highest level against
the Euro for a year and this week it broke through the psychological £1 to
€1.20 barrier. Since October the Pound
has risen by 6 Euro cents, equivalent to about 1.5 pence per litre of milk.”
“Global milk supplies are surging,
particularly in
Mixed results in final global dairy auction(23rd December 2011)
This week’s Fonterra auction produced a mixed bag of
results with the auction average weighing in at $3688/tonne compared to
$3737/tonne two weeks ago. This
represents a $49/tonne or 1.3% average drop.
Cheese prices bucked the trend averaging $3601
representing a $29 tonne lift (+1.1%)
Suppliers asked to fund Tesco price cut war
http://fairdealfooduk.wordpress.com/2011/12/17/2572/
This
is a straight cut and paste from an article published this week. Several
processors have confirmed that this is happening with both branded cheese and
liquid milk. No wonder one commented
“Bring on an Ombudsman with real teeth.”
The
Fresh Produce Journal brings news that Tesco has been asking suppliers for
massive sums to help pay the cost of the promotion.
Suppliers
have contacted FPJ to say they have been asked for huge contributions, with one
firm saying the sums involved could bankrupt them:
“It’s
just as we predicted would happen when the price cuts were announced,” one
supplier said. “They have asked for a ridiculous amount of money, I mean an
unfeasibly insane sum.”
Another
supplier said: “It’s fair to say that Tesco always ask for money – they call it
a marketing investment. They create joint businesses plans that give us a year
agreement with certain GSCOP (Groceries Supply Code of Practice) required
stipulations.
“It
creates the impression of supplier security and you build all the known knowns
into that plan. You then get back to being a supplier but then what happens is
top-down strategies like the Big Price Drop are introduced and that blows the
JBP out of the water.”
A
Tesco spokesperson said: “We talk regularly and constructively to our suppliers
to ensure we are working efficiently together, as is standard business
practice.”
Readers Christmas bulletin
contributions(23rd December 2011)
Several
of the contributions sent to Ian whilst amusing were deemed unsuitable for
family reading so apologies if your jotting is not featured below.
I’m dreaming of a green Christmas
This was kindly forwarded to
us by a farmer reader who put pen to paper a year ago when weather conditions
were less favourable.
I'm
dreaming of a green Christmas.
Just
like the ones I used to know.
Where
milking parlours don't freeze,
And
slurry goes through slats please.
And
only Christmas cards have snow.
I'm
dreaming of a green Christmas
Where
milk and feed lorries get through.
Be
you DUP or Shiner,
A
green Christmas is a winner.
And
that will please Ms Gilder new
I'm
dreaming of a green Christmas
With
not a snowplough to be seen.
And
it would make me happy,
If
cow dung would stay clappy.
And
water troughs stay full and clean.
I'm
dreaming of a green Christmas.
With
not a grittier out at night.
Where
roads don't shine and glisten,
And
water pipes aren’t hissing.
And
Santa’s got the only sleigh in sight.
And this from another of our
artistic readers, who signed off as “A HACKED OFF FARMING FAMILY”: (23rd December 2011)
On the first day of
Christmas the weather gave to me......
12 under zero
11 calves a coughing
10 wandering sheepies
... 9 jabs of resflor
8 buckets of water
7 extra layers
6 freezing units
5 LITRES DOWN
4 frozen troughs
3 times as long!!!!
2 huge feed bills
Unusual Enquiry – Wedding Venue for
2013(23rd December 2011)
We have received
an enquiry to ask readers if they know of a wedding venue in the
Preston-Manchester or Bolton/Wigan area. Ideally somewhere that has either a few
B&B's near by or hotels and an area suitable for parking. The Bride intends
to use http://www.papakata.co.uk/your-event.php who
would put the tipi's up on the day and remove them the next day, together with
caterers, toilets, generators etc. So all she needs is a pretty field for a
wedding in April 2013. If you have any
ideas email the office.
November Milk Production (16th December 2011)
November’s
provisional milk production was up only 4.3million litres (0.3%) to 1.032
billion litres.
This
takes the cumulative production to 9.024billion litres compared to 8.937
billion a year ago giving a year on year increase of 51.2million (+0.5%). This is the highest cumulative production in
the past 5 years.
Cumulative
butterfat for the year stands a whopping 12 points up on the 3.90% recorded a
year ago and is now 4.02%.
Record
The
latest Defra calculation has produced an October average milk price of 29ppl
which is the highest on record.
January dividend payment
for First Milk members (16th December 2011)
First
Milk have announced they will pay a 3% return on members capital in January
based on the performance of the business in the six months to the end of
September 2011.
Chairman
Bill Mustoe commented, ”Given our drive to pass returns to members as quickly
as possible, we will pay out a return on capital in January. This is the third
time in 18 months that we have paid out a return on members’ capital; over that
period this has put more than £1800 into the pocket of an average First Milk
member.”
Milk Link kill any concerns over New
Year milk price reduction (16th December 2011)
Milk
Link have reviewed their business performance and prospects the result of which
Milk Link have announced they expect to be able to maintain their current
producer milk price until at least 1st April 2012.
This
should be of comfort to any members who are nervous over industry talk of
potential New Year price cuts. Let’s
hope some of the major liquid buyers make similar commitments or push ahead
with further producer increases similar to the one announced by Meadow last
week.
Milk
Link responded to one member comment that the letter was simply warming him up
for an April price drop stating this is not the case and it is simply to dispel
the rural myth that the co-op are one of the milk purchasers plotting to reduce
member prices in the New Year.
Badger cull gets the green light (16th December 2011)
Environment Secretary Caroline Spelman
has given the green light for controlled culling of badgers in two English
pilot areas as part of the package of measures to tackle bovine TB. Full
details can be found here: http://www.defra.gov.uk/publications/2011/12/14/pb13691-bovine-tb-badger-control/
The
NFU have developed a website (TB Free
Wind Farm Poll (16th December 2011)
The Daily Mail is holding an
online poll, “Should we build more wind
turbines to cut carbon emissions?” in which your support is
requested:
http://www.dailymail.co.uk/debate/polls/poll.html?pollId=1029654
Please
help this go viral if you support wind turbines by forwarding to as many of
your friends who support wind power as possible. Despite being a Daily
Mail poll, currently by some majority people are supporting wind power – I’m
sure the anti-wind lobby will be attempting to skew the vote in their
favour. It is good to demonstrate to these newspapers that their skewed
opinions are not always shared by the majority of the population. If you don’t support wind farms you should
still vote.
It is the season to be jolly (16th December 2011)
Ian
is requesting readers email us with their humorous “Dear Santa” requests ready
for next week’s bulletin. Here is one
example to stimulate your brain:
Dear
Santa, For Christmas I
0.5ppl milk price increase for
Meadow Foods producers kick starts 2012 on good note (9th December 2011)
Whilst
dark and skint forces appear to be working extra hard to soften farmers up for
liquid price drops in 2012, Meadow Foods have once again stuck their head above
the parapet with a 0.5ppl price increase from 1st January.
With
no hurdles to jump it’s a simple 0.5ppl addition to the current standard litre,
taking Meadow’s to 28.88ppl. It means that the company have increased their
producer price by 4.87ppl in the past 10 months.
This
bold and industry benefitting move will hopefully stop those from the darkside fully
in their tracks, and once again force them to realise they won’t get away with
it.
World Dairy Auction prices rocket up
3.3% (9th
December 2011)
There’s
more good news from the Fonterra Global Dairy Auction, this week, which the
liquid processors will have wanted like a hole in the head. Average prices
jumped a tasty $120/tonne or 3.3%. The
average for all products stood at $3,737 tonne.
Key
results were as follows: (note, once
again averages from this auction have been incorrectly calculated by professional
economists, but the ones below are correct!)
WMP +$63 or +1.8% to average $3637/tonne
SMP +$70 or +2.1% to average $3424/tonne
Cheddar +$54 or +1.5% to
average $3572/tonne
Will
January 2012 mirror 2011 and snooker any downward Christmas wishes of some
processors and retailers? The
next
auction will be on 20th December.
Minimal joy in EU dairy package (9th December 2011)
Dairy
farmers have little if anything to get excited about with this week’s final EU
dairy package, which was agreed by the European Council, European Commission
and European Parliament.
Granted
there is a bright light in the form of the ability to form producer
organisations for which one could conceivably represent up to 33% of the
As
for the rest of the package it will have little effect on the
Rob
Newbery, NFU Chief Dairy Advisor, commented “We must re-double our efforts as a
dairy industry by working with the dairy processors and DEFRA to draw up a
voluntary code of practice that will give farmers better bargaining power and
greater revenue from milk sales. Should
this process fail to offer fairness and transparency in contracts they deserve,
we will be pressing DEFRA to legislate.”
Proud of Dairy and our military (9th December 2011)
This
week Ian attended the Annual Ceremony of the British Christmas Cheeses at the
Each
time Ian has attended this event he has come away proud of all those esteemed
military men and women who make him feel very humble.
Ian
was equally proud to see the very best British cheeses offered to the
Pensioners by our great cheese makers.
If ever there was an event that epitomises “Proud of Dairy” then this is
it.
Well
done to The Dairy Council for maintaining this great annual tradition.
Milk Quota Available (2nd December 2011)
999,883 litres 3.96% @ 0.25ppl
386,339 litres 4.00% @ 0.30ppl
1,038,024 litres 4.04% @ 0.25ppl
Should you require any information or
prices on available milk quota, please contact Jacquey@ipaquotas.co.uk
1ppl
milk price increase to 26 Arla Organic suppliers – from 1st
December (2nd
December 2011)
This takes their standard litre price
to 35.5ppl
Dairy
Crest Direct (DCD) members challenge Dairy Crest (2nd December 2011)
Following last week’s bulletin
highlighting A1 supermarket’s unbelievable 6ppl sale of Dairy Crest’s (DC) branded
Country Life milk, DCD, on behalf of its members, questioned DC over their
commercial activities, the promotions and the role they play. DCD confirmed they had received calls from a
number of “angry/frustrated DCD members.”
In a written response from Dairy
Crest’s Commercial Director to the Chairman of DCD the company refer to Ian’s
article as a “tale”, but it certainly was not.
DC state that they believe DC supply
less than 50% of Johal Dairies liquid milk requirements (who supplied the cheap
milk), with the balance supplied by Wiseman and Freshways. Fine, but for some reason it was only
the Country Life milk which was on promotion at 6ppl. DCD members should
perhaps ask why.
The letter also stated that the milk
was only sold for a short period of time. That’s true, for three days. But what
they didn’t say is that whenever one shop gets cheap milk like that other shops
want cheap milk too. And this makes it impossible to lift the milk price in the
middle ground.
However, DC did confirm “we are very
surprised by this and do not like to see our milk promoted in this way.”
Ian’s agenda is not, as suggested in
the letter, to pick out DC as being solely responsible for this type of
promotional activity. To help Ian please can some of the many readers of this
bulletin who are responsible for or see similar promotions let Ian know.
Free
milk now on the cards . . . and you
guessed it! It comes from Dairy Crest! (2nd December 2011)
Last week milk was being sold for 6ppl.
This week there’s milk being given away free! Dairy Crest’s Milk & More
doorstep delivery service promises “Everyday low prices”, and this week is
giving a free pint of 1% milk when customers by any pack of Kelloggs’
cereal. DC say the promotion is designed to increase sales via the Milk &
More scheme.
Let’s hope it succeeds, but why doesn’t
it come up with another kind of promotion that doesn’t involve milk? It surely
realises it is getting a reputation among farmers for selling cheap milk, and
such promotions only exacerbate this view. Its 0.2% profit margin in its latest
accounts clearly shows it’s making nothing on its liquid milk so something has
to change.
Wisemans
share price reaches 5 year low (2nd December 2011)
At one point today the one trick pony
Wisemans share price hit the rock bottom at 220p before recovering to 250p.
Their
First mIlk purchased 11.3million shares
in Wisemans for 250p and then cashed in 4 million in November 2009 for 450p
leaving 7.1million share they retain today.
Job
cuts at Muller factory (2nd December 2011)
The dairy industry news regularly
focuses on the ruthless world of liquid milk and cheese promotions, however,
news of 52 potential job cuts at yoghurt manufacturers Muller Dairies’, Market
Drayton factory confirm they face similar pressures. The factory currently employs around 700
staff and a spokesperson within the factory stated that they need to reduce
their base cost and increase efficiencies. Once done, their new CEO Ronald Kers
will drive through planned growth initiatives.
A 30-day consultation with staff has commenced and goes from the top to
the bottom.
Are
Alaister Mac’s election aspirations back on track? (2nd December 2011)
Last week’s article concerning the
eagerly awaited NFU AGM and elections was evidently mis-interpreted by one or
two readers, either for genuine or mischievous reasons. So let me clarify the
position.
The NFU has concluded a thorough
internal investigation into accusations of financial irregularities involving
Livestock Board Chairman, Alastair MacIntosh. The NFU’s Director General Kevin
Roberts will formally report his conclusions and why he has drawn them to the
NFU’s Governance Board and Audit Committee in due course. However, he has once
again reiterated to Ian that absolutely no irregularities concerning
MacIntosh’s NFU expenses or diary have been found.
In addition, Roberts can find no
evidence of influence from MacIntosh in connection with NFU money being
directed towards the Ladies in Beef (LIB) campaign. The £45,000 (actually
£37,000 plus VAT) was paid to an external third party PR agency to provide seed
corn for the launch and ongoing PR for LIB. And also for the record, neither
Ian or anyone for that matter has questioned or is questioning the LIB
initiative, which also received major retailer backing and has already
demonstrated it has delivered more bangs for its bucks than some other sector
investments.
So to clarify, as far as the use of NFU
monies goes MacIntosh has got the all clear, which is good news for him and his
supporters for the top table posts. All he has to do now is convince the NFU
council that he can conclude any outstanding personal matters quickly, devote
100% to the NFU and is the best man for the job.
NFU
Elections update (2nd
December 2011)
Farmers Weekly and FWI interactive have
an interesting and thought provoking article covering the current NFU election
candidates and their positions, courtesy of top hack Johann Tasker. See http://www.fwi.co.uk/Articles/02/12/2011/130370/Where-will-the-NFU-find-its-leaders-now.htm#.TtiqMLLnPfc.twitter.
MacIntosh is quoted as saying that
“Anyone who knows me knows that I have always given 100% to the NFU and there
is no reason for that to change.” Reading between the lines he will remain a
very serious contender.
It is an undisputed fact that with only
5 candidates for 3 top positions it’s not exactly an indication that the NFU’s
succession policy is healthy and vibrant.
The quirky voting system with its 75% rule could produce the odd
surprise casualty. Let’s hope during the
next 2 to 4 years progress can be made to encourage more potential top table
successors.
Fullwood
Midget Portable Milking Machine (2nd December 2011)
On
Ebay ends 19:22 hours – Sunday 11th December 2011 – Ebay Item No.
270865234789 - http://www.ebay.co.uk/itm/270865234789?ru=http%3A%2F%2Fwww.ebay.co.uk%3A80%2Fsch%2Fi.html%3F_from%3DR40%26_trksid%3Dp5197.m570.l1313%26_nkw%3D270865234789%26_sacat%3DSee-All-Categories%26_fvi%3D1&_rdc=1
Milk Quota Available (25th November 2011)
999,883 litres 3.96% @ 0.25ppl
643,346 litres 4.11% @ 0.30ppl
383,231 litres 4.13% @ 0.35ppl
Should you require any information or
prices on available milk quota, please contact Jacquey@ipaquotas.co.uk
Record breaking 6ppl milk on sale –
Time for action! (25th
November 2011)
The price of milk in the middle ground has dropped to
a record low this week, and not for any old milk but for one of Britain's
premium brands.The stomach
wrenching offer - 8 x 2 litre packs for just £1 - started
yesterday at A1 supermarket, Small Heath, Birmingham (Tel 01217 728444 or fax
01217 736754 if you want to make your views known to them.)
The milk is once again Dairy Crest's Countrylife milk
supplied to the shop by Johal Dairies Ltd,
Dairy Crest's branded milk is regularly, if not
exclusively, at the centre of all of these barmy suicidal offers. But why does
DC back Johal? Several milk processors we spoke to would politely say no thanks
to the business, for fear of attracting bad publicity, and would not wish to be
associated with their past activities.
So, what can farmers do? Make their feelings known to DC, Johal
and A1 supermarkets, that's what! One farmer Ian told about the deal was
contemplating purchasing the milk and doing a photo shoot of him tipping it
back in to the bulk tank.
DC says it
absolutely cannot stop the likes of Johal selling its milk so cheaply because
of Competition Law (and denies it sells it cheaply to them in the first place
to facilitate such deals) but we don't see Wiseman's milk sold as cheap, nor
Cravendale, or Charlie Paynes and the like. It also says it can't refuse to
supply a company on Competition grounds.
But something
has to be done to stop these ludicrously low offers. When will DC suppliers
wake up to what is happening out on the streets with their milk and say enough
is enough and vote with their feet? If enough farmers felt strongly enough and
resigned then perhaps DC might invest a little more effort in finding a
solution that complies with Competition laws and which takes the industry
onwards in a positive manner.They certainly aren't going to get good press
while these deals carry on.
Auction average 29.02ppl (25th November 2011)
This month’s United Dairy Farmer’s milk
auction saw 43 million litres average 29.02ppl, a shade down from the 37
million litres, which averaged 29.55ppl last month.
As David Dobbin CEO of United commented
“This was another good auction for United members taking into account the
higher volumes (+16%) of milk for sale and weakening returns in international
markets.”
The same auction in November 2010
averaged 26.77ppl resulting in a 2.25ppl difference.
United’s producer base milk price for October
deliveries was 28.5ppl, where it has been for the past 3 consecutive months.
Milk
Link recruitment claims not as first read (25th November 2011)
Milk Link this week issued a press
release headed “Milk Link makes strong
progress in recruitment of farmers expanding Lockerbie Creamery” leading to
some commentators and gurus instantly assuming Milk Link had recruited the 50
million litres of new milk claimed from South West Scotland and the North of
England from the likes of Lactalis, First Milk, Meadow Foods, Paynes Dairies,
Arla and Medina.
On further investigation the 50 million
litres is the total new supply Milk Link has signed up across GB with the main
source of around 20 million litres coming from organic farmers who are
switching back to conventional milk production.
This is a big switch as a result of weak demand and strong supply. Sources indicate a maximum of 10 million
litres have been recruited by Milk Link within the Lockerbie milk field.
The 50 million is the conclusion of
months of work and courtships with producers starting to supply the co-op from
now and during the next 12 months coming from a very wide and varied range of
existing milk processors. Milk Link has
the option to do milk swaps and move their own milk supplies around the country
to satisfy individual factory requirements.
£10
million school milk scam (25th November 2011)
A Department of Health internal audit
have revealed that an estimated £10 million is being “creamed off” the under
5’s free school milk scheme by “greedy middle men” and the government has
ordered a review of the scheme. The scheme provides ⅓ pint (189ml) a day of free milk to
nursery children in approved care arrangements across GB. The department
believes middle men are overcharging to the tune of £10 million a year, with
prices of up to £1/pint.
The scheme costs around £53
million/year and is set for radical reform with a commitment that the scheme
will continue and hopefully “greedy cowboy suppliers” will be exposed and their
involvement immediately terminated.
Milk Quota Available (18th November 2011)
417,763 litres 3.88% @ 0.30ppl
999,883 litres 3.96% @ 0.25ppl
643,346 litres 4.11% @ 0.30ppl
Should you require any information or
prices on available milk quota, please contact Jacquey@ipaquotas.co.uk
Auction
results up 3% (18th
November 2011)
This weeks 56th Fonterra
Global Dairy Trade Auction saw prices increase to average $3617 tonne, an
increase of $106/tonne (+3%) in two weeks.
Cheddar was up 3.3% to average
$3518/tonne
SMP was up 1.9% to average $3354/tonne
WMP was up 2.5% to average $3574/tonne
Wisemans
operating profits at all time low 1.1ppl (18th November 2011)
Wiseman are the latest dairy processor
to release half year results and once again they highlight seriously tought
trading conditions.
The headlines were as follows:
Turnover £457.7m up 1.1% (+£4.9m)
on 2010
Profit before tax £11.8m down 41.6% (-£8.4m) on 2010
Half year net debt £28.2m up 31% (+£6.7m )on 2010
In terms of earnings per litre the
latest numbers represent a record low of 1.1ppl, a whopping 54% below Wisemans
10 year average of 2.4ppl.
Analysts in general reported the
results as better than anticipated all emphasising the huge impact the never
ending retail battle on liquid milk pricing was having on Wisemans and others.
There is no doubt producers are contributing a slice of their profits to the
price war.
Most conclude the retail battle is
unlikely to end and the prospect of Wisemans securing further significant sales
contracts does not look good. A real danger to Wisemans and others is if there
were to be any collapse in cream prices.
A plus is the fact Wisemans total debt
is low and it has minimal pension liabilities. Another plus is the announcement
of Wisemans joint venture with the Australian firm A2 (see below).
It’s not a particularly positive
outlook for our liquid processors and as one Wiseman results analyst commented
“the road to recovery is proving to be longer than we anticipated.”
Wiseman shares were down 12p from 282p
on Friday of last week to around 270p today, which is the lowest price seen in
the last 12 months. The 12 month high was 360p.
Wisemans
enter exciting JV with Australians (18th November 2011)
At the same time as releasing very
average half year trading results Wisemans simultaneously announced a joint
venture with Australian A2 Corporation Limited who specialise in milk which
appeals to those with lactose intolerance.
The new range of milks, aimed at 20% of
the population who find conventional milk hard to digest, should be available
on the shelves mid 2012.
Wisemans clear aim is to grow the
market, without knocking seven bells out of competitors, and to capture
consumers who do not currently buy milk.
Wisemans investment in the JV is
estimated to be £2m.
Surprise
Dairy Event announcement (18th November 2011)
The RABDF have announced that starting
next year the event will be re-branded as Livestock 2012 incorporating The
Dairy Event. The logic is simple. By the end of 2013 there are likely to be
less than 10,000 dairy farmers in
The second move is to shift the date
from early September to the first week in July starting in 2013. This will
avoid the late harvest conflict seen this year and is judged by RABDF following
their own research t be a better time of year for farmers making investment
decisions aimed at the forthcoming winter. So the 2012 dates will be Tuesday 4th
and Wednesday 5th September and the 2013 event will be
Wednesday 3rd and Thursday 4th July.
The news appears to have come as a
complete surprise to three trade stand holders Ian spoke to all of whom claim
they were not consulted on the proposed changes or involved in the RABDF’s
research. Most people don’t like change but all three trade stand holders
indicated the date move was not popular and the fact dairy had been relegated
to a sub title of the event was equally unpopular in their eyes.
Time will tell whether their reactions
are typical but one comment is true, from 2012
Re-organisation
at the top of Dairy Crest (18th November 2011)
Dairy Crest have announced that Mark
Taylor will be leaving his position as Milk Procurement Director to be replaced
by Mike Sheldon who held the position prior to Mark.
Three
year milk battle estimated to cost a whopping £2.5million plus (18th November 2011)
Three years after
Although Dairy Crest denies selling
milk cheaply to the likes of Johal its recent trading figures show just how
awful the returns are from its liquid milk business, and doing something about
the mayhem in the middle market might not only help its margins, but those of
farmers to.
Latest offer for Dairy Crest branded
milk comes from Midland Dairy Supplies of Birmingham, where 2 litres of milk is
available for 69p (34.5ppl) with a strap line of “Why Pay More?” and confirming
the price is fixed!!!
A selection of the milk quota available (11th November 2011)
1,275,088 litres 3.97% @ 0.25ppl
1,019,795 litres 3.98% @ 0.30ppl
406,569 litres 4.10% @ 0.35ppl
Should you require any information or prices on available milk
quota, please contact Jacquey@ipaquotas.co.uk
Production down again (11th November 2011)
Initial
DEFRA
October
production was 1.0622 billion litres a drop of 13.7 million litres,
representing a 1.3% drop.
The
cumulative production for the first 7 months of the quota year stands at 7991.7
billion litres, which is an increase of only 45.7 million or 0.57% on last
year, however, this increase is diminishing by the month.
Note,
the above figures are not butterfat adjusted.
Butterfats continue to head North and for the first 7 months of the year
have averaged 4%, which is a massive 13 points up on the 3.87% recorded a year
earlier.
Dairy Crest liquid results are sour (11th November 2011)
DC
have released their half year results, which whilst collectively for the whole
business are good results the individual components expose how competitive the
liquid market is.
The
headlines were as follows:
Turnover £796.2m up 2% (+£19.3m) on 2010
Profit
before tax £39.2m up 9% (+£3.1m) on 2011
Half
year net debt £365.3m up 9% (+29.8m) on 2011
Whilst
the 9% increase in profits is a good result it camouflages a jaw-dropping
liquids division performance.
When
you look at DC’s liquids division turnover of £533.8m, the £1.2m underlying
profit represents a pitiful 0.2% profit margin.
In addition if you factor in £1.7m of exceptional costs the liquid
division has lost £500,000 excluding gains from property sales.
CEO
Mark Allen commented “The need to pay farmers a higher price, coupled with
fierce retail price competition has put pressure on margins throughout the
liquid milk supply chain and profits excluding property profits in this
business (liquid) have fallen from £10.9m to £1.2m (a 90% drop!!). Interestingly there are numerous references
to “paying a fair milk price” but only one mention of paying a “fair market
related price.” Which is it?
City
comments included “operating margins on milk evaporated to virtually nothing at
DC” and “a collapse of nearly 90% in profits at its dairies (liquid) division,
squeezed by both farmers and supermarkets.”
There
is no disputing the fact DC, Arla and Wiseman have been seriously squeezed by
retailers at the same time as needing (and wanting) to pay farmers a
competitive market price for the raw milk they require. It’s called a pincer movement.
Some
will point the finger at some of the so-called suicide deals offered by DC to
its customers; however, there is another side to this story. The only way a processor’s factory can be
efficient is if it operates at full capacity and if these optimum efficiencies
are mirrored in efficient and cost effective distribution costs. DC could be guilty of aggressively chasing
volume to achieve such efficiencies. The
big question is will they achieve the efficiencies and will this strategy of
increasing volume and reducing costs work and deliver realistic profits in
their liquids division or will they have to rely on some cross-subsidisation
from their healthy and profitable cheese and spreads divisions?
In
additions it’s debatable whether DC’s efforts with Milk & More will help
their bottom line and/or arrest the never ending decline in doorstep sales.
The
undisputable fact is very thin, almost non-existent margins on liquid milk are
simply not sustainable.
Interestingly,
DC’s share price dropped from 339p to 331p before bouncing up to 346p mid
morning today. Clearly some city
analysts and investors anticipated the half year results to be accompanied by a
profits warning. DC are confident they
are on target hence the boost in confidence in the overall business and the
expectation that the second half will be more profitable than the first half.
DC
have stated that they are on track with £20 million efficiency savings and cost
cutting.
Arla Milk Partnership Annual Accounts are out (11th November 2011)
Following
a three week delay accounts have finally started to arrive with Arla suppliers,
which means most of the regional meetings have taken place before members had a
chance to study the accounts.
Only
two members have contacted Ian by email today, both of them firmly focussed on
one section of the accounts, namely Section 4, headed Remuneration.
We
anticipate more commentary on the MPL accounts soon.
Milk Watch (11th
November 2011)
Free Milk
Our
local Co-op in Ashbourne has taken undervaluing of milk to new heights with its
latest doorstep flyer offering 2 litres of milk free to customers who spend £20
or more in the store.
More cheap milk
Midlands
based East End Cash & Carry, who have 3 stores, are offering Dairy Crest
Countrylife Milk supplied by Johal Dairies at a jaw-dropping 33ppl (12 litres
for £3.99). The promotion starts on
Monday 14th.
More long term cheap milk
A
letter and offer to a Londis shop from Dairy Crest offers fixed prices on
liquid milk from September to March and illustrates how aggressive DC are. The offer is 2 litres of milk (whole, skimmed
and semi) at 79p. Such deals leave
little, if any, margin and nail others to the floor boards if they are forced
to defend their existing customers leaving minimal hope of such prices
producing ex-farm gate milk price increases.
Progressive Dairy Farmer Wanted (11th November 2011)
I
hear that the new Animal Health & Welfare Board for England after its
first board meeting this week contacted Dairy UK and the NFU and advised
them they are interested in co-opting onto the board a dairy farmer -
should the right calibre of individual come to the fore. The
criteria is simple:
They
should be from
If
interested the NFU and Dairy UK are looking for candidates to put forward!
Milk Quota Available (4th November 2011)
1,275,088 litres 3.97% @ 0.25ppl
1,019,795 litres 3.98% @ 0.30ppl
406,569 litres 4.10% @ 0.35ppl
Should you require any information about the above milk quota that
we have for sale then please contact Jacquey@ipaquotas.co.uk
1.23ppl milk price rise from Lactalis catapults them back up the
popularity league (4th
November 2011)
Back
on the 30th September this bulletin highlighted the fact cheese
processor Lactalis had some very disgruntled producers following the firms
declaration that producers would not be given a milk price increase.
This
certainly put Lactalis under pressure but to be fair they have both listened
and responded with a 1.23ppl flat rate increase from November 1st.
The
increase has no conditions, seasonality or hurdles making it once again one of
the best milk for cheese price contracts in town.
World Commodity Auction prices are a mixed bag (4th November 2011)
This
weeks 55th Fonterra Global Dairy Auction produced a more or less
stand on result. The average auction price was $3,511/tonne down $29/tonne
representing a slight drop of less than 1%.
Within
the results cheddar prices averaged $3,406/tonne (-$91 or -2.6%).
SMP
prices were identical to the previous auction at $3,292/tonne and the WMP
average was virtually unchanged at $3,487/tonne.
Co-ops both make half year trading statements (4th November 2011)
Both
First Milk and Milk Link have this week released their half year trading
updates. Whilst the statements supplied, give an indication of direction of
travel they are only a guide as to where both expect to be by March 31st
2012.
Credit
to Milk Link for distributing a very informative full colour 10 page
publication which is written in plain English and easy for all to understand
and follow. A point especially important to its farmer members/owners. Sadly
First Milks report contains limited information.
Milk Link’s half year trading statement (4th November 2011)
Group
Turnover up to £311.8m (+10.2% on £283m in 2010)
Net
Debt reduced by £5.2m to £85.8m (-5.7% on £91m in 2010). Note Milk Link compare
debt to the same six month period a year ago and not the March 2011 year end
debt figure of £79.9m. Also if you add the increased member funds, now standing
at £75.3m, it translates to a total debt increase year on year.
In
summary Milks Link’s profitability appears to be on the up with EBITDA up £1.3m
or 7%.
First Milk’s half year trading statement (4th November 2011)
Operating
profit of £4.7m (+24% or £3.8m compared to 2010)
Bank
debt up £7m to £70m (+11% compared to the £63m in 2010) mainly due to increased
cheese production as a result of increased branded sales.
Group
turnover down £8m to £272m (£280m in 2010)
The
drop in First Milk’s turnover is a bit of a mystery and surprise given that
sales from the acquisition of Kingdom Dairy (May 2011) are presumably within
the group turnover figure hence turnover should be up. Does this mean the value
of products sold from members milk or the volume of members milk sold is down?
However
for all First Milk trumpet their headline press release “First Milk maintains
strong progress” members will be very aware that the period this trading
summary covers is by far the best market for cheese on record.
How
do MCVE and the average DEFRA farmgate milk price compare for the same six
months.
DEFRA
Average Factory gate MCVE
April 26.42 32.10
May 26.39 32.82
June 26.63 33.16
July 27.21 32.91
August 27.55 32.84
September 28.04 33.11
6month
average 27.04 32.82
Milkprices.com’s
12 month average all processor milk price is 26.16ppl to the 1st September
2011 within which Milk Link’s cheese contract average is 25.75ppl and First
Milk’s cheese contract average is 24.55ppl. The actual First Milk milk for
cheese contract price is today 27.5ppl whilst Milk Link’s is 28.5ppl. First
Milk claim they are making strong progress but the reality is all three of
their contracts occupy the bottom 3 places in the milk price league table and
there is still work to be done.
Milk
Link make it very clear in their trading statement that despite numerous
producer price increases they realise they are 0.6ppl below the average DEFRA
12 month farmgate milk price.
They
comment “We remain committed to achieving a member milk price at least in line
with the DEFRA rolling average”. The fact they are honest and up front is a big
plus.
Ian Potter
Marketing Services Limited (t/a Ian Potter Associates)
Registration
No: 7219456
Registered in