Dairy Industry news and features

This page was last updated on 19th February 2020 at 11.53 am (Press your refresh/reload button for the latest information)

New Run Cattle Tag Prices

We supply a full range of all types of Cattle & Sheep tags at very competitive prices including

BVD, EID & Management tags – other combinations available please call for details

Cattle Tags - New Run Combinations	Retail Price (excl vat)	Discounted Price per 100+ (excl vat)
Large & Large	£1.42	£1.37
Large & Large BVD*	£2.42	£2.00
Large & Button	£1.17	£1.12
Large & Button BVD*	£2.42	£2.00
Large & Medium	£1.42	£1.37
Large & Medium BVD*	£2.42	£2.00
Medium & Medium	£1.42	£1.37
Medium & Medium BVD*	£2.42	£2.00
Medium & Button	£1.17	£1.12
Medium & Button BVD*	£2.42	£2.00
Large & EID Secondary	£2.60	£2.55
BVD Test	£2.15	-
BVD Test + BVD Free England	£2.40	-

*Excludes optional BVD testing charge

Please contact the office on 01335 320016 or email sales@ipaquotas.co.uk for more information, or visit our website http://www.ipaquotas.com

We supply a full range of all types of Cattle & Sheep tags at very competitive prices including BVD, EID & Management tags

contact the office for prices.

Remember this bulletin continues to be available free of charge and takes Ian & the team considerable time to produce. The only encouragement to keep producing it is a combination of enthusiasm, tag sales & enquiries from our readers

https://www.forfarmers.co.uk/dairy/dairy/youngstock.aspx

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

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

Ian Potter Marketing Services now has a new facebook page and can be found using the link below, follow the page to keep up to date with Bulletin News, Livestock Tag offers and Entitlements.

https://www.facebook.com/Ian-Potter-Marketing-Services-IPMS-Ltd-112735830193142/

GDT Average down 2.9% as Coronavirus cases increase   (18^th February) 2020)

Todays GDT Auction average fell for a second consecutive auction this time by 2.9% to average US $3176 tonne the lowest average price since January 2019 . The results follow  hot on the heels of a 4.7% fall only two weeks ago and this measn WMP has seen more than 8% wiped off its value in less than a month.

The escalating confirmed cases of Coronavirus are the key reason for the falls (see next story).

Key Price moves were:

            Butter down 3.9% to average $4090 tonne

            WMP down 2.6% to average $2966 tonne

            SMP down 2.6% to average $2840 tonne

            Cheddar up 5.3% to average $4526 tonne

The Chinese Coronavirus is hitting World Dairy Trade   (18^th February 2020)

There are no signs the Coronavirus has turned the corner with 72,440 cases confirmed in China resulting in 1870 deaths and rising daily.

The spread is exerting serious pressure on world dairy prices and despite todays GDT result analysts anticipate pressure will come on cheese prices given the Chinese food service industry has seen numbers of Chinese consumers eating out collapse.

In addition there are reports that internal movement of refrigerated goods in China is slow as well as slow port unloading of refrigerated containers carrying imported dairy products.

Food chains including KFC and Pizza Hut have already closed down more than 30% of their Chinese outlets with total sales reported as down by 50% plus. 

Everyone is watching the figures hoping soon they will head South and that the virus will be short-lived but at the moment that’s certainly not the case.

1ppl Price Reduction for Crediton Dairy Suppliers – from 1^st of March (7^th February)

This ends an impressive price run by Crediton and results in a liquid standard litre price of 27.5ppl.

The reduction is attributed to poor cream values and comes as no surprise.

Belton Farm (Cheese) to stand on/hold suppliers milk price until 1^st of April (7^th February)

This maintains the current manufacturing standard litre price at 27ppl and based on a liquid standard litre at 26.25ppl.

Lactalis (AKA The Fresh Milk Company) to stand on for February and March (7^th February)

This results in a minimum manufacturing standard litre price of 27.61ppl and based on a liquid standard litre of 26.5ppl.

South Caernarfon Creameries (Cheese) to stand on for February and March (7^th February)

This maintains a manufacturing standard of 27.28ppl based on a standard litre price of 26.34ppl.

Wensleydale Creamery (Cheese) to stand on for February and March (7^th February)

The February stand on is confirmed and the March one is TBC but anticipated. This maintains a manufacturing standard of 27.75ppl and a liquid standard litre of 26.8ppl.

Wyke Farms (Cheese) to stand on for February (7^th February)

This maintains a manufacturing standard litre price of 26.91ppl and based on a liquid standard litre of 26ppl.

Pattemore’s Dairy (Liquid) to stand on for February (7^th February)

This maintains producer’s standard liquid litre price at 26.25ppl and based on a manufacturing standard litre of 27.12ppl.

Graham’s Dairy (Liquid) to stand on for February and March (7^th February)

This maintains a standard liquid litre price of 25.5ppl

Wells Farm Dairy (Liquid) to stand on for February (7^th February)

This maintains a producer’s standard liquid litre price of 25.7ppl.

1ppl Milk Price increase for Pensworth Dairy (Liquid) Suppliers – from 1^st of March(7^th February)

This is a two part increase with 0.5ppl as a flat rate increase to the base price and the remaining 0.5ppl payable to supplying farmers who participate in Penworth’s animal welfare standards commencing in April.

Assuming over 50% (and it should really be 100%) uptake the new liquid standard litre price will be 25ppl.

0.5ppl Milk Price increase for Meadow Foods Suppliers – from 1^st of March (7^th February)

This increase results in a liquid standard litre price of 26ppl and based on a manufacturing standard litre of 26.38ppl (Cheshire/Midlands region) and 26.25ppl (Lake District/Cumbria).

It’s now pointing towards any liquid purchaser paying under 26ppl on March 1^st as very much under the spot light and off the pace as the gap between the best and worst paying milk buyers rapidly closes.

GDT Price fall attributed to Coronavirus in China (7^th February)

This week’s GDT Auction fell back sharply by 4.7% to average US$3226 tonne.

The fall in price was put down to the impact of the quickly developing Coronavirus in China with Dairy trade disrupted and slowing down.

WMP prices took a 6.2% battering however some New Zealand analysts had feared the drop in price could have been 10% or more. The best outcome for the world and dairy prices is for the virus to be quickly contained.

Key Price moves were

WMP down 6.2% to average US $ 3039 tonne

SMP down 4.2% to average US $ 2907 tonne

Cheddar up 6.0% to average US $ 4302 tonne

Medina and Freshways will no longer be called M & F Dairies (7^th February)

Inside sources have confirmed that the Freshways takeover/merger with Medina will no longer be named M & F Dairies as reported on 5^th of November. The full nickname for M & F Dairies as suggested by a couple of middle ground customers will therefore no longer be the source of amusement.

In a recent article Kevin White of the Grocer points to almost a branding merger between the two processors with all address references to Freshways Acton HQ. In addition, Kevin’s article points to a carve up of the two distribution networks indicating a very close working relationship.

Some of the quotes in The Grocer’s article are likely to raise eyebrows within the Competition and Markets Authority (CMA) who it is claimed have been asked to take an interest in the merger/takeover especially with reference to its market share in the South-East.

Freshways appetite for Spot Milk is believed to be a combination of two factors (7^th February)

Reports of Freshways suddenly seeking both 3^rd party processing and packing plus relatively large volumes of milk including spot milk has left a few of us puzzled. It is claimed that Freshways have lost significant volumes of milk in South Wales but more importantly there are very strong rumours that the Muller Dairy Crest 5 year Medina deal ending has had the biggest impact.

Back in the Autumn of 2015 the CMA gave the green light to the Muller take over of Dairy Crest’s liquid business subject to Muller providing up to 100 Million Litres a year of toll processing to Medina from Severnside, Gloucestershire.

It is believed Muller have decided to end the facility from 1^st of April following Freshways involvement with Medina which has put pressure on the combined businesses. This is likely to be the reason why Freshways are seeking additional processing. In addition, there are rumours suggesting changes at Severnside as part of Project Darwin.

1ppl (0.5p + 0.5p) milk price increase for Freshway suppliers – from 23^rd February PRODUCER NOTIFIED (31^st January)

Freshways join Meadow and hopefully others who have been paying a relegation liquid standard litre price of 25ppl or less and now have to get back amongst the pack or risk losing supplying farmers.

This 1ppl increase is not automatic and comes in two parts.

0.5ppl will only be paid to suppliers who remain within a 5% tolerance of their monthly A litre volume – note not B litres.

So, if you fall short by 6% you will not retrieve this 0.5ppl. Note Freshways are only concerned over those suppliers who fall short on deliveries.

The remaining 0.5ppl will be paid on all A litres.

If the full 1ppl is achieved the Freshways standard liquid litre will increase from 25ppl to 26ppl.

Arla continues with a 14 month stand on milk price – until 1^st March (31^st January)

Its another fantastic result for the European giant and means producers prices for conventional and organic milk will be held at current levels until at least 1^st March.

The conventional manufacturing standard litre price remains at  30.04ppl and based on a standard liquid litre holds at 28.89ppl.

Arla’s member organic milk price also remains unchanged at 40.88ppl (Manufacturing) and 39.30ppl (Liquid).

The last Arla member price reduction was 1.33ppl on  1^st of January 2019

Barbers (cheese) stand on for a 5^th consecutive month - until 1^st April (31^st January)

This maintains Barbers standard manufacturing litre price at 27.79ppl and based on a liquid standard litre at 26.8ppl. Barbers producers excess litres, AKA B price, is confirmed at a healthy 29.43ppl for January suppliers.

Glanbia (cheese) stand on\hold its price until at least 1^st March (31^st January)

This maintains a manufacturing standard litre price at 27ppl and based on a liquid standard litre 26.1ppl.

0.5ppl milk price reduction for suppliers to Saputo (AKA Dairy Crest Davidstow) from 1^st March (31^st January)

Whilst this price reduction is unwelcome it has to be put into context as to where it sits and its history.

Firstly, DCD and Saputo have agreed the new 1^st March 2020 standard manufacturing litre price of 28.7ppl is a minimum four-month floor price until 1^st July 2020. This is a welcome move and provides stability during the Spring flush in terms of it can only be this price or better. Note based on a standard liquid litre the minimum floor price will be 27.62ppl.

The Saputo price was held at 29.9ppl for an impressive 12-month spell and some would claim a reduction is overdue and somewhat inevitable. One cheese processor recently commented to Ian that “The Saputo and Arla farmgate prices have defied gravity”. It’s still up there with the best and in a champions league placing with everyone now way behind Arla whose performance currently matches Liverpool.

Market Update (31^st January)

Spot milk prices are still holding at 27p to 28p with regular reports that Freshways are the main regular buyers of spot milk and are short on volume.

A key challenge for liquid processors who are paying a liquid standard litre price at the top end is balancing the books at current cream prices.

According to AHD Dairy the January 2019 bulk cream price was £1710 and one year later was down to £1300 representing a 24% fall.

Price moves for February and March will fall into two distinct camps. Those who dropped too low for far too long who need to lift prices or risk supplies. Which boils down to liquid processors paying 25p or less.

Then there are bottom end cheese processors paying 27p or less.

Finally, those who have held prices high for as long as possible in the hope they didn’t have to drop who are now forced to adjust.

There is a small glimmer of hope for prices in the second half of the year especially for Cheese processors who will be praying that the currency will not strengthen to the point it sucks in cheap imports which would put a spanner in the works.

GDT average up another 1.7% (21^st January)

Hot on the heels of the 7^th January 2.8% jump comes todays 1.7% lift to average US $3434 tonne, for 33,050 tonnes sold (33,165 sold 7^th January). The number of active bidders continues to rise this time to 191.

Butter + 5.5% to average US $4,250 tonne

WMP + 2.4% to average US $3,233 tonne

SMP + 0.7% to average US $3,036 tonne

Cheddar + 0.6% to average US $4,048 tonne

All of the above average prices are well over the 17^th December 2019 Auction results when prices surprisingly crashed back by 5.1% to $3,302 tonne.

0.5ppl Milk Price reduction for First Milk Members from 1^st of February (21^st January)

This takes producers standard manufacturing litre to 27.38ppl and based on a standard liquid litre to 26.5ppl.

Pattemores Dairy (Liquid) price hold until 1^st of March (21^st January)

This maintains producer’s standard liquid litre price at 26.25ppl and based on a manufacturing standard litre at 27.12ppl.

0.5ppl Milk Price increase for suppliers to Meadow Foods – from 1^st of February (21^st January)

It’s presumably pure co-incidence that at the same time as Meadows March 2019 profits were announced (see below) the company announced 0.5ppl farmgate milk price increase from 1^st February.

Meadow were the only large processor to drop its liquid standard litre price to 25ppl from 1^st of September with an eye watering 1.75ppl drop which has lasted for 5 months and well below all other major GB milk processors farmgate milk prices.

The increase results in a liquid standard litre price of 25.5ppl and based on a manufacturing standard litre price to 25.87ppl (Cheshire/Midlands) and 25.75ppl (Lake District/Cumbria).

32ppl for Spot Milk but now softening (21^st January)

Spot sales have been running at 32ppl for most of January but now appear to be softening and this week have dropped under 30ppl between 27 to 29ppl.

The spot trade is very volatile but does give us a feeling of the market temperature. Supplies were reported as slightly short of demand earlier this month hence the high spot price for a couple of weeks.

Healthy £25.6m pre tax profit for Meadow Foods (21^st January)

Meadow Foods 31^st March 2019 pre tax profits have weighed in at a very healthy £25.6 million which should delight its private equity group owners.

On an estimated milk throughput of circa 500 million litres this profit represents a healthy 4.65ppl significantly more than a large chunk of Meadow farmer suppliers earnt.

DEFRA’s math’s is called into question for a second consecutive month (21^st January)

Defra has declared its November 2019 average farmgate milk price at 29.69ppl an increase of 0.3ppl on the October average (29.35ppl). Admittedly the months fat and protein numbers were up but this increase comes in a month when processor prices either fell or stood on.

It has to be noted the 29.69ppl is not a standard litre price and with November milk quality averaging 4.3% fat and 3.47% protein AHDB Market Intelligence say this quality adds at least 1ppl to the so called standard litre price. Despite this at 29.69ppl it’s an eyebrow raising price.

Sainsburys watch on as another of its suppliers wants out (21^st January)

It seems wherever the name Sainsburys appears and dairy together its often associated with devastating news.

Now NFT a distribution firm close to our offices in Derbyshire who employ close to 2,000 people are seeking a new buyer with the help of Pricewaterhouse Coopers.

NFT’s biggest customer is Sainsburys for whom NFT transport their chilled food and drink to stores across GB.

The NFT business lost £31 million to September 2018 and the figure to 2019 is yet to be declared but the odds are firmly in favour of a deterioration in what was already a shocking set of 2018 financials.

According to Sky News “Sainsburys declined to comment” surprise, surprise.

So, Medina take Sainsburys on as its main customer and in under two years its annual results were crippling. Tomlinson’s went into administration with Pricewaterhouse Coopers (PWC) called in following two years of having Sainsburys as its largest customer. Now PWC are handling the attempt to sell NFT who also have Sainsburys as its main customer. There appears to be a common link here.

The list of Sainsburys suppliers who have to learn quickly to ‘Live well for less’ continues to grow.

0.26ppl Milk Price reduction for Tesco (TSDG) producers – from 1^st of February (3^rd January)

This results in a liquid standard litre milk price of 30.93ppl (Arla) and 31.18 (Muller) for the next quarter.

Virtually all Milk Purchasers stand on with 2020 Milk Prices (3^rd January)

Other than the reported Tesco (see above) and Saputo (AKA Dairy Crest) 1^st February farmgate milk price reductions according to our information all milk purchasers have stood on for January and in many instances February suggesting a period of stability.

The milk buyers who have recently confirmed to Ian that their price is a stand on are as follows:

Belton Farm (Cheese) hold for January and February with standard litre prices of manufacturing 27ppl

& Liquid 26.25ppl.

Crediton Dairy (Liquid) hold for January and February with a standard litre price of 28.5ppl Liquid. This price has been held for 11 months and in February 2018 Crediton’s producer milk price was 28ppl!

Dale Farm (Kendall) hold for January with a standard litre price of 26.14ppl Liquid.

Muller Direct hold for January and February with a standard litre price of 26.25ppl Liquid which includes the 1ppl Muller Direct Premium / 13^th payment.

Barbers (Cheese) hold for January and February with standard litre prices of manufacturing 27.79ppl & 26.8ppl liquid.

0.01ppl Milk Price increase for CTRG Members – from 1^st of February (3^rd January)

This takes producers standard liquid litre milk price to 29.39ppl.

General Market Update/Snippets (3^rd January)

According to AHDB Dairy’s bean counters the 2019/20 GB Milk year is on target for a 29 year production high at 12.58 Billion Litres despite the dairy herd having reduced by 1.75 million head (-2.4%)

During 2019 UK imports of Irish Cheddar were set to break a 20 year plus record mainly due to processors stock piling against a no deal Brexit.

During the nine month period January 2019 to September 2019 imports were up a staggering 24% to almost 90,000 tonnes.

AHDB also report:

Cream prices fell more than anticipated in the run up to Christmas down 15% on the month and down 22% compared to December 2018, Cream Price values to a liquid processor were at their lowest value for 3 years plus at 7.4ppl.

Butter & Mild Cheddar more or less stable in terms of the December average.

SMP Prices continue to rise but only by 3% in the month.

612 Producers in England & Wales left in 12 months (3^rd January)

England & Wales Producer numbers in 2019 fell by 612 from 9169 to 8557.

LAND / FARM WANTED IN HAMPSHIRE OR THE ISLE OF WIGHT (3^rd January)

We have been asked to post this advert by a couple with rollover money who intend to buy land in Hampshire or the Isle Of Wight. They would consider a complete farm or parcels of land subject to a minimum 20acres. Please contact ianpotter@ipaquotas.co.uk with any details. An intensive unit would not be ruled out with less than 20 acres.

For Sale (3^rd January)

Ian’s Office 4 and 2 Station Solid Office desks and 9 Chairs for Sale on Ebay.

Due to a complete office refurbishment we have the following for sale:

2 x 4 Station Desks – Ebay Item Number 274160018173 and 2741160023160

1 x 2 Station Desk – Ebay Item Number 274160025914

9 x Swivel Office Chairs –

4 of Ebay Item Number 274160028940

3 of Ebay Item Number 274160031175

2 of Ebay Item Number 274160033577

If you are interested please follow the link below and then click on see other items.

https://www.ebay.co.uk/itm/office-desk-4-person-Multi-Person-Office-Work-Station-Call-Center-Cluster-Desk/274160023160?hash=item3fd535f678:g:I0UAAOSwvARd8gRG

GDT 5.1% price drop is a bombshell – (23^rd December)

Last weeks GDT Auction saw the average price drop by a whopping 5.1% to US $3302 tonne for the 35,748 tonnes on offer. The result was both unwelcome, unexpected and unexplained.

Notable movers were:

WMP down 6.7% to average US $3099 tonne

SMP down 6.3% to average US $2867 tonne

Butter down 2.4% to average US $3886 tonne

Cheddar up 1.7% to average US $3869 tonne

0.7ppl Milk Price reduction for Saputo (AKA Dairy Crest) Davidstowe suppliers from 1^st February – (23^rd December)

This reduction ends an impressive 12 month hold at a 29.9ppl manufacturing standard litre price.

From 1^st of February 2020 the Saputo/Dairy Crest manufacturing standard litre will be 29.2ppl and based on a liquid standard litre of 28.12ppl.

Arla Stand on price hold continues and has now completed a 13 month run – (23^rd December)

Arla members conventional milk price will hold for January 2020 at 30.04ppl based on a manufacturing standard litre and 28.89ppl on a liquid standard litre.

The last Arla member price reduction was 1.33ppl from 1^st of January 2019 which means this is a very impressive 2019 calendar year hold and still running.

Note there have been a few tiny currency smoothing changes which during that 13 month period have resulted 30.24ppl standard litre price (January 2019) slightly reducing to 30.04ppl (January 2020).

Arla’s member organic milk price also remains unchanged at 40.88ppl (Manufacturing) and 39.30ppl (Liquid).

Lactalis (AKA Caledonia & The Fresh Milk Company) to stand on until 1^st of April 2020 – 23^rd December)

Lactalis will hold its supplier milk price until 1^st April 2020 at a minimum floor at 27.61ppl based on a manufacturing standard litre and 26.5ppl based on a liquid standard litre.

Barbers (Cheese) to stand on/hold its supplier Milk Price for January – (17^th December)

This maintains Barbers standard manufacturing litre price at 27.79ppl and based on a liquid standard litre at 26.8ppl.

Wyke Farms (Cheese) to Stand on/hold its producer price for January – (17^th December)

This maintains a manufacturing standard litre price of 26.91ppl and a liquid standard litre price of 26ppl

Nampak business on life support should send shivers down industry spines – (17^th December)

More evidence of serious fresh milk industry supply chain stress. Nampak is a significant UK milk bottle manufacturing business whose accounts which were recently published showing significant losses of £2.7 million in 2018 with an eye watering pension fund liability of almost £28 million.

Excluding Nampak’s significant restructuring costs the years efforts leave a small 2018 profit of only £124,000 (£3.75 million loss in 2017) on a turnover of £76 million (£84 million in 2017). That’s a margin of 0.1%.

On further investigation its rumoured that Nampak had an immediate crisis on their hands last week and were urgently seeking significant (as in several hundred thousand) blow moulded liquid containers from competitor blow moulding factories in the run up to Christmas for which Nampak are unable meet the extra demand, middle ground Nampak customers include Paynes Grahams, Medina, Arla & Trewithen to mention a few.

Nampak rumoured to have sold out to so called “Vulture Fund” Greybull – (17^th December)

As this edition went to the send box there are very strong rumours that Nampak have sold their UK bottle blowing factories to Greybull who are badged as rescuers of distressed businesses with a view to turning them around.

This sale should send further shivers down the spine of all involved in the UK liquid business including responsible retailers and those in the food service.

Greybulls previous acquisitions include British Steel, plus Rileys Snooker, Morrisons M. Local Stores, Monarch airlines and Comet all of whom ended up in administration with Greybull pocketing its fees which has led some to refer to them as a “Vulture fund”

These are two grim news stories to have in the run up to Christmas which further highlights the perilous state the GB Liquid milk market is in. Houston we have a problem and desperately need International Rescue the liquid business is in meltdown and what can only be described as on life support and those at the retail and wholesale end of the chain should be worried.

No Christmas cheer for 72 Tomlinson’s and Sainsbury’s farmers – (17^th December)

PWC the administrators for the collapsed Tomlinson’s Dairies Limited have issued their proposals and its very depressing reading.

The key points are that the 72 farmers (Tomlinson’s directs plus Sainsbury’s group) are unlikely to receive any payment from the administration. HSBC are owed £15.6 million and this is unlikely to be fully repaid with finance Wales Investments highly likely to join the farmers for a nil payout on the £1.8m it is owed.

Officially the report states that unsecured creditors will receive between 0p to 3p in the £1.

There are 11 finance agreements in the queue for payment.

Of the other creditors the notable ones are:

Milk Supplied by 72 farmers £3.3m (43 days milk)

Arla Foods £1.66m

Kite Consultancy £37k

OMSCo £89k

Lloyd Fraser Haulage £438k

Willis Haulage £118k

PWC have had interest from 58 potential buyers for the assets but none have resulted in an acceptable bid hence the assets will be broken up presumably by Auction in the New Year.

Tomlinson’s are undoubtedly another Sainsbury’s casualty having folded after only 2 years of a 3 year Sainsbury’s contract. Its history requires no detailed analysis.

2016 £1.6m profit

2017 £1.7m profit - on a £50 million turnover with 100 million litres

2018 £4.3m loss - Sainsbury’s 3 year contract commenced processing 200 million litres.

2019 £2.7m loss

Curiously Sainsbury’s have lodged “a significant counterclaim” on October 10^th but no one has further details as to what this claim relates to. A smart guess would be it relates to the interest free loans JS have arranged via Muller to the affected farmers.

Wensleydale (Cheese) 0.6ppl reduction from 1^st December – (2^nd December)

This results in a manufacturing standard litre price of 27.75ppl and a liquid standard lire price of 26.8ppl.

Dale Farms Northern Ireland 0.25ppl reduction in base price from 1^st October – (2^nd December)

This results in a standard liquid litre price of 25.59ppl.

Belton Farm (Cheese) to stand on/hold its producer price until at least 1^st February – (2^nd December)

This results in a manufacturing standard litre price of 27ppl and a liquid standard price of 26.25ppl.

Muller to Stand on/hold its producer price until at least February 1^st. – (2^nd December)

This maintains a standard liquid litre price of 25.75ppl

Meadow Foods to Stand on/hold its producer price for December – (2^nd December)

This maintains a standard litre price of 25ppl.Meadow Foods January milk price to be confirmed this week.

South Caernarfon Creameries to Sand on/hold its producer price until at least 1^st of February - (2^nd December)

This maintains a manufacturing standard liquid price of 27.28ppl and a liquid litre price of 26.34ppl for both

December and January.

Patmore’s (liquid) to Stand on/hold its producer price until at least 1^st February - (2^nd December)

This maintains a standard liquid litre price of 26.25ppl and based on a manufacturing standard litre of 27.12ppl

Saputo (Davidstow AKA Dairy Crest) to stand on/hold its producer Milk Price until at least 1^st February. - (2^nd December)

This is an impressive 11^th consecutive month hold at a manufacturing standard litre price of 29.90ppl and based on a liquid standard litre 28.82ppl.

Wyke Farms (Cheese) to Stand on/hold its producer price for December - (2^nd December)

This maintains a manufacturing standard litre price of 26.91ppl and a liquid standard litre price of 26ppl

Glanbia (Cheese) to stand on/hold is producer price until at least 1^st February - (2^nd December)

This maintains a manufacturing standard litre price of 27ppl and a liquid standard litre price of 26.1ppl.

Wyke Farms (Cheese) & Lidl announce 28ppl 3 year fixed price option - (2^nd December)

Wyke Farm suppliers now have the option to fix a minimum of 10% up to a maximum of 50% of their milk output for 3 years starting from the 1^st of January 2020 to 31^st December 2022 at 28ppl.

It’s another Lidl fixed price deal to come to market this time targeted at Wyke producers, As Wyke Farms Andrew Gaskell commented “It is a ground breaking offer in the UK cheese Industry”

In the event the offer is oversubscribed over and above the initial 30 million litres required then scale back is likely to be applied and in the unlikely event the full allocation is not taken famers at the 50% level might be able to increase their commitment above the 50% threshold.

All producers who opt to fix at 28ppl are guaranteed a minimum 10% allocation but fix means it’s fixed for all parties.

DEFRA’s maths is once again called into question - (2^nd December)

DEFRA are claiming the average farm-gate milk price for October was an eye watering 29.35ppl. In addition they claim the average price paid in September was 29.47ppl which is suspect and certainly warrants further investigation.

For October the standard liquid litre price for non aligned ranged from 24ppl to 29.02ppl (Arla) and on a standard manufacturing litre the range was 26.91ppl to 30.19ppl (Arla). Note DEFRA do not include any retrospective bonus/13^th payments in the 29.35ppl figure. Its milk price reporting claims to cover 94% of processors in England & Wales.

In addition the DEFRA 29.35ppl is the average price paid to producers not a standard litre price but it simply looks horribly wrong. 

DEFRA’s bean counters unfortunately have a track record of poor number crunching. In April 2016 this bulletin reported it’s irresponsible and misleading calculation with DEFRA claiming the February 2016 milk price had jumped by 2.48ppl in a month from 23.09ppl to 25.57ppl. DEFRA dug their heels in and refused to backdown but subsequently secretly amended the 25.57ppl figure dropping it down to 23.01ppl without admitting they were wrong!

See top story from this link – Bulletin 04.04.2016

Ian has emailed his story to the person responsible in DEFRA julie.rumsey@defra.gov.uk

Muller Direct 2020 premium to double as calf euthanization is added. - (2^nd December)

Muller has doubled its Muller direct Premium from 0.5ppl (2019) to 1ppl (2020 calendar year) subject to Muller Direct farmers meeting certain conditions one of which is by December 2020 those wanting to qualify for the premium must have stopped any on farm practice of euthanizing healthy calves unless the practice is backed up by a veterinary letter. Such a letter will be required before euthanization of any calves under TB restriction will be considered acceptable.

The premium is only available to Muller Direct producers and not available to Muller farmers on aligned contracts for their core supplies or their discretionary priced supplies.

The 1ppl will be paid to those who have qualified in January 2021 and there is no need to opt in or opt out because farmers either meet the conditions or they don’t. Note those farmers unfortunate enough to have received a minimum 12 months notice from Muller to terminate their supply contract will be eligible for the 1 ppl premium however those farmers having served notice to leave Muller at 31^st December 2020 will not receive any premium in January 2021.

For Sale (2^nd December)

Ian’s Daughters 1.2 Litre Polo for sale £800 – only 2 Lady owner’s from new.

Email ianpotter@ipaquotas.co.uk for a full specification but note –

1 years MOT

It has just (6 miles ago) had a new clutch, new catalytic convertor, new exhaust/silencer and new coil spring.

Its on BF Goodrich winter tyres

Very well maintained and in great condition.

0.4ppl milk price increase for farmers supplying Wells Farm Dairy liquid is the first conventional liquid processor rise since October 1^st 2018 - PRODUCER NOTIFIED - (22^nd November)

Throughout 2019 this bulletin has been a catalogue of processor price reductions and stand on prices.

Wells Farm dairy surprised most if not all of its 50 or so local farmer suppliers with the announcement that from December 1^st their milk price will increase by 0.4ppl to give a liquid standard litre price of 25.7ppl. One swallow doesn’t make a summer but it’s a positive step in the right direction and should have been well received by most if not all of Wells farmers.

The last time we reported a processor price increase was a 0.21ppl price increase from October 1^st 2018 so 14 months until this one has hit the radar. Although the Wells Dairy notice appears to be only 14 days few if any farmers will grumble at the fact its not voluntary code compliant.

It’s the first and could be the only 2019 processor farmgate milk price increase in 2019.

Arla to hold its Member conventional Milk Price for an 11^th consecutive month. – (22^nd November)

Arla has today confirmed a stand on member milk price for an 11^th consecutive month starting 1^st of December at 30.19ppl  based on a manufacturing standard litre and 29.02ppl (liquid standard litre).

Arla state that “The outlook for the milk price for the coming months remains stable” which for Arla members is a positive note to end the year on.

Arla’s UK organic members standard litre milk price is also unchanged with its manufacturing standard litre at 41.03ppl and based on a liquid standard litre 39.43ppl. In the commentary mention is made that demand growth for organic remains weak with continued strong supply across all of Arla’s markets and they conclude by stating “the outlook ( for organic ) is uncertain“.

UK organic milk sales have declined for a number of reasons throughout 2019 which remains  a concern

Saputo (AKA Dairy Crest Davidstow Cheese) to stand on/hold its suppliers milk price from 1^st December until at least the end of the year – (22nd November)

This announcement maintains the Davidstow manufacturing standard litre price at 29.9ppl and based on a standard liquid litre at 28.82ppl.

First Milk Cheese Member price to stand on/hold from 1^st December until at least the end of the year – (22nd November)

This announcement maintains the Co-ops manufacturing standard litre price at 27.9ppl and based on a liquid standard litre at 27ppl.

Paynes Dairies (Liquid) to stand on/hold its producers Milk Price for December  - (22nd November)

This means the existing liquid standard litre price of 25.75ppl continues.

0.5ppl milk price reduction for suppliers to Dale Farm Kendall - From October 1^{st -} (22nd November)

This is a backdated price cut results in a 1^st October standard liquid litre price of 26.14ppl.

0.5ppl milk price reduction for suppliers to Grahams Dairies (Scotland) from December 1^st (22nd November)

This reduces producers liquid standard litre milk price to 25.5ppl.

Dale Farms Northern Ireland stands on/hold members milk price from September 1^st (22nd November)

This maintains Dale Farms (NI) standard liquid litre price at 25.84ppl.

Grahams declare a profit in its annual results – (22^nd November)

In its year ending 31^st March 2019 Grahams has declared a £2.2 million profit before tax up from 1.3 million (2017 & 2018) with turnover up £4.9 million (4.7%) to £109 million. The business also invested £5.6 million of capital during the year.

Note in 2018 the 1.3 million reduced to a pre tax profit of £400.000 due to exceptional costs. The numbers may sound big but as a return on capital they are nothing to trumpet.

GDT average up 1.7%- (22^nd November) - (22nd November)

Tuesday GDT Auction produced on all products average up 1.7% to average US $3481 tonne for the 37,968 tonnes sold to 134 buyers. The GDT price rises are predicted to continue until into 2020 due to increasing global demand out pacing milk supply which is flat lining and static. On the back of the recent GDT results New Zealand milk price forecasts are expected to rise again.

Notable price movements were:

SMP + 3.3% to average $3,017

Cheddar + 2.5% to average $3,701

WMP + 2.2% to average $3,321

Butter - 1.3% to average $4,061

AMPE leap frogs MCVE – (22^nd November)

The AHDB AMPE price (Actual MILK Price Equivalent) for October stands at 30.21ppl and has leap frogged the MCVE (Milk for cheese value equivalent) at 30.09ppl for the first since mid 2018.

Sainsburys and Tomlinsons Sainsburys farmers are heading for a bitter legal battle. (22nd November)

The Tomlinson Sainsbury’s farmer battle is expected to move to stage 2 because clearly the retail giant has maintained its image of having skin as thick as a rhinoceros. 

Sainsbury’s Dairy Development Group 2007 inception publicity proudly trumpeted that it would work with its farmer suppliers “to ensure sustainable profits for them (I assumed them refers to the farmers and not Sainsbury’s!) and a sustainable source of British milk for our customers”. 

Sainsbury’s has let down those farmers it enticed to move from Muller to Tomlinson’s two years ago and far from receiving a fair price based on cost of production for 43 days milk they have received zero payment.

It is understood that lawyers are the next and only way to resolve the matter and the hope is that all of the Tomlinsons/Sainsburys farmers stick together shoulder to shoulder and none wimp out when it comes to going head to head with the retail giant.

Tomlinsons folded with 331 employees made redundant and around 67 dairy farmers pockets hit hard.

For Sale

Ian’s Daughters 1.2 litre VW Polo is for auction on EBay - ends This Sunday 23^rd

Only two female owners from new, drives well and has been well maintained and is in great condition

https://www.ebay.co.uk/itm/VW-Polo-1-2-litre-two-lady-owners-from-new-Very-well-maintained-and-condition/274097140342

EBay item number:  274097140342 

Remember this bulletin continues to be available free of charge and takes Ian & the team considerable time to produce. The only encouragement to keep producing it is a combination of enthusiasm, tag sales & enquiries from our readers

All views expressed in this bulletin are those of Ian Potter Associates and a shed load of dairy farmers.  It is necessarily short and cannot deal with various issues that arise in any detail.  As a result it must not be relied on as giving sufficient advice in any specific case.  Every effort has been made to ensure the accuracy of the content but neither Ian Potter Associates nor Ian Potter personally can accept any liability for any errors or omissions.  Professional advice must always be taken before any decision is reached. For our privacy policy please log onto our website www.ipaquotas.co.uk

AMPE & MCVE continue to head North (5^th November 2019)

Both market indicators are showing positive signs of recovery see above.

Wyke Farms to Stand on/hold it’s supplier price for November (5^th November 2019)

This is one of the final November Milk Price announcements and results in a standard litre manufacturing price of 26.91ppl and based on a liquid standard litre 26ppl.

Barbers (Cheese) to stand on/hold its supplier price for December (5^th November 2019)

This maintains Barbers standard manufacturing litre price at 27.79ppl and based on a liquid standard of 26.8ppl

Glanbia (Cheese) to stand on/hold its supplier milk price until at least January 2020 (5^th November 2019)

This maintains Glanbia’s standard manufacturing litre price at 27ppl and based on a standard liquid litre 26.1ppl.

Belton Farm (Cheese) to stand on/hold its supplier price for December (5^th November 2019)

This maintains Belton’s standard manufacturing litre price at 27ppl and based on a liquid standard litre of 26.25ppl.

Crediton Dairy (Liquid) to stand on/hold its supplier price for December (5^th November 2019)

This maintains Crediton’s standard liquid litre price at 28.5ppl.

GDT Auction bounces up by 3.7% (5^th November 2019)

Todays Global Dairy Trade auction saw prices increase by 3.7% to average US $3446 tonne compared to only 2 weeks ago.

Notable price movements were:

SMP + 6.7% to average $2924

WMP + 3.6% to average $3254

Freshways & Medina Merger/Amalgamation (5^th November 2019)

Ian has attempted to speak with one of the Directors to clarify the detail behind the deal without success. From information received a deal has been agreed and according to one of our wholesale readers, let’s call him Mr Smith from North London the name of the merged business will be M & F Dairies.

According to Mr Smith the abbreviation has been translated by customers uncharitably to Mother Fu--er Dairies.

It should certainly be a bonus for the two loss making liquid dairies to join forces lets hope they jointly turn around their combined business.

According to another customer, code named Mr Jones from the Midlands, the merged business will not be a 50:50 split with the final split decided according to capital values input by each party.

Muller solution to Scottish milk output (25%) surge is painful but many feared deeper surgery. (5^th November 2019)

Muller’s October review into rocketing Scottish milk output from its 230 supplying farmers has concluded.

Disappointingly 14 farmers in Aberdeen have been given 12 months notice to find a new milk purchaser with the likelihood they would be allowed to leave earlier if they can secure a new home for their milk.

In addition a tiered transport charged will be introduced from February 2020 involving all Muller farmers (216 post November 1^st 2020) and includes aligned and non aligned producers. The tiering will see those who have expanded most, since the 2017 calendar base year, pay the highest charge. Charges range from 0.25ppl to 0.85ppl. The charge will not include Aberdeen farmers who already pay a 1.75ppl transport charge.

Note all charges will be reviewed annually and at the moment Muller claim they are transporting 180 million litres each year to its English processing facilities involving 6,000 tankers.

Do the Muller numbers stand up to scrutiny (5^th November 2019)

Several Muller farmers were quick to contact Ian raising questions about the Muller Scotland production figures and their proposed remedies.

AHDB issued a Scottish milk surplus update last Tuesday confirming that

“Milk Collections of farms in Scotland are estimated at 1,478 million litres in 2018/19 an increase of 55 million litres (+4%) compared with 2014/15”.

Compare this to the Muller press release where Muller stated

“Production from Scottish farms who supply us (Muller) however is up by 25% since 2014 as a result Muller is transporting 180 million litres per annum to dairies in England”.

If these figures are accurate it means Lactalis (The Fresh Milk Company), Grahams Dairies, First Milk & Woodcocks, Arla Lockerbie plus others have all lost significant volumes during the same period!

That alone should trigger challenges on the accuracy of the two sets of figures.

Meanwhile, some Muller producers are claiming Muller provided them with letters confirming they required the extra milk. The letters were requested by farmer’s bankers in order to facilitate bank funding for expansion. “So Muller knew and accepted the extra milk was coming”.

This has prompted some to claim that if Muller management didn’t realise the volumes were coming down the pipeline then it’s a management failure.

Add to this the fact that Muller farmers have informed Ian that they all have to submit 15 month advance production forecasts. Failure to submit is non negotiable and in the event the forecast is out of kilter to the actual producers suffer a price penalty on a sliding “accuracy scale” based on a percentage variance (%).

The forecasts are contracted and submitted quarterly.

On top of that the Muller contract obliges producers to give a minimum 3 months advance notice of any intention to significantly increase milk production by 10% or more.

Another subscribes to the conspiracy theory that it’s all simply a plot to terminate some contracts and “to cut milk prices (sorry haulage charges)”.

Remember Muller’s Willy Waving? (5^th November 2019)

Finally remember the press release dated 27^th February 2013 when Muller “signalled its intention to be the UK’s largest and most successful dairy company” which at the time Ian mischievously labelled as willy waving.

In that release New Muller Suppliers were offered a 1ppl recruitment incentive based on all volume produced in a year 1in addition to the 30.5ppl standard litre price.

The 1ppl was also paid to Muller’s non aligned farmers starting from 1^st April 2013.

This was paid on the entire 12 months milk production if the farm produced a minimum of 2% more milk “on average worth £14,000”.

To rub salt in the wound Muller stated that Western Scotland was a milk field Muller wanted to increase supplies of milk from both new & existing farmers.

There is now increasing farmer pressure for this cocktail of numbers and statements to be further investigated and looks set to be the biggest representation test the Muller Milk Group Farmer Board have ever faced. All eyes are turning towards that board to see how big their balls are now the Muller willy waving is over!

Campbeltown/Mull of Kintyre creamery to close after almost 100 years (5^th November 2019)

After 18 months of trying to sell its Campbeltown Creamery, First Milk have had to admit defeat and have on Friday (1^st Nov) entered into the required consultation period with 14 employees.

The last hope for a sale as a going concern lay with what turned out to be a successful crowd funding bid from the 29 local supplying dairy famers. Sadly when the commercials were crunched it simply wasn’t even close to looking like it would be a viable sustainable business to preserve & continue.

The farmers explored numerous avenues with the aim of securing the sites future and its Mull of Kintyre cheddar cheese brand but it was simply a massive vertical hill to climb, so having opened in 1923 the doors look set to close in 2019 after almost 100 years of cheese production.

The farmers waved the white flag at a meeting last Wednesday evening. Better to have tried and failed than not to try at all but the world of cheese brand promotion and retail sales is very tough and not for the feint hearted.

The good news consolation for those 29 farmers is that going forward they will continue to have their milk collected and paid for by First Milk at the Co-op’s member price with no additional haulage charge unlike some others in Scotland! (See Above).

Sadly for the 14 employees there appears to be no income protection.

Sainsbury’s currently buy an estimated 400 tonnes of Mull of Kintyre cheese and one proposal was to ramp up the tonnage sold to Sainsbury’s and at the same time charge them up to an additional £1000 tonne to circa £4000 tonne for the creamery’s total anticipated output of circa 1400 tonnes year.

It wasn’t an offer Sainsbury’s or other retailers could back and given the harsh commercials it could easily be a relief that those farmers didn’t take on the creamery.

Closure has been on the cards for several years and it has not come without a huge effort to prevent the doors closing by all involved.

One producer sent Ian a copy of Page 5 of last weeks Scottish Farmer and a poorly researched article by Ken Fletcher. It claimed staff had been informed of the closure last Tuesday, before the farmer bid was shelved, and even talked about “a producer backlash” both of which were miles away from the truth and the dairy equivalent of fake news.

Arla to hold its Member conventional Milk Price for a 10^th consecutive month.- (22^nd October 2019)

Arla has today confirmed a stand on member milk price for a 10^th consecutive month starting 1^st of November at 30.19ppl based on a manufacturing standard litre and 29.02ppl (liquid standard litre).

Arla’s UK organic members will see a 0.91ppl (1 euro cent) reduction to 40.22ppl based on a manufacturing standard litre and 38.66ppl (liquid standard litre). UK organic milk sales have declined for a number of reasons in 2019 which is a concern.

Note this 1 euro cent comes a month after Arla reduced its Swedish Organic milk price by 1 euro cent.

Marks and Spencer’s do the honourable thing and pay all its Welsh Tomlinson’s suppliers- (22^nd October 2019)

Whilst there were we believe only two M&S aligned producers affected by the recent collapse of Wrexham based Tomlinson’s Dairies the top end retailer has paid both farmers directly for all the milk delivered up to and including Saturday 12^th of October when Tomlinson’s closed it’s doors. In fact Ian understands M & S took over all farmer payments at least 2 months ago declining to pay Tomlinson’s for the farmers share.

Sainsbury’s only have one realistic option- (22^nd October 2019)

The move by M&S to do the honourable thing and pay its dairy farmers in full piles even more pressure on Sainsbury’s whose reputation is certainly that it has skin like a rhinoceros. To date Sainsbury’s has shown no inclination to the numerous criticisms and attacks it is experiencing in connection with the outstanding milk money due to its SDDG Tomlinson’s farmers.

If Sainsbury’s want to maintain a good reputation, goodwill and relationships with their supplying farmers, as M&S have, they only have one option and they would be wise to declare it very soon. Otherwise its set to be a long drawn out costly process.

Together with Sainsbury’s – Tomorrow’s Conference - (22^nd October 2019)

Tomorrow Sainsbury’s are holding their 2019 farming conference at the Park Plaza, Westminster from 10am. It’s billed by Sainsbury’s Head of Agriculture Barney Kay as

“A great opportunity for you to ask questions which will be put to the Q and A panels by Charlotte Smith” (as in BBC Radio 4 farming today).

Send your questions to register@sainsburys-events.co.uk . Ian hopes Sainsbury’s SDDG Tomlinson’s farmers attend and/or and others step forward and don’t let Barney down because he hopes “you find the conference engaging, informative and thought provoking”.

It’s the best place to be heard and to ask one simple non confrontational question “Will Tomlinson’s SDDG farmers be paid in full for the milk they sold to Sainsburys via Tomlinsons Dairy from September 1^st to October 12th?”

Sainsbury’s V M&S - (22^nd October 2019)

M&S read the signs and took control of the money due to its Welsh Farmers whereas Sainsbury’s appear to have taken no action to protect its farmers. In addition Sainsbury’s allegedly paid Tomlinson’s on a daily basis to aid cash flow.

That may have helped Tomlinson’s but having made that move Sainsbury’s are exposed without any trunks on now the tide has gone out because the farmers want paying and Sainsbury’s were aware of how serious the financial position of Tomlinson’s was.

.

These 40 or so SDDG farmers were definitely encouraged, persuaded and induced to give up a Muller contract in favour of a Tomlinson’s contract and that will be cannon fodder for the lawyers if they get a shot at the retailer. At least one litigation funder is smelling blood along with at least one legal firm who is using these words plus ‘enticement and pressure’.

Sainsbury’s have to show their hand because the farmers are now overdue their September milk payment and are starting to get anxious and showing signs of wanting answers and money.

One suggested to Ian Sainsbury’s are like rhinoceroses and thick skinned. But they aren’t complete idiots (yet to be confirmed) and are highly unlikely to let this proceed to court.

Tomlinson’s sites up for sale but where’s the milk - (22^nd October 2019)

PWC as administrators for Tomlinson’s of Wrexham are attempting to close bids for up to three Tomlinson sites in less than a week.

All of Tomlinson’s direct suppliers have fled to various parts of the country in a bid to find a new home and the Sainsbury’s suppliers have all been given Muller contracts as have the M & S producers. So it’s a liquid business for sale without any milk.

It’s a mystery why the business didn’t continue to run under the administrator in a bid to maximise the value or why attempts to sell earlier as a going concern didn’t happen. A liquid processing facility with no milk will be difficult if not near impossible to achieve anything more than salvage value on.

On offer today at Sainsbury’s - (22^nd October 2019)

Sainsbury’s have a toy sale and you can buy a Hotwheels Corkscrew Crash for only £25 (was £50) plus a Play-Doh Animal Discovery Bucket for £10 (was £20).

Tomlinson’s SDDG farmers believe Sainsbury’s James Car Crash Curtis who is credited as been instrumental in introducing 2 wild card processors to Sainsbury’s (Medina & Tomlinson’s) in 2016 is the driver of the Hotwheels Milk Screw Crash and that the Play-Doh Animal Discovery Bucket has had all its milking cows taken out.

Sainsbury’s & Tomlinson’s Special Edition - (15^th October 2019)

Tomlinson’s Liquid Dairy of Wrexham goes into Administration

On Saturday evening around 33 direct suppliers plus approximately 39 (15%) of Sainsbury’s Dairy Development Group (SDDG) suppliers were told Sunday’s milk would not be going to Tomlinson’s for processing and its doors were closed.

On Monday (yesterday) Pricewaterhouse Coopers were appointed as administrators.

The Tomlinson’s family business employed 331 staff and started 36 years ago and until 2016 was a well respected solid family business. Then came the award of a Sainsbury’s liquid contract in May 2016 and the need to double capacity to around 200 million litres within a 16 month period.

PWC in their announcement confirm “Tomlinson’s had suffered an accumulation of significant operating losses over recent years”.

The business was profitable and nose dived in the year ending March 2018 where it lost around £5 million and a further £2 Million to March 2019. For the 331 staff its devastating news, for the 72 or so farmers it will be painful and the potential, yet to be confirmed, loss of 6 weeks milk money will certainly push some over the edge. All of these farmers need support, advice and help to cope and see a way forward and a future.

Credit to Lloyd Fraser (haulier), Muller and Sainsbury’s for ensuring Sunday’s milk and thereafter was all lifted, processed, delivered to Sainsbury’s stores and will presumably be paid for, to ensure seamless continuity of customer supply.

The Background to Tomlinson’s & Sainsbury’s

All of the 39 or so SDDG farmers were originally with Muller where they committed to deliver what Sainsbury’s required including investing in Sainsbury’s higher standards and welfare.

The farmers have accommodated everything Sainsbury’s have asked of them and have done nothing to deserve this consequently Sainsbury’s must surely accept responsibility for the dire situation they have put these loyal farmers in.

Let’s face facts the farmers involved are only linked to Tomlinson’s because they were told to move from Muller if they wanted to retain their Sainsbury’s supplier status. It was a postcode lottery over which the farmers have no control or say.

When Sainsbury’s encouraged them to move from Muller to Tomlinson’s those farmers trusted Sainsbury’s and believed the retailer had carried out due diligence on the Tomlinson’s family business.

It’s now time for Sainsbury’s to step forward accept responsibility and comment on what’s next in particular their position on the money its SDDG farmers are due on milk supplied from 1^st of September to the 12^th of October.

Barney Kay in particular needs to be visible especially given he hails from Tomlinson’s area coming from Stoke-on-Trent and living within 7 miles of the Potter office (Barney the kettles on if you do the school run). Barney has a good agricultural background, was a NFU regional director, general manager of the National Pig Association, general manager at Moy Park, Head of Agriculture at Tesco (2015-2019) and a few months ago moved to Head of Agriculture at Sainsbury’s. He knows about farming.

Let’s see Sainsbury’s through Barney and his side kick Gavin Hodgson, Sainsbury’s Head of Livestock, demonstrate how strong Sainsbury’s value the relationship with the Tomlinson’s SDDG farmers.

Will Sainsbury’s be honourable and do the right thing or will they dig their heels in and go on the defensive?

If Sainsbury’s don’t do the right thing it will likely destroy some farmers and will certainly severely dent farmer’s faith in retailers and their aligned contracts. Already there is local talk of several on the edge if no money comes.

One solution must be for Sainsbury’s to be invoiced for the 6 weeks milk by each farmer and for Sainsbury’s to pay them direct subject to a signed debt transfer enabling Sainsbury’s to receive any proceeds from the administrator thereby avoiding double funding.

In a nut shell it’s a case of Sainsbury’s deciding between Value v Values!

What next for the Tomlinson’s SDDG (Sainsbury’s Dairy Debt Group)?

Affected farmers are asking about payment for milk they supplied to Sainsbury’s in good faith. Depending on how Sainsbury’s choose to play this out will determine whether the 39 or so SDDG Tomlinson’s farmers are judged to have had a fair deal. Affected farmers have renamed their group as the Sainsbury’s Dairy Debt Group.

I believe if Sainsbury’s effectively stick two fingers up to paying the farmers for the milk delivered to Tomlinson’s the lawyers will be quick to sharpen their teeth. Christine Tacon as the current Groceries Code Adjudicator GCA can expect to be wheeled into the frame as matters escalate especially given she also lives in the heart of the area.

At that point the National Press are likely to take a keen interest alerting Sainsbury’s customers to the situation. Any legal or GCA process will take time but as Sainsbury’s know from past experience its customers will ultimately decide whether they believe these SDDG farmers have been treated fairly or hung out to dry.

Only last night there was a TV documentary covering 150 years of Sainsbury’s a period where the retail giant held pole position as the countries No 1 retailer until recent years when it slipped to 3^rd position..

The programme highlighted a number of recent gaffs & own goals by Sainsbury’s including their bizarre decision to sell a Sainsbury’s brand of ‘Fairly Traded Red Label tea’. Having successfully pioneered fair trade and trading terms with farmers in developing countries ensuring they were paid a fair price in 2017 came Fairly Traded tea from Sainsbury’s which was instantly viewed as undermining those farmers and confused consumers.

Then came the Greenpeace report stating that Sainsbury’s were worst in class for their use of single use plastic and non-recyclable packaging. Greenpeace subsequently promoted an orange strap line stating Sainsbury’s ‘couldn’t care less’.

As I have stated previously Sainsbury’s have to pick between value and values on this issue.

Medina

Liquid middle ground processor Medina has just published its financials for the 78 week period to 27th October 2018 and has posted an eye watering £1.4 million loss compared to a £2.57 million profit in the year (52 week period) ending 29^th April 2017 pre its involvement with the Sainsbury’s business. Like Tomlinson’s Medina borrowed to expand and accommodate the additional business from Sainsbury’s in 2016.

There is an extremely serious PR series of events Sainsbury’s Dairy appear to be at the heart off. No wonder some are linking where Sainsbury’s go with their dairy business tends to follows ‘a trail of orange destruction’. Some liquid processors might be better off not having major retailer’s liquid business.

0.79ppl milk price increase for Sainsburys (SDDG) ALIGNED SUPPLIERS- From 1^st October- (11^th October)

This results in the following standard liquid litre prices

Muller SDDG 30.94ppl

Arla SDDG 30.82ppl

The change is partly due to the following cost of production movements on the three F’s. Feed 10.34ppl (down0.11ppl), fertiliser 0.95ppl (up 0.04ppl) and fuel 0.78ppl (up 0.04ppl)

0.90ppl Milk Price reduction for suppliers to Pattemores Dairy (liquid) from-1^st November - (11^th October)

This takes producers standard liquid milk price to 26.25ppl and based on a standard manufacturing litre to 27.12ppl.

0.75ppl Milk Price reduction for suppliers to Barbers (cheese) –from 1^st November- (11^th October)

This takes producers standard manufacturing litre milk price to 27.79ppl and based on a standard liquid litre to 26.80ppl.

0.75ppl Milk Price reduction for suppliers to South Caernafon Creameries (cheese) – from 1^st November - (11^th October)

This takes producers standard manufacturing milk price to 27.28ppl and based on a liquid standard litre 26.34ppl.

0.63ppl Milk Price reduction for suppliers to The Fresh Milk Company Scotland (cheese) AKA Lactalis from 1^st October - (11^th October)

This is actually a quarterly floor price and means for October, November & December the lowest price based on a manufacturing standard litre will be 27.61ppl and based on a liquid standard litre 26.5ppl,

0.45ppl Milk Reduction for First Milk members (Cheese) – from 1^st November - (11^th October)

This takes members manufacturing standard litre milk price to 27.9ppl and 27ppl based on a liquid standard litre.

Crediton Dairy to hold its producers Milk Price for November - (11^th October)

This hold maintains the liquid standard litre price at 28.5ppl.

Belton Cheese to stand on/hold its producer Milk Price for November - (11^th October)

This means the existing manufacturing standard litre price of 27ppl continues and based on a standard liquid litre 26.25ppl

Saputo (Davidstow AKA Dairy Crest) to stand on/hold its producer Milk Price for November - (11^th October)

This is an impressive 9^th consecutive month hold at a manufacturing standard litre price of 29.90ppl and based on a liquid standard litre 28.82ppl.

Wensleydale Creamery (Cheese) targets a hold for its producer Milk Price for November - (11^th October)

This will be the 8^th consecutive monthly price hold although it is yet to be officially confirmed.  The standard manufacturing litre price will remain at 28.35ppl and the standard liquid litre price will continue at 27.40ppl.

Meadow Foods (Liquid) to stand on/hold its producers Milk Price for November - (11^th October)

This means the existing liquid standard litre price of 25ppl continues.

Wells Dairy (Liquid) to stand on/hold its producers Milk Price for November - (11^th October)

This means the existing liquid standard litre price of 25.3ppl continues.

Paynes Dairies (Liquid) to stand on/hold its producers Milk Price for November - (11^th October)

This means the existing liquid standard litre price of 25.75ppl continues.

Yew Tree Dairies to stand on/hold its producer Milk Price for November - (11^th October)

This means the existing liquid standard litre price of 25.5ppl will continue.

Freshways (liquid) to stand on/hold its producer Milk Price for November - (11^th October)

This means the existing liquid standard litre price of 25ppl will continue.

Pensworth Dairies (Liquid) to stand on/hold its producer price for November - (11^th October)

This means the existing liquid standard litre price of 24ppl will continue.

Grahams Dairies Scotland (liquid) to hold its producer milk price for November - (11^th October)

This means the existing standard litre price of 26ppl continues.

First Milk to double its Member Premium in 2020 - (11^th October)

This is effectively a 13^th payment and will increase from the current 0.25ppl to 0.5ppl from April next year.

Glanbia defer November Milk Price decision fearing a No deal Brexit car crash - (11^th October)

In a comprehensive letter to its Anglesey mozzarella cheese factory suppliers Glanbia’s CEO Paul Vernon has outlined the crisis the company would face if we end up with a no deal Brexit and the proposed tariffs.

Cheese sales to the EU will incur a crippling tariff of 1852 Euros/tonne which represents a cost of approximately 60% on current sale prices and in PPL terms represents 18ppl!!

Glanbia Anglesey export almost half of its Mozzarella output and this tariff coupled with Zero tariffs on imported mozzarella results in l a very potent cocktail to swallow.

Consequently Glanbia has suspended its policy of giving producers one clear calendar months notice of milk price changes until its clear what future trading relationships post 31^st October will be in place.

Market Indicators - (11^th October)

Given the Brexit no deal possibility Ian has decided not to report on UK Wholesale prices for cheese, SMP, Cream etc because it could all go downhill and change very quickly and to give price indicators a this stage would be pointless.

No deal dairy tariff car crash could cost the UK dairy industry £1.3 billion - (11^th October)

Jaws could be heard hitting the desks of dairy processors earlier this week when the government dropped the bombshell that it’s temporary no deal Brexit will see European dairy products able to come into the UK subject to Zero or minimal tariffs. Meanwhile the significant volume of UK dairy exports currently going into Europe (90% of our dairy exports) will be hit with WTO tariffs which were was described by Dairy UK as “cripplingly high” and will make our dairy products uncompetitive in Europe.

The tariffs will be nothing short of catastrophic and result in an estimated 150,000 tonnes of cheese and 33,000 tonnes of butter flooding the UK market creating “the potential for huge farmgate milk price collapses” racking up to £1.3 billion in lost revenue. (See above Glanbia story)

Dairy UK are calling (or perhaps screaming) at government to put equivalent/reciprocal tariffs in place to protect the industry and a car crash in farmgate milk prices. The only alternatives appear to be either government support or potential quick exodus of dairy famers and possibly some processors. Lets all point our prayer mats towards London and a deal because this scenario could result in farmgate milk prices across the piste crashing suddenly.

Another liquid Processor to close - (11^th October)

“17years of marvellous milk and yummy yoghurts” from Marybelle dairy in Suffolk looks set to come to an end very soon.

The processor supplies its products to local Co-op stores, Asda, Morrisons & Waitrose plus other outlets but simply cannot make money, and with its closure goes the last dairy processor in East Anglia and the loss of 19 jobs.

Single Farm Payment Exchange Rate Set - (11^th October)

The 2019 SFP Basic payment exchange rate will be 89.092p to the Euro compared to 89.47p in 2018.

Muller set to address rocketing Scottish Milk output -   (11^th October)

Muller has an oversupply problem in Scotland which it is tackling this month having experienced a 25% surge in milk supplies from its 230 Scottish farms which is way ahead of demand during the past 5 years.

This equates to 180 million litres of additional milk equivalent to 33 litres of extra milk per person living in Scotland. 

By my calculations thats 6,316 tankers a year @ 28,500 litres with each trip from Bellshill to Manchester (Muller’s most Northerly English dairy) amounting to 410 miles return. The simple arithmetic is that this means an eye watering 2.6 million lorry miles year.

In addition to the financial implications of trucking the surplus milk to England there are serious environmental costs which are unsustainable and particularly unacceptable to consumers.

Some Muller producers have apparently doubled production in that time with one almost tripling and we are talking multiple millions of extra litres coming from individual farms in many cases. Most have expanded with many choosing not to check what demand for fresh milk is doing in Scotland with Muller prior to making their long term investments.

Ian put a number of direct questions to Muller some of which were answered including the fact that there is no distinction between the volume expansion between aligned and non aligned Muller suppliers both have expanded in parallel.

In addition Muller have not recruited in Scotland since 2013 so no increase from new arrivals.

The review, or rather the solution, is anticipated by the end of the month and it’s likely the end result  will be a cocktail of measures some of which may be painful and unpalatable  for some producers.

Ian believes transport charges exclusive to Mullers Scotland Farmers could be one result plus the likely ditching of volume incentives and the serving of termination notices to some producers. For any farmer unfortunate enough to be served notice it could be the end of the road with no where to sell their milk- worrying times.

One problem which appears difficult to negotiate is the offenders might not be the ones or the only ones who are penalised. 

Others in the frame as encouraging and trumpeting Scottish milk expansion include NFUS. For example in 2013 they called for a doubling of Scottish milk production to 1.6 billion litres by 2025 (when the average farmgate milk price was over 30pp!) but interestingly little mention was made of profitable outlets for this enormous quantity of extra milk.  The golden rule is markets and customers first as in demand led expansion.

Only this week the NFUS Scotland’s President confirmed that NFUS has “the ambition to double the size of the farming, food and drink industry in Scotland to £30 billion”

Dairy Farmer Crowd Funding bid to save Campletown Creamery - (11^th October)

29 Kintyre Peninsula Dairy Farmers have announced a crowd funding bid seeking £50,000 to acquire the Mull of Kintyre cheddar cheese processing site from First Milk. Their plan is to use a combination of crowd funding plus a per litre levy on all milk supplied. The Kintyre site has processed local farmers milk since 1923.

For details see http://www.crowdfunder.co.uk/mokcheddar

Milk Prices Purchaser (Non Aligned)	October 2019		November 2019		Conventional Milk Recruitment Status
	Liquid	Manuf.	Liquid	Manuf.
Arla Foods Non-Aligned	29.02	30.19	tbc	tbc	Closed/not recruiting
Davidstow/Saputo (AKA Dairy Crest)	28.82	29.90	28.82	29.90	Selective limited recruiting
Crediton Dairy	28.50		28.50		Recruiting within a 30 mile radius
First Milk	27.45	28.37	27.00	27.90	Recruitment doors opening shortly
Wensleydale Creamery	27.40	28.35	27.40	28.35	Temporarily closed
Barbers	27.34	28.56	26.80	27.79	Closed/not recruiting
Pattemores	27.15	28.02	26.25	27.12	Closed/not recruiting
SouthCaernarfon Creameries (Cheese)	27.09	28.03	26.34	27.28	Closed/not recruiting
Yew Tree Dairy	25.50		25.50		Closed not recruiting
Lactalis/Caledonian/Fresh Milk	26.50	27.61	26.50	27.61	Closed/not recruiting
Belton (Cheese)	26.25	27.00	26.25	27.00	Closed/not recruiting
Glanbia	26.10	27.00	tbc	tbc	Recruiting
Wyke Farms	26.00	26.91	tbc	tbc	Selective limited recruitment
Grahams Scotland (Liquid)	26.00		26.00		Closed not recruiting
Paynes	25.75		25.75		Recruiting
Muller Wiseman; standard	25.75		25.75		Closed/not recruiting
Wells Farm (Liquid)	25.3		25.30		Closed/not recruiting
Freshways	25.00		25.00		Selective limited recruitment
Meadow Foods	25.00		25.00		Closed/not recruiting
Pensworth	24.00		24.00		Closed/not recruiting
Buckleys (Medina)	24.00		tbc

Note: Yew Tree Dairy’s Ingredients contract is continuously open to new recruits.

New Run Cattle Tag Prices

We supply a full range of all types of Cattle & Sheep tags at very competitive prices including BVD, EID & Management tags.

Cattle Tags - New Run Combinations	Retail Price (excl vat)
Large & Large	£1.37
Large & Button	£1.09
Large & Medium	£1.35
Large & Metal	£1.09
Medium & Medium	£1.35
Medium & Button	£1.05
Medium & Metal	£1.05
Large & EID Secondary	£2.30

Please contact the office on 01335 320016 or email sales@ipaquotas.co.uk for more information, or visit our website http://www.ipaquotas.com

Remember this bulletin continues to be available free of charge and takes Ian & the team considerable time to produce. The only encouragement to keep producing it is a combination of enthusiasm, tag sales & enquiries from our readers

All views expressed in this bulletin are those of Ian Potter Associates and a shed load of dairy farmers.  It is necessarily short and cannot deal with various issues that arise in any detail.  As a result it must not be relied on as giving sufficient advice in any specific case.  Every effort has been made to ensure the accuracy of the content but neither Ian Potter Associates nor Ian Potter personally can accept any liability for any errors or omissions.  Professional advice must always be taken before any decision is reached. For our privacy policy please log onto our website www.ipaquotas.co.uk

1.5ppl Milk Price reduction for Supplier5s to Wyke Farms (Cheese) from 1^st October (19^th October 2019)

This takes the producer standard manufacturing litre price to 26.91ppl & based on a standard liquid litre 26ppl.

1ppl Milk Price Reduction for Suppliers to Payne’s Dairies – from 1^st October (19^th October 2019)

This takes producers standard liquid litre price to 25.75ppl.

Freshways (liquid) to stand on/hold its producer milk price for October (19^th October 2019)

This means the existing liquid standard litre price of 25ppl will continue.

Staying with Freshways they have recently written to customers pushing through a 4ppl price increase from early September which is good news. One of the reasons for Freshways 1^st September 2ppl producer price cut was a fall in cream values. The price of cream has recently increased by 2ppl (see below) and coupled with the fact Freshways have presumably achieved a 4ppl customer increases farmers could be in for a price increase.

Sainsbury Tender triggers several farmers fury from those put on a Bosman from Muller to Tomlinson’s (19^th October 2019)

Sainsbury’s held its third Dairy Development Group (SDDG) aligned farmer meeting near Knutsford, Cheshire yesterday (18^th) and unlike the previous two SDDG meetings this week it was far from plain sailing with one side of the room having smiley faces and the other side red steaming faces as blood pressure rose. 

The free movement/transfer of SDDG farmers is the big bone of contention especially those in Cheshire who from 1^st October 2020 will cease to be Muller SDDG producers and move on the dairy equivalent of a free Bosman transfer to Tomlinson’s Dairy in Wrexham, Wales.

These farmers didn’t hold back and aired their concerns and worries over the free transfer and their fears over the finances.  The end result was an agreement for those concerned farmers to have two further area meetings next week involving Tomlinson’s to discuss the farmers very business like and reasonable request that Sainsbury’s guarantee their milk payments in the event Tomlinson’s business is completely derailed.

In reality Sainsbury’s simply cannot stand by and allow Tomlinson’s to head downhill. Recently progress appears to have been made to turn the fortunes of Tomlinson’s around  from its low point around 18 months ago following Tomlinson’s first experience  in processing Sainsbury’s milk which lets say didn’t go according to plan.

However along came the appointment of Stephen Oldfield, who has been previously nicknamed the GB dairy undertaker having been involved with several dairy receiverships including DFOB. On this occasion he is more of a magician working hard to turn the business around and playing match maker trying to marry or continue the 3 year relationship between  Sainsbury’s  and Tomlinson’s rather than organising a funeral as was first feared.

Sainsbury’s won’t be able to say to the farmers it’s nothing to do with us if Tomlinson’s fail because the PR outfall will be unimaginable. Incidentally Ian thinks it is highly unlikely Sainsbury’s would allow it to happen during the rumoured 3 year Tomlinson’s contract extension until 2023.

If next weeks meetings in Cheshire and Skegness result in Sainsbury’s providing guarantees to the farmers all should be well.  If not it will be interesting to watch how many affected farmers explore other outlets including the possibility of a Muller direct contract, if available which might not be automatic.

Its likely common sense will prevail and all 53 farmers who are been told they are moving will run with it.  It’s a postcode lottery over which the farmers have no control or say and one wonders how the Industry has reached this bizarre situation.

Those moving from Tomlinson’s to Muller were smiling yesterday the others going the other way concerned but at the end of the day the likelihood is few will give up the 4ppl premium the SDDG contract currently delivers over some alternatives. Some will not be happy but a 4ppl price drop is a tough pill to swallow in this environment.

One final interesting move is the hauling of only six farmer’s milk from Skegness to Tomlinson’s a round trip of over 400 miles which for the fastest route passes Arla Leeds and Muller Manchester processing plants.  The total transport cost is likely to be at circa 4ppl especially given it has to be packed and transported back to regional depots and stores in the area.  That’s a serious cost and does nothing to reduce Sainsbury’s environmental footprint. So long as its Sainsbury’s footing the bill Tomlinson’s and the farmers won’t be too concerned.      

Medina loose out on all Sainsbury’s Business after only 3 years! (19^th October 2019)

As part of the recent Sainsbury’s tender outcome Medina are set to loose all the business it has had for the past 2 years which will be distributed to Arla  and Muller from 1^st October 2020 with Tomlinson’s literage  more or less remaining the same at circa 90 million litres.

All of the Medina SDDG farmers will be moving on a Bosman to Muller or Arla. This is another bitter blow to Medina which is strongly rumoured not to be a price based decision by Sainsbury’s.

In total Sainsbury’s have around 270 producers delivering under 500 million litres.

The Outlook (19^th October 2019)

The good news is that in the past couple of weeks cream values have risen by around 30p equivalent to over 2ppl in liquid value.

The FCStoneMilkprices.comUKMFE forward prices point to firmer prices for both butter & SMP however the continual recovery in the value of sterling is cancelling out most of the uplift.

Meanwhile both AMPE & MCVE continue to drift South and allowing for a 2ppl AHDB deliver/collection cost from the farm to the dairy results in a farmgate AMPE or 25.66ppl and MCVE 27.93ppl excluding any processor margin.

Meanwhile GB milk production is heading for a 29 year high as the milk pours out particularly it appears from Scottish Dairy farms.

Interesting change at Freshways (19^th October 2019)

According to Companies House Balvinder (Bali) Nijjar has had his Directorship of Nijjar Dairies Limited Terminated. Maybe its part of a cost cutting exercise.

Cheese / Manufacturing Price Movements

1ppl Milk Price reduction for Suppliers to Joseph Heler (Cheese) – From 1^st October – (6^th September 2019)

The conversion of Helers farmgate milk price to a standard litre price is a very close guarded secret and that’s not surprising given all the information Ian has points to Helers price being one of the lowest GB cheese prices around if not the lowest.

1ppl Milk Price reduction for suppliers to Belton Farm (Cheese) – October 1^{s -t} (6^th September 2019)

Belton are one of the few cheese processors to cut its milk price which from October 1^st will be 27ppl and based on a liquid standard litre 26.25ppl.

First Milk to stand on/hold its member Milk Prices for October- (6^th September 2019)

This results in a continuation of the co-op’s manufacturing standard litre price at 28.37ppl and based on a liquid standard litre of 27.5ppl.

Barber’s (Cheese) to stand on/hold its producer Milk Price for October- (6^th September 2019)

This means the existing manufacturing standard litre price of 28.56ppl continues and based on a liquid standard litre the price is 27.54ppl.

Saputo (Davidstow AKA Dairy Crest) to stand on/hold its producer Milk Price for October- (6^th September 2019)

This is an impressive 8^th consecutive month hold at a manufacturing standard litre price of 29.90ppl and based on a liquid standard litre 28.82ppl.

South Caernarfon Creameries (Cheese) to stand on/hold its producer Milk Price for October- (6^th September 2019)

This is the fifth consecutive hold and continues a manufacturing standard litre price of 28.03ppl and based on a liquid standard litre 27.09ppl.

Glanbia Cheese to stand on/hold its producer Milk Price for October - (6^th September 2019)

This means the existing manufacturing standard litre price of 27ppl continues.

Liquid Price Movements

1.25ppl Milk Price reduction for suppliers to Yew Tree Dairy (Liquid) - From 1^st October - (6^th September 2019)

This takes Yew Trees standard liquid litre milk price to 25.5ppl

0.033ppl Milk Price reduction for M&S aligned suppliers from 1^st of October – but who cares? - (6^th September 2019)

It’s a tiddly reduction which still results in a 1^st of October liquid standard litre price of 33.32ppl.

According to www.milkprices.com this is 1.91ppl above the 31.41ppl paid a year ago and is a whopping 1.93ppl higher that the 5 year M&S average price of 31.39ppl.

Paynes Dairies to stand on/hold its producer Milk Price for September - (6^th September 2019)

This means the existing liquid standard lire price of 26.75ppl will continue.

Meadow Foods (Liquid) to stand on/hold its producers Milk Price for October.- (6^th September 2019)

This means the existing liquid standard litre price of 25ppl continues.

Wells Dairy (Liquid) to stand on/hold its producers Milk Price for October.- (6^th September 2019)

This means the existing liquid standard litre price of standard of an estimated 25.3ppl continues.

Pensworth Dairies (Liquid) to stand on/hold its producer price for October-(6^th September 2019)

This means the existing liquid standard litre price of 24ppl will continue.

Pattemores (Liquid) to stand on/hold its producer Milk Price for October for a 4^th consecutive month- (6^th September 2019)

This results in a continuation of its very credible liquid standard litre price of 27.15ppl and based on a manufacturing standard litre 28.05ppl

Processors still to announce their 1^st October Milk Price- (6^th September 2019)

Medina who appear to have joined Helers in avoiding any communication over milk prices with Ian. However, having reduced its 1^st of September standard liquid litre price what some producers claim is a standard litre price under 24ppl its not surprising Medina are keen to avoid publicity. Note this figure excludes the 0.45ppl Medina loyalty bonus some Medina suppliers receive.

Arla expected to announce around the 24^th/25^th September

Wyke Farms (Cheese) expected to announce on the 18^th September

Paynes Dairies expected to announce when Charlie decides

Lactalis AKA The Fresh Milk Company are expected to announce its quarterly Milk Price for 1^st October to 31^st December on the 19^th of September.

Freshways – Any information to Ian will be gratefully received.

New Run Tag Prices

We also supply a full range of all types of Cattle & Sheep tags at very competitive prices including BVD, EID & Management tags.

New Run Combinations	Retail Price (excl vat)
Large & Large	£1.37
Large & Button	£1.09
Large & Medium	£1.35
Large & Metal	£1.09
Medium & Medium	£1.35
Medium & Button	£1.05
Medium & Metal	£1.05
Large & EID Secondary	£2.30

Please contact the office on 01335 320016 or email sales@ipaquotas.co.uk for more information, or visit our website http://www.ipaquotas.com

Remember this bulletin continues to be available free of charge and takes Ian & the team considerable time to produce. The only encouragement to keep producing it is a combination of enthusiasm, tag sales & enquiries from our readers

All views expressed in this bulletin are those of Ian Potter Associates and a shed load of dairy farmers.  It is necessarily short and cannot deal with various issues that arise in any detail.  As a result it must not be relied on as giving sufficient advice in any specific case.  Every effort has been made to ensure the accuracy of the content but neither Ian Potter Associates nor Ian Potter personally can accept any liability for any errors or omissions.  Professional advice must always be taken before any decision is reached. For our privacy policy please log onto our website www.ipaquotas.co.uk

1ppl Milk Price reduction for Muller Direct Farmers – from 1^st October (29^th August 2019)

This takes producer’s standard litre price to 25.75ppl for the majority of producers who meet the Muller direct premium (estimated to be 80% of producers) which others will receive a standard litre price of 25.25ppl. The 0.5ppl premium is paid to qualifying farmers annually in arrears effectively as a 13^th payment.

In the press release Muller comment that the price reduction “reflects record levels of milk production at a time when the industry is facing marginal decline in demand for fresh milk and other dairy products”.

Arla milk price held for an 8^th consecutive month (29^th August 2019)

Arla has confirmed it will hold its member milk prices for both conventional and organic for the 8^th consecutive month starting 1^st of September. The manufacturing conventional standard litre remains at 30.22ppl and based on a liquid standard litre remains at 29.05ppl.

For Arla’s organic supplying members the hold means standard litre prices for manufacturing 41.97ppl and 40.33ppl for liquid.

Crediton Dairy to hold its producers milk price for September (29^th August 2019)

This hold maintains the liquid standard litre price at 28.5ppl.

At the same time Crediton Dairy have on offer a second 2 year fixed price option at 28ppl from 1^st of October when the current 2 year fixed price deal comes to an end.

Under this offer farmers can look to a fixed price for 25% or 50% of their monthly base litres for the 2 year period. Total literage available is 20 million litres. Scaling back will apply if the offer is oversubscribed.

Muller look set to close its Aberdeen depot (29^th August 2019)

Muller has commenced a 30 day consultation with 50 employees at its Aberdeen depot as part of its £100 million project Darwin cost and margin improvement programme.

Wells Farm Dairy Correction (29^th August 2019)

Following our last bulletin we eventually managed to obtain the pricing matrix for Wells producers from 5^th September which we were originally mischievously informed resulted in a standard liquid litre price under 25ppl. We did qualify this by stating “we are attempting to confirm the exact price”.

Whilst Wells milk price is not independently monitored by www.milkprices.com the liquid standard litre we calculate to be 25.3ppl or a fraction more for September.

To that end Wells are in the mix and by no means as low as some whom for September were at 24ppl or close to it.

PRICE DROPS

1.75ppl milk price drop for suppliers to Meadow Foods – from 1^st September (9^th August 2019)

This reduces producer’s standard liquid litre milk price to 25ppl.

1.75ppl milk price drop for suppliers to Wells Dairy – from 5^th September (9^th August 2019)

We are reliably informed this takes Wells producers to a standard liquid litre price below 25ppl. We are attempting to confirm the exact price.

1.35ppl milk price drop for suppliers to Pensworth Dairy (liquid) – from 1^st September (9^th August 2019)

This reduces producer’s standard liquid litre milk price to 24ppl.

PRICE HOLDS

Muller Direct to hold its producer milk price for September (9^th August 2019)

This is the 7^th consecutive monthly price hold at these levels and continues the standard litre liquid price of 26.75ppl.

Yew Tree Dairy to hold its producer milk price for September (9^th August 2019)

This is the 6^th consecutive monthly liquid standard litre price paid by Yew Tree at 26.75ppl

Payne’s Dairies likely to hold its producer price for September (9^th August 2019)

Payne’s Dairies current standard litre price stands at 26.75ppl and whilst the September price is yet to be confirmed the intention is to hold. However there is predatory pricing in the middle ground by some who are in the 25p or less bracket eg: Bestways selling 2 litres for 79p!!

In addition to this Payne’s producers have had the opportunity to lock in upto 15% of their production at a fixed price of 27.5ppl for 12,18 & 24 months which looks like a smart move.

Grahams Dairies Scotland (liquid) to hold its producer milk price for September (9^th August 2019)

This is the 5^th consecutive monthly standard liquid price paid by Grahams at 26ppl.

Saputo Dairy UK (AKA Dairy Crest Davidstow Cheese) to hold its producer milk price for September (9^th August 2019)

This is the 7^th consecutive monthly price hold and continues the standard manufacturing litre price of 29.9ppl and a liquid standard litre price of 28.82ppl.

South Caernarfon Creameries (Cheese) to hold its producer milk price for September (9^th August 2019)

This is the 4^th consecutive monthly price hold and continues the standard litre manufacturing price of 28.03ppl and a liquid standard litre price of 27.09ppl.

Belton Farm (Cheese) to hold its producer milk price for September (9^th August 2019)

The hold continues a standard litre manufacturing price of 28ppl and a liquid standard litre price of 27.25ppl.

First Milk (Cheese) to hold its members milk price for September (9^th August 2019)

This is the 4^th consecutive monthly price hold and continues the standard litre manufacturing price of 28.37ppl and a liquid standard litre price of 27.45ppl for those supplying the Tesco cheese pool their standard manufacturing litre price remains at 28.87ppl.

Wyke Farms (Cheese) to hold its producer milk price for September (9^th August 2019)

This is the 4^th consecutive monthly standard manufacturing price paid by Wyke at 28.47ppl and based on a standard liquid litre 27.5ppl.

Wensleydale Creamery (Cheese) to hold its producer milk price for August (9^th August 2019)

This is the 5^th consecutive monthly price hold with the September price still to be confirmed. The standard liquid litre price will continue at 27.40ppl.

Pattemore’s (liquid) to hold its producer milk price for September (9^th August 2019)

This is the third consecutive month of Pattemore’s paying a liquid standard litre price of 27.15ppl and based in a manufacturing standard litre 28.05ppl.

OTHER NEWS

GDT Auction results down 2.6% as New Zealand Production increases (9^th August 2019)

Tuesday GDT Auction saw the average price fall by 2.6% to US$3253 tonne with volumes on offer up almost 40% to those on the previous auction. Quantity sold 34,969 tonnes.

The fall in price is predominantly attributed to the fact New Zealand is heading towards its spring peak and the US/China trade war. Note China is GDt’s longest monthly buyer. Next sale 20^th August.

All product prices declined and notable movements were

Butter down 5.5% to average $4165 tonne.

Cheddar down 2.0% to average $3838 tonne.

WMP down 1.7% to average $3039 tonne.

SMP down 1.6% to average $2482 tonne.

Domestic Milk Production (9^th August 2019)

GB deliveries for week ending 3^rd August are running 1.5% ahead of the same week in 2018 with May up 1.7% (+23 million litres) for UK deliveries and the year to date + 2.9% (+77 million litres). Source AHDB Dairy.

The real prospect if a no deal Brexit has weakened sterling to 92p which is some good news for 2019 SFP payments and is helping increase dairy commodity values.

Freshways 2ppl plus price cut to a 24.4ppl base price- from 1^st September (2^nd August 2019)

Freshways has stunned its supplies, yet again, this time hitting them hard with an eye watering drop from 1^st September.

The Freshways base price is 24.4ppl and results in a liquid standard litre price of 25ppl down 2.06ppl.

Numerous reasons are given in a letter to producers as to why this cut is necessary including special offers from competitor processors.

The one statement which has had several Freshways producers rolling their eyes and gnashing their teeth is the one from Bali Nijjar in the letter which reads.

“I am confident we will continue to be at the top end of milk purchaser over the long term…”

Given Freshways will almost certainly have the lowest or one of the lowest liquid prices paid in September and be more than 4ppl a drift of the top quartile there is little wonder several producers have read this as Bali Spin.

Freshways are certainly no where near kites Champion league and which ever league they are in on 1^st September almost certainly see Freshways in the relegation zone.

1ppl milk price reduction for suppliers to Glanbia (Cheese) – from 1^st September (2^nd August 2019)

This takes producers standard manufacturing litre price down to 27ppl.

Arla hold members milk price for a 7^th consecutive month (2^nd August 2019)

Arlas latest announcement means the standard manufacturing milk price remains at 30.22ppl and based on the liquid standard litre 29.05ppl.

The Organic member price also remains unchanged at 41.97ppl (manufacturing) and 40.33ppl (liquid). All prices include Arlagarden + and the accessibility incentive/bonus.

Whilst Arla state that the outlook for the milk price is stable for the foreseeable future there is speculation that any change from these prices by Arla is more likely to be upwards which would put the cat amongst the pigeons and exert even more pressure on some of Arlas lessor competitors especially those drowning in dirty water in the middle ground.

Lactalis (The Fresh Milk Company) hold its milk price (2^nd August 2019)

Lactalis have held their guaranteed minimum milk price for the period July 1^st to September 30th at 28.27ppl based on a standard manufacturing litre price and 27.13ppl based on a standard liquid litre.

First Milk holds members milk price for September (2^nd August 2019)

Based on a manufacturing standard litre the price remains at 28.37ppl and on a liquid litre 27.45ppl. For those supplying the Tesco cheese pool their standard manufacturing litre price remains at 28.87ppl.

Barbers (cheese) hold prducers milk price for September (2^nd August 2019)

Based on a manufacturing standard litre the Barbers price remains 28.56ppl and based on a liquid standard litre 27.75ppl.

First Milks results look solid (2^nd August 2019)

First Milk have released their 31^st March 2019 financials which given they were made public in July is certainly a seismic improvement from the years when they were published in October and November for fear of loosing members.

Turnover + 7.8% to £272.3m

Operating profit £2.7m (£3.2m in 2018)

Operating profit as a % of turnover 2.6% and stable.

Nett Debt reduced by £3.8m in the year to £41.1m

The increase in turnover is primary attributed to Ornua securing the Sainsburys cheese business plus growth in exports, to 21 countries.

All in all a good solid set of financials.

First Milk to close its Arron Creamery (2^nd August 2019)

Commercial Dairy Farming on the Isle of Arran will almost certainly end in 2019 and with it the production of branded Isle of Arran cheese. Only two farmers remain and First Milk decision to close the factory will likely be the final nail in the coffin.

It is understood that post the closure of the Arran factory First Milks have offered to collect milk and transport it to the mainland but only for a very short period during which time the cows will have to be sold.

In addition the prospect of selling the Campbeltown Creamery to anyone other than the local Kintyre farmers looks extremely challenging having had the for sale board up since April 2018.

GDT Auction more or less stand on (4^th July 2019)

Tuesday GDT Auction saw prices down by only 0.4% to average US $3302 tonne. Whilst technically this is the fourth consecutive auction fall, following a 3.8% drop only two weeks ago, it is viewed as more or less a stand on result.

Notable prices were:

SMP up + 3.2% to average $2430 tonne

WMP No Change to average $2969 tonne

Cheddar down - 1.5% to average $3756 tonne

Butter down - 4.8% to average $4339 tonne

0.5ppl milk price reduction for Dale Farm members for May deliveries(4^th July 2019)

This takes producers supplying Dale Farm in Kendall to 27.14ppl based on a standard liquid litre and 26.34ppl for those supplying Dale Farm in its homeland in Northern Ireland.

0.19ppl milk price reduction for Mullers Co-Op (CTRG) suppliers from 1^st August PRODUCER NOTIFIED (4^th July 2019)

This results in a standard liquid litre milk price of 29.37ppl

0.07ppl milk price reduction for Tesco (TSDG) suppliers from 1^st August PRODUCER NOTIFIED (4^th July 2019)

The reduction arises as a result of the quarterly cost tracker review. The 1^st August Muller TSDG standard litre price will be 31.07ppl and for an Arla TSDG producer 30.95ppl.

By comparison www.milkprices.com’s standard liquid litre milk price for August 2018 was 30.17ppl for a TSDG Muller Supplier.

Arla to stand on with its July milk price for a 6^th consecutive month (4^th July 2019)

This is indeed a significant achievement by Arla who have managed the 2019 spring flush at a constant 30.22ppl based on a standard manufacturing litre and 29.05ppl for a standard liquid litre.

For Arla Organic suppliers the standard litre price remains at 41.97ppl (manufacturing) and 40.33ppl (liquid).

Note there has been a tiny 0.01ppl currency smoothing adjustment to all Arlas ppl prices.

Saputo Dairy UK (AKA Dairy Crest Davidstow) stand on August milk price for a 6^th consecutive month (4^th July 2019)

This is a notable achievement by the cheese processor and DCD which means producers August standard litre milk price of 29.90ppl (manufacturing) and 28.82ppl (liquid) continues for a 6^th consecutive month.

Barbers (cheese) stand on August milk price (4^th July 2019)

This means continuation of the standard manufacturing litre price of 28.56ppl and based on a liquid standard litre 27.75ppl.

Meadow Foods Bombshell notice to find another Milk Buyer (4^th July 2019)

Last week Meadow sent a letter to a number of its producers giving them 12 months notice that they no longer require their milk. Meadow declined to confirm how many notices have been issued but judging by the people who have contacted Ian and alternative milk purchasers it could easily number 50 plus affected farmers.

Meadow informed Ian the notices are linked to quantity of milk supplied, farm assurance, milk quality including claiming they have weeded out the “farms we couldn’t take a customer onto”. This does not run true with farmers Ian has spoken to or indeed the notice letters which make no reference to milk quality or any farm assurance concerns or failures. In addition Meadow informed Ian some of the others under notice were small pickups of under 750 litres/day.

The sting in the tail is Meadows statement that from April 1^st 2020 for their final 3 months notice period those farmers under notice will be paid at a B litre milk price. This must surely be challenged by those involved because if Meadows contractual notice period is 12 months how can they pay a B price for the final 3 months?

Ian would like to hear, on or off record, from affected Meadow producers via email but it looks like a smoke screen with Meadow having lost a serious amount of contracted volume somewhere and needing to cut volume and cost quickly and if possible by squeezing loyal producers to quit early.

The Dairy Crest name has been ditched (4^th July 2019)

It hasn’t taken long for Dairy Crests new Canadian owners Saputo to change the signs to Saputo Dairy UK as the name Dairy Crest is confined to the history books. The Dairy Crest name was christened in the 60’s by the MMB who started to sell its cheese under the brand name. Will DCD be rebadged as SDD (Saputo Dairy Direct) which is the same abbreviation for same day delivery?

Muller confirms the closure of its Foston Derbyshire facility (4^th July 2019)

It was a forgone conclusion that as part of Mullers £100 million project Darwin it would close at least one factory and it was no surprise that Foston is the one to be closed by the end of this year with the loss of 223 full time jobs. Most of the milk will be diverted to Mullers Manchester or Market Drayton facilities.

Regrettably 31 farmers are likely to be served 12 months notice by Muller as a result of the closure mainly due to geographical location. Muller will shortly be meeting the farmers involved both in groups and individually.

The main issue is the constant annual reduction in liquid consumption which is reducing by approximately 70 to 80 million litres year. In addition Fostons geographical location in relation to Mullers other operations and its relatively small size circa 350 million litres year are both key factors in the decision to close.

In order to achieve Mullers 2 year £100 million turnaround target under Project Darwin Muller are likely to have to make further tough announcements and decisions.

Muller acquired the Foston factory from Dairy Crest 3 years ago, so this is not a knee jerk reaction. With a minimum target of all its processing facilities to be at 90% plus utilisation and today with Foston averaging under 80% utilisation (180 farmers suppling 270 million litres annually) Muller were forced to take action. The site is not for sale and is likely to be put to new uses by the Muller Group.

AHDB’s Dairy Contracts Legislation briefing tows the Unions Line on contract legislation (4^th July 2019)

Ian had a sneak preview of AHDB’s latest briefing ahead of its publication on their website yesterday.

Its certainly a political hot potato and could easily have been written by the NFU’s and over stamped with AHDB’s Market Intelligence branding.

Four pages of the 10 page briefing are devoted to reviewing how legislated milk contracts in Italy, France and Spain operate yet no mention is made of the fundamental basics as to whether such legislation is delivering those farmers a consistently better milk price than that paid to GB farmers under discretionary pricing.

On page 5 there is a curious 1 to 5 star rating which clearly gives a high star rating to formula pricing and a very low star rating to the current buyer discretion pricing. This is likely to be a hot topic for discussion and further analysis/challenges.

The one statement in the reports summary which had Ian rolling his eyes back and taking a double take was the one claiming that relationships where farmers and processors work in partnership towards a common goal having strong lines of communication are not widespread in GB. The report concludes “unfortunately those types of relationships are not widespread.”

This must be a typo because GB wide such relationships are fortunately widespread with farmer representation, PO’s, Co-Ops etc eg, Muller, Arla, First Milk, Barbers, Tesco, Sainsburys, Saputo Dairy UK (AKA Dairy Crest), Lactalis, M & S, SCC plus more.

Surely it’s a fact that ineffective or non existent supply chain relationships which allow some smaller milk buyers to steam roller over supplying farmers with unacceptable changes is the problem and there are only a handful of rogues. Frankly Ian doubts any legislation would change how these rogues operate and in some respects legislation could play into their hands.

These are the bad apples. More on that in Ians July Dairy Farmer Article.

The conclusion is its a bit like Ians school reports AHDB could do better than this and should do but read it and make your own minds up.

Dairy Crest (Saputo Dairy UK) launches low calorie Cathedral City Cheese (4^th July 2019)

Dairy Crest continues to drive innovation with its latest development of a 50% less fat Cathedral City branded cheese called “Cathedral City 82”. Its

a half fat cheese with one third less calories than standard cheese.

The 82 range is initially exclusively available in Tesco stores for nine months until March 2020.

This looks like a smart move by DC.

Note from the Editor AKA Ian (18^th June 2019)

Given the lack of real Dairy News this bulletin will be continue to produced as and when there is anything newsworthy to report. Normal Friday weekly editions will resume when necessary. Many Thanks Ian & Associates.

GDT down for a third consecutive Auction (18^th June 2019)

Todays GDT saw the third consecutive all prices reduction this time the fall was a further 3.8% to average US $3208 tonne for 24,239 tonnes sold.

The previous two auctions recorded falls of 1.2% and 3.4%.

Notable movements were:

Butter down 5.7% to average US $4553 tonne

Cheddar down 4.3% to average US $3781 tonne

Whole Milk Powder down 4.3% to average US $3006 tonne

Skim Milk Powder down 3.5% to average US $2358 tonne

0.6ppl milk price reduction for direct suppliers to Arla – from July 1^st (18^th June 2019)

This reduces producer’s standard liquid litre milk price to 26.4ppl and based on a standard manufacturing litre to 27.53ppl.

0.5ppl milk price decrease for suppliers to Pattemores (liquid) – from 1^st July (18^th June 2019)

This reduces producers standard liquid litre milk price to 27.15ppl and based on a manufacturing standard litre 28.05ppl.

0.5ppl milk price decrease for Sainsbury’s (Muller & Arla) producers from 1^st July (18^th June 2019)

The reduction arises due to its quarterly cost tracker review of feed, fertiliser and fuel prices.

The resulting standard liquid litre prices are 30.15ppl (Muller) and 30.3ppl (Arla).

Dairy Crest to stand-on with its July producer milk price (18^th June 2019)

This hold maintains producer’s standard manufacturing litre price at 29.90ppl and based on a standard liquid litre at 28.82ppl which is another excellent achievement for DC and DCD.

Belton Farm (Cheese) to stand-on with its June milk price (18^th June 2019)

This hold maintains producers standard manufacturing litre price at 28ppl and based on a standard liquid litre at 27.25ppl.

First Milk to stand-on with its July member milk price (18^th June 2019)

This hold maintains member’s standard manufacturing litre price at 28.37ppl and based on a standard liquid litre at 27.45ppl.

Freshways to stand-on with its June producer milk price – PRODUCER NOTIFIED (18^th June 2019)

Freshways standard liquid litres for June will remain at 27.06ppl and this will be the minimum price for July.

Freshways will now give its suppliers a minimum 21 days notice of any further price charges which unless our Freshway moles have failed to press on any recent communications translates to the same price being paid for June and July deliveries.

African Swine Fever ripples from China (18^th June 2019)

The African Swine Fever outbreak which was first recorded last August is rampant in Asia with others fearing it is now a case of when it spreads to other parts of the world not if.

ASF is reducing Chinas pig herd at an alarming rate and with it comes a significant reduction in the demand for whey (cheese makers valuable by product) a key component in piglets feeds.

Many predict a total reduction in the Chinese pork herd of 25% would be a good result and remember China is responsible for 50% of global pork production so a 25% reduction equates to 12.5% of world output.

Pig prices across the world are heading North as China seeks to replace its lost output. In addition Chinese beef imports have rocketed. In April China imported 130,000 tonnes up 75% compared to April 2018 figures and domestic Chinese beef prices are also heading North. There are now reports, due to reduced pork availability and increasing prices it is influencing Chinese farmers who have started to prematurely slaughter dairy cows for the beef market.

So worldwide demand for beef and other meats from China is on the increase and the likelihood is that for the remainder of 2019 the ASF outbreak in China is going to play a major role in the volatility of world meat prices and whey prices with one up and the other down.

1ppl milk price reduction for Pensworth (liquid) suppliers –from June 1^st . (24^th May 2019)

This reduces producers standard manufacturing litre milk price to 25.35ppl and based on an Organic standard litre 39.35ppl

0.5ppl milk price reduction for Wyke Farms (cheese) suppliers – June 1^st (24^th May 2019)

This reduces producers standard manufacturing litre milk price to 28.47ppl and based on a standard liquid litre to 27.5ppl.

0.3ppl milk price reduction for First Milk Members – from June 1^st (24^th May 2019)

This reduces producers standard manufacturing litre milk price to 28.37ppl and based on a standard liquid litre to 27.45ppl.

Arla to stand-on with its June member milk price (24^th May 2019)

This hold means the current champions league standard manufacturing litre price of 30.23ppl and standard liquid litre price of 29.06ppl are retained for a 5^th consecutive month.

Arlas Organic members standard litre milk price remains at 41.98ppl (manufacturing) and 40.34ppl (liquid).

Credition Dairy to stand-on with is June producer milk price (24^th May 2019)

This hold means the current very healthy standard liquid litre milk price of 28.5ppl is retained.

Freshways Suppliers vent their anger over major contract change (24^th May 2019)

The Nijjar family yesterday demonstrated how little its Directors feel any necessity to engage with its supplying farmers having given them all five weeks bombshell notice of a significant price drop and contract change.

Ian calls it the Arla factor because Arla’s 5 months standard liquid litre price of 29.06ppl and its inclusion in the Freshways basket price is “now making us (Freshways) even more uncompetitive” as commented by MD Bali Nijjar in his letter to producers this week.

Freshways have operated a transparent basket price featuring five liquid processors for 16 years (since 2003) which now include Arla, Muller Meadow, Paynes & Yew Tree. However now the Arla price doesn’t suit Freshways and in a letter to producers state “Their (Arlas) June price of 29.06ppl is substantially higher than the remaining 4 in the basket who average 26.6ppl.”

Result is after 16 years Freshways have given just over 1 months notice that its contract pricing terms will be unilaterally changed and the basket price will be ditched to be replaced with a Freshways schedule which simply translates to a significant price cut.

To say this has come as a complete bombshell is an under statement especially given the fact several Freshways Farmers suppliers claim their farmer representatives were not consulted and the change was imposed.

If correct Freshways are playing a very dangerous game because the change is coming at a time when total GB output is heading towards “normal” and futures prices and market sentiment is cautiously looking towards at least stability in milk prices if not some small increases. In other words the change is short notice and well behind market movements.

It’s a long time since so many farmers vented their anger at Ian as much as Freshways suppliers have in the past 24 hours.

To summarise these Freshways farmers do not feel Freshways have been fair and to change a pricing mechanism which has operated for 16 years at a months notice with zero consultation has been interpreted that Freshways can steam roller any changes they wish and “stick two fingers up to producers.”

Back in January in Ians Dairy Farmer Article he wrote “I agree there have been a small handful of milk purchasers who have crossed the line with unacceptable behaviour.” And that “such practices have to be stamped out.”

Michael Oakes, NFU Dairy Board chairman stated “milk purchasers cant be trusted to deliver fair contract terms and continue to use and abuse farmers.”

As a generalisation applied to UK milk purchasers Ian disagreed with Oakes but understands why Freshways suppliers are furious and feel both Michael Oakes and Ians comments now apply to Freshways.

Several Freshways farmers are threatening to walk on the basis if the contract terms can be changed to drop their milk price in a months time they should be able to leave on the 28^th July or after.

For these farmers any Trust has evaporated over night and I guess voting with their feet is the only way their anger will be registered.

Whilst Muller have project Darwin Freshways perhaps need project Thunderbird because for sure International Rescue is needed to improve its relationship and communication with its suppliers.

Mark Allen sails into the sunset as the name Dairy Crest Vanishes (24^th May 2019)

Mark Allen has announced his decision to step down ass CEO of Dairy Crest with immediate effect which will come as no surprise to all involved given it’s a case of “Job Done”.

Mark will be around until July when the Dairy Crest brand will be confined to the history books and replaced with the brand name Saputo Dairy UK.

0.75ppl milk price reduction for Grahams Dairies producers from 1^st May (3^rd May 2019)

This reduces producers standard liquid litre milk price to 26ppl.

In a letter to producers Grahams are upfront in declaring they are having to handle significant additional unplanned volumes which have necessitated the forward sale of 1 million litres of spot milk at 14ppl as well as 8 surplus artic loads having been sold on the 27^th April alone!!

Grahams report that 65% of its producers have increased milk production compared to 2018 levels and around 10 producers who are having the biggest impact are talking to Grahams on a 1:1.

Having scrapped its A & B system prior to the 2017 flush it means all Grahams producers feel the pain and not just those who are contributing to the dramatic increase.

0.75ppl milk price reduction for Barbers (cheese) producers milk price – from 1^st June (3^rd May 2019)

This reduces producers standard manufacturing litre milk price to 28.36ppl and based on a liquid standard litre to 27.34ppl.

0.5ppl milk price reduction for Blackmore Vale Farm Cream from May 1^st – PRODUCER NOTIFIED (3^rd May 2019)

This reduces producers standard liquid litre milk price to 28.2ppl

0.35ppl milk price reduction for Wensleydale (Cheese) producers milk price – from 1^st May – PRODUCER NOTIFIED (3^rd May 2019)

Very last minute price changes are still around and this one reduces producers standard manufacturing litre milk price to 28.35ppl and based on a liquid standard litre to 27.4ppl.

0.35ppl milk price reduction for Pattemores Dairy producers – from 1^st June (3^rd May 2019)

This reduces producers liquid standard litre milk price to 27.65ppl and based on a manufacturing standard litre 28.57ppl.

Dairy Crest (Cheese) to stand-on with its June producer milk price at 29.9ppl (3^rd May 2019)

This is fourth consecutive Dairy Crest producer milk price hold and is worthy of a mention and thumbs up to all involved in achieving a hold until at least 1^st July.

The hold means the manufacturing standard litre remains at 29.9ppl and on a liquid standard litre 28.82ppl.

Belton Farm (cheese) stands on until July 1^st at 28ppl (3^rd May 2019)

The hold means the manufacturing standard litre remains at 28ppl and on a liquid standard litre 27.25ppl.

Muller possible Dairy Closure as part of Project Darwin (3^rd May 2019)

Local knowledge to Ian’s office indicates employees at Muller’s Foston Dairy are now under a 45 day consultation with a view to Muller having to close the factory.

The former Amelca plant has certainly had a very chequered history from when it first opened and closed after a few weeks when the business folded spectacularly.

Project Darwin was launched in February this year with a clear target to achieve £100 million in savings by the end of 2020 at the latest and this is another stepping stone towards that target.

Mullers six dairies are under capacity and need to be pushing at 90% or more capacity and to achieve this one site will close.

Muller process and supply more than 50% of the GB fresh milk requirements and margins are almost non existent.

In addition to the closures Ian has received emails from a couple of Muller wholesale customers who are rather annoyed that Muller are ditching their business on the basis it’s uneconomical to continue to supply them with fresh milk products. Tough as it is Muller did give plenty of advance warning and it has to turn this business around.

All eyes and ears will be on CEO of Muller Patrick Muller when he presents at next weeks annual Dairy Industry News conference.

Arla members stand on with its May conventional price at 30.23ppl -(24^th April 2019)

This is Arlas 4^th consecutive member milk price hold keeping the standard liquid litre price at 29.06ppl and based on a manufacturing standard litre 30.23ppl.

This is a welcome if not remarkable achievement by Arla and certainly puts more pressure on other processors who are finding current prices extremely challenging. During the past week spot milk has been regularly trading between 13 to 15ppl and the signs are pointing towards further weakening as milk production continues to increase. Several processors who in previous years have managed to track Arla have now been left standing and many, particularly liquid processors will have little option other than to do their own thing and do what is right for the survival of their businesses.

Arlas members who supply Organic Milk also benefit from a price hold at 41.98 based on a manufacturing standard litre and 40.34ppl based on a liquid standard litre.

Challenging issues for Arla One Contract sign up in mainland Europe but no issues raised with our NFU’s-(24^th April 2019)

As we rapidly approach the 30th April Arla one contract sign up deadline the news from Mainland Europe is some farmers and their representative organisations are unhappy with the new One Contract terms.

The Danish dairy farmers Union LDM have appointed two lawyers who have studied Arla's One contract and terms, and both lawyers have issues which Arla will have to address or are addressing.

First is the threat a non signing farmer will be given notice and his contract terminated after one year on 1st May 2020, which they claim is illegal and contrary to Arla's own Articles of Association, as well as basic Danish co-op rules. LDM claim Arla have admitted this is a valid complaint and have agreed to withdraw the threat.

Ian had an email exchange with Arla over this and two other clauses back in March, and on further reading of the comprehensive Arla response it does appear that this threat cannot be implemented and Arla have rewound.

In addition, LDM is in opposition to point 13 in the contract which is affectively a gagging order on each individual member which they refer to as the “mouth basket” rule or confidentiality clause. Once again LDM claim Arla has accepted that it needs to revise this wording and dilute it down.

Finally LDM is in opposition to point 15, which moves power from the board of representatives to the board of directors.

The end result is that Arla are expected to issue a legal appendix to the new contract shortly.

It is a certainty that any changes spearheaded by the Danish, German and Swedish representative organisations will be unilaterally applied to all Arla members.

For Arla it will certainly make life simpler and tidy up the terms all members adhere. Its hardly surprising farmers in Denmark are scrutinising the detail forensically, given the fact Arla are such a dominant milk buyer and no alternatives are available to supply other milk processors.

Here in GB, though, sign-up is proceeding almost as planned and almost complete with allegedly 90% plus of GB farmers signed up to the new contract. Bizarrely, given the cacophony of noise and decades of chest beating and self flagellation over contracts by the farming unions there has been on this issue... silence and dutiful acceptance that all is right and all is well.

James Osman, Chief Dairy Advisor for National Farmers Union commented to Landbrugsavisen (a leading Danish Farm publication ) that UK-farmers have no significant problems with the agreement. Ian has recently had email correspondence with both NFU Scotland and NFU, and neither are aware of any specific concerns having been raised with them.

That’s a head scratcher, because the two NFUs are placing significant importance and urgency on the absolute necessity for Government to push through contract legislation and reform. It's not many weeks ago that the NFUs supposedly had loads of members highlighting it was a big problem... yet non of them must supply Arla as there have been no questions from GB farmers and no questions from the NFU’s! Still, despite this lack of an issue among grass roots Arla farmers (which is also echoed by most farmers supplying most processors) the NFU's will press on with their contract reform bombast, regardless.

This article appeared in a recent Danish agricultural paper which we have had translated and summaries the position.

So is the opinion of other countries' milk producers on the Arla agreement

In Denmark, LDM has been highly critical of Arla's new supplier agreement. In other countries, they also look at the paragraphs.

It is not only the National Association of Danish Milk Producers who are critical of the agreement, which Arla has during the last month's time tried to get its members in Denmark and abroad to sign.

The supplier agreement, which is a legal document, will in future regulate the rights and obligations of the members of the dairy company. According to the dairy company's own announcement, the agreement is created because you want to digitise its agreements with the members, rather than having them lying on paper and there is nothing new in the agreements.

But several critical voices have since criticised the agreement back in February criticised the agreement to make milk producers significantly worse than before.

At LDM one has gone so far as to directly discourage its members from signing the agreement. And Thursday evening, a meeting was held in Agerskov, where two lawyers with knowledge of agriculture, directly advised farmers NOT to sign - and to withdraw signatures if they have already signed.

According to chairman Stefan Gård, the Swedish milk producers in the Swedish Milk Farmers are still looking at the agreement and have not yet come up with a recommendation to the members.

The same goes for the German association, BDM, the Bundesverband Deutsche Milchviehhalter. Here, however, one is somewhat cautious about commenting - on the grounds that Arla has threatened that you can be thrown out as a farmer if you do not sign or if you talk about the company publicly in the future.

"It's a bit of a problem we've talked to several critical Arla owners. But they are afraid to talk about it because they don't want to lose their contract," a BDM employee says.

"You can write that we see the changes as a problem. The changes only benefit the company. We haven't decided on an official position yet. But if it were me, I wouldn't sign it," he says.

NO ESSENTIAL ISSUES

According to several reports from Arla, the most criticized point in the agreement, namely the confidentiality clause, comes from England, where it is more normal than in Denmark and Sweden. In England, too, the agreement has not been identified as a problem, says National Farmers Union Dairy Department.

"Some of our members have contacted us with their concerns about the contract and we are reviewing it from a legal point of view, but so far we see no significant issues," writes James Osman, chief adviser of the dairy area of the National Farmers Union in a written feedback

Wyke Farms (cheese) to stand on with its May milk price at 28ppl – PRODUCER NOTIFIED-(24^th April 2019)

Wykes standard liquid litre price will remain at 28ppl and based on a standard manufacturing litre 28.99ppl.

0.45ppl milk price reduction for Muller Co-operative Group suppliers – From 1^st May -(24^th April 2019)

This results in a standard liquid litre price of 29.56ppl.

GDT Auction stands firm with a slight uplift-(24^th April 2019)

Last weeks GDT Auction produced a small average all products price rise of 0.5% to average US $3447 tonne. The result was as anticipated with previous auction gains maintained.

The slight upward movement is the 10^th consecutive auction rise and the average stands at almost a 2 year high.

Notable prices-(24^th April)

Butter up 3.5% to average US $6,126 tonne

Cheddar up 1.4% to average US $4,319 tonne

SMP up 0.2% to average US $2,462 tonne

WMP down 0.7% to average US $3,269 tonne

Muller set to reduce its product numbers by up to 40% -(24^th April 2019)

As part of its £100m cost cutting exercise, AKA project Darwin, Muller has announced that its current range of 835 UK milk and cream products from its six dairy processing facilities is set to be cut to around 500

In addition some customers who take small uneconomical deliveries will be given notice by Muller and delisted.

According to an article in The Grocer Magazine by Kevin White Muller has also stood back from tendering for several supply contracts.

0.75ppl milk price reduction for suppliers to South Caernarfon Creameries (cheese) – from 1^st May (5^th April 2019)

This results is a manufacturing standard litre price of 28.03ppl

0.75ppl milk price reduction for suppliers to Belton Farm (cheese) from 1^st May (5^th April 2019)

This results in a manufacturing standard litre milk price of 28ppl and based on a liquid standard litre 27.25ppl.

0.37ppl milk price reductionfor suppliers to Lactalis (cheese) from 1^st April - (5^th April 2019)

This takes producers standard manufacturing litre milk price to 28.27ppl and 27.13ppl based on a standard liquid litre.

0.3ppl milk price reduction for suppliers to Freshways – from April 1^st – PRODUCER NOTIFIED (5^th April 2019

Freshways have notified its producers of a further 0.3ppl milk price reduction on their A litres from April 1^st which reduces the A price liquid standard litre to 27.06ppl

0.34ppl milk price reduction for Tesco aligned producers from 1^st May – PRODUCER NOTIFIED (5^th April 2019)

Muller (liquid) to stand on with its May milk price at 26.75ppl (5^th April 2019)

The 26.75ppl is a standard liquid litre price which includes the 0.5ppl premium. The Muller Direct Organic standard liquid litre May price is 40.25ppl.

Crediton Dairy (liquid) to stand on with its May milk price at 28.5ppl (5^th April 2019)

Crediton continue to head the liquid processor league table with a liquid standard litre price of 28.5ppl.

Pattemores (liquid) to stand on again with its May milk price at 28ppl (5^th April 2019)

Pattemores standard liquid litre price of 28ppl is set to remain one of the leading liquid processor milk prices for yet another month only to be top trumped by Crediton Dairy.

Dairy Crest (cheese) to stand on with its May milk price at 29.9ppl (5^th April 2019)

This is an impressive move by Dairy Crest who have held their producer milk price at 29.9ppl (based on a standard manufacturing litre) for four consecutive months. Based on a standard liquid litre the price remains at 28.82ppl.

Barbers (cheese) to stand on with its May milk price at 29.13ppl (5^th April 2019)

This is the fourth consecutive month Barbers have held producer prices at this level which is 29.13ppl based on a standard manufacturing litre and 28.09ppl based on a standard liquid litre.

First Milk (cheese) stand on with its May member milk price at 28.68ppl (5^th April 2019)

First Milks decision to hold its April milk price for May results in a standard manufacturing litre milk price of 28.68ppl (including the 0.25ppl member premium paid in April 2020) and based on a standard liquid litre 27.75ppl.

Milk Deliveries update (5^th April)

According to AHDB Dairy GB milk deliveries for week ending 23^rd March were up 4.3% compared to the same week last year equivalent to an additional 1.5million litres day and heading for the most milk produced in 32 years and towards 15 billion litres.

To add to the problem is the fact milk production in Southern Ireland is also at record levels. January to February 2019 production is up 3.2% and The Emerald Isles 2018 milk output was up 4.4% to 7.58 billion litres up a whopping 53% on the 2007 to 2009 average annual production.

Dairy Crest 1 Billion pound sale is approved (5^th April 2019)

The sale of the remaining Dairy Crest business to Canadian Saputo has been approved at 6.20 per share valuing the business at almost £1 Billion. The new owners will take charge on April 15^th.

0.37ppl milk price reductionfor suppliers to Lactalis (cheese) from 1^st April (26^th March 2019)

This takes producers standard manufacturing litre milk price to 28.27ppl and 27.13ppl based on a standard liquid litre.

Arla to stand on with Members April milk price which continues to defy gravity (22^nd March 2019)

Arla continue to leave most of its UK competitors scratching their heads having today announced that their will be no change to the Arla member April milk price which is Arla’s third consecutive monthly price hold.

This means from April 1^st the following www.milkprices.com standard litre prices will be paid.

Conventional Organic

Manufacturing standard Litre 30.23ppl 41.98ppl

Liquid Standard litre 29.06ppl 40.34ppl

There has been a tiny 0.01ppl quarterly smoothing adjustment to be the above prices.

Arla’s milk price to date has defied gravity and is certainly a talking point amongst Arla members and non Arla suppliers especially those who have been on the receiving end of numerous 2019 price cuts.

0.5ppl bonus for suppliers to Crediton Dairy = from 1^st April (22^nd March 2019)

From 1^st April Crediton dairy will introduce a 0.5ppl bonus for producers who opt into recording specified health & Welfare parameters under its Farm Metrics Scheme which includes lameness, mastitis etc.

Whilst the scheme is optional it is anticipated that a very significant percentage of Creditons suppliers will opt in and achieve the new premium. Payments will be made each month and not accumulated and paid at the end of the year as practised by some milk purchasers who appear to fear producers might give notice to leave in which case those under notice forfeit any such bonus. Crediton are understandably more confident in the stability and loyalties of its producer base hence the decision to pay all who qualify for the bonus on a monthly basis.

Given the almost inevitable certainty that more than 50% of Crediton suppliers will take part it will increase the Crediton standard litre price to 28.5ppl.

Morrison’s are the latest retailer to sign up to Arla 360 (22^nd March 2019)

Morrison’s are the second retailer to sign up to the Arla 360 farm standards scheme and follow Aldi who were first past the post. The Arla 360 standard is a scheme whereby one standard has been set by the farmer members/processor as opposed to various retailers setting multiple standards for farmers and retailers to abide by.

Approximately 200 Arla farmers are aligned to Morrison’s and set to benefit. All will be paid a “top secret” supplement in return they will have six months to deliver the standards and comply in six distinct areas. The rumour is that the payment is around 1ppl which will certainly inject multi millions into farmers pockets.

Anyone who opts out or fails to meet the standard will be replaced with another Arla member.

Morrison’s are the first retailer to sign up to the Arla UK 360 standards across the complete range of Arla milk supply.

They currently have their own group and clearly having signed up view this as a longer term commitment to both Arla and their aligned farmers.

1^st March Standard liquid Milk Price league table (22^nd March 2019)

Purchaser	Mar-19
Arla Foods	29.07
Davidstow	28.82
Barbers	28.09
Glanbia	28.07
Crediton Dairy	28
Pattemores 1 Million	28
Wyke Farms	28
Belton	28
First Milk	27.5
Lactalis/Caledonian	27.5
Meadow Foods	27.5
Grahams Dairies	26.75
Muller Wiseman; standard	26.75
Paynes	26.7

1ppl milk price reduction for suppliers to Glanbia (Cheese) – from 1^st April (15^th March 2019)

This results in a manufacturing standard litre milk price of 28ppl and based on a liquid standard litre 27.07ppl

1ppl milk price reduction for suppliers Dale Farm (Kendal) (8^th March 2019)

This results in a standard liquid litre milk price of 28.14ppl.

0.75ppl milk price reduction for suppliers to Meadow Foods – from 1^st April (15^th March 2019)

This takes producers standard liquid litre milk price down to 26.75ppl

0.75ppl milk price reduction for suppliers to Joseph Heler Cheese – from 1^st April – PRODUCER NOTIFIED (15^th March 2019)

Its top secret what the Heler standard litre price will be so much so that even the supplying farmers don’t know and can’t compare. Apologies.

0.75ppl milk price reduction for suppliers to Yew Tree Dairy – from 1^st April (15^th March 2019)

This results in a standard liquid litre milk price of 26.75ppl

Belton Farm (Cheesemakers) to hold prices for March (15^th March 2019)

This retains producers’ standard manufacturing litre milk price at 28.75ppl and based on a standard liquid litre at 28ppl.

Barbers (Cheese) to hold suppliers milk price for a Third consecutive month (15^th March 2019)

This retains producers’ standard manufacturing litre milk price at 29.13ppl and based on a standard liquid litre at 28.09ppl.

First Milk to hold its Member Milk price for April (15^th March 2019)

This means for February, March and April First Milk members manufacturing Standard Litre milk price has remained unchanged at 28.43ppl and based on a standard liquid litre 27.5ppl.

0.54ppl milk price increase for Marks & Spencers Suppliers from – 1^st April (15^th March 2019)

This results in a standard liquid litre milk price of 33.36ppl.

0.25ppl 13^th Payment/Member Premium to be paid to First Milk members in 2020 (15^th March 2019)

This is a new additional 13^th payment which is calculated monthly based on capital invested and paid as a lump sum in April next year.

To receive the full 0.25ppl a member must have reached their capital contribution target. The maximum capital a First Milk member can achieve is 200% which would result in a 0.5ppl payment.

Taking into account the 0.25ppl payment this increases the First Milk manufacturing standard litre milk price to 28.68ppl and on a liquid standard litre to 27.75ppl.

GDT Auction jumps up + 3.3% (15^th March 2019)

Last weeks GDT Auction saw the average all products index increase by 3.3% to average $3309 tonne the highest seen for 9 months. The only casualty was SMP where prices dipped by 4.3% since the previous action only two weeks ago. This is the 7^th consecutive average price rise since December 4^th 2018 and New Zealand analysts say that with the current strong ex farm milk output the increased prices are demand driven mainly from China. 

Notable price movements were:

Cheddar          up 6%              to average US $3888 tonne

WMP               up 6%              to average US $3186 tonne

Butter              up 3.7%           to average US $4657 tonne

SMP                down 4.3%      to average US $2462 tonne

Milk Price Outlook is heading for further price reductions (15^th March 2019)

UK milk output is simply a pipeline heading rapidly towards full bore and pressure.

It’s a fact that other than the dramatic and sudden intervention of Mother Nature with a second Beast from any direction the only signal likely to rein in production will be further processor price drops.

Spot milk is heading South and is under 20p with trades today reported at 18ppl and showing no signs of levelling with some fearing a return of single digit prices.

Cream has dropped by 25p from £1.65 and hovering around £1.40 in only 4 weeks a reduction equivalent to around 2.5ppl to a liquid processor or retailer depending on contract terms.

The forward market signals offer no encouragement and are sliding South.

Arla and most of the cheese processors are indeed performing extremely well in holding farmgate milk prices at current levels for the moment. If they can ride through spring holding current prices it will be a cracking result.

One positive is that only 1,400 tonnes of SMP remain in EU Intervention stores compared to 380,000 tonnes in 16 months ago in November 2017.

Not sure how much foreign cheese is in our stores in the run up to Brexit but its a fact there has been significant forward buying of dairy products in the run up to Brexit which is likely to cool down from this point forward as buyers sit back. That’s unless we end up with a delay and they opt to keep topping their dairy stocks up as an insurance.

According to the predictions of industry analyst Chris Walkland the UK has only ever produced 45 million litres a day on two previous days and this year we could touch 46 million litres/day.

Unless things change very soon he predicts spring 2019 will see that 45 million litre day smashed for 30 consecutive days.

That leaves one big question. Do we have the capacity to process all the milk or will we see distress milk? 

It won’t matter a jot what Ian Potter  says because what will be will be and it now seems inevitable that further price cuts are on the cards especially from some liquid processors, unless something sensational happens to cut UK milk output and quickly.

Back in October Ian stated by spring 2019 there would be a price correction to somewhere between 26 to 27ppl for liquid processors and not a price crash. That assumed it was a “normal” year. Its by no means a normal year in terms of milk volumes in terms of the political uncertainty the industry faces so those predictions could be history within weeks.

Overall the Outlook is not looking good with the likelihood of more pain before any gain. Don’t shoot the messenger who has a pretty good track record of calling this market.  Nervous times are certainly here.

Arla to be Carbon neutral/net Zero by 2050 (15^th March 2019)

Arla has set a target from the cow to the consumer to be carbon zero by 2050 with any unavoidable emissions entirely offset by actions elsewhere in the supply chain. In addition Arla will balance Nitrogen and phosphorus cycles to support clean water and equally important to be more closely aligned with Nature to further increase bio diversity across the British countryside.

Its an impressive target for which detailed plans specific to the UK will be published shortly and will involve all at Arla from the dairy farmer to the consumer.

It’s the sort if plan which gets you noticed with retailers and food service buyers.

Arlas UK MD Ash Amirahmadi comments “One of the greatest challenges facing us all is providing natural, nutritious food for a growing population whilst reducing our collective impact on the world around us. Arla has already shown this is possible and the new ambitions announced today will ensure Arla’s farmers”.

2^nd year of Dairy Promotion hits Cinema screens in London (15^th March 2019)

The joint AHDB/Dairy UK funded Department of Dairy Related Scrumptious Affairs consumer advertising is now in its second year and from this Monday (11^th March) includes Cinema advertising.

The £1.2 million campaign will run across the nation for 10 weeks and is targeted at yound parents and uses powerful messages reminding young parents of the nutritional value in dairy products.

0.8ppl milk price reduction for suppliers to Paynes Dairies – from 1^st March (1^st March 2019)

This results in a standard liquid litre price of 26.7ppl

Arla maintain their leading position by holding producer prices for a 2nd consecutive month (1^st March 2019)

Arla will maintain its conventional member milk price at 30.24ppl based on a manufacturing standard litre and 29.07ppl based on a standard liquid litre.

Muller to stand on for April will be a huge relief to its suppliers (PRODUCER NOTIFIED) (1^st March 2019)

Following last months 1.25ppl shock March milk price reduction Muller farmers will be pleased with the news that their will be no milk price reduction for April deliveries. The Muller liquid standard litre price for March & April is 26.75ppl including the 0.5ppl premium paid in arrears and without that premium its 26.25ppl.

The equivalent March price for Arla members (see above) is 29.07ppl a gap of 2.32ppl if you include the Muller 0.5ppl premium. Without the premium the gap is an eye watering 2.82ppl.

Dairy Crest to stand on for April milk payments (1^st March 2019)

The standard manufacturing litre price will remain at 29.9ppl and based on a standard liquid litre 28.82ppl.

Meadow Foods to stand on for March milk payments (1^st March 2019)

This means Meadow have held their producer price for February and March at 27.5ppl for a standard liquid litre.

Barbers cheese to stand on for a third consecutive month (1^st March 2019)

For a third month Barbers standard manufacturing litre price will remain at 29.13ppl and based on a standard liquid litre 28.09ppl.i

Pattermores to stand on for April milk payments (1^st March 2019)

The standard liquid litres will remain at 28ppl and based on standard manufacturing litre 28.93ppl

0.9ppl Arla Organic member milk price reduction- from 1st March. (1^st March 2019)

This reduction still leaves Arla winning at Top Trumps and results in an organic standard manufacturing litre price of 43.55ppl and based on a liquid standard liquid litre 41.85ppl.

In the last bulletin we confirmed that Omsco had reduced its March producer milk price by 1ppl. Based on a standard liquid litre this result in a 41ppl price.

Arla will pay its former members its entire 2018 net profit of 290 million Euros/£257 million. (1^st March 2019)

This will amount to an additional 2.3 euro cents per kg/milk or 2.07ppl for its 11,200 European members on all milk delivered.

UK wise Arlas revenue from retail and Food service was up 3.3% to break the £2 billion barrier (2017 £1.9 4 billion).

Without doubt when you sift through all of the numbers it's Arlas huge basket of branded products on offer to the UK consumers which are driving these results. Arla branded product sales grew 8.6% and have an average annual growth for the last 5 years of 8.8%.

The total member pay out is £245 million of which 2,500 UK members will receive £64 million this month.

Production update (1^st March 2019)

Whilst milk production in the key mainland Europe Nations of France, Germany and Holland are lower than they were in 2018 that certainly is not the case in GB with milk flowing at such a rate it's heading for the rocks with the real possibility we simply won't have sufficient processing capacity at peak production.

According to AHDB Dairy GB milk deliveries are running at 800,000 litres a day up (+2.2%) or + 5.6 million a week.

Saputo from Canada to buy Dairy Crest for close to 1 billion. (1^st March 2019)

Once Dairy Crest succeeded in offloading its liquid business to Muller it was inevitable the more profitable and attractive. Davidstow Cheese facility would be sold and it's heading for ownership by Saputo who are in the top 10 largest in the world.

Canadian owned world dairy giant Saputo have made a cash offer of £6.20 per share totalling £964 million and Dairy Crest board approval is set to be unanimous.

Dairy Crest is certainly a solid, branded profitable operation which for the last financial year delivered a profit after tax of 150 million.

It's good news for Dairy Crest share holders, great news CEO Mark Allen (who will be off with the Loot into the Sun set) and appears to be good news for the Dairy Crest farmer suppliers.

Saputo have no operations in Europe which means a very limited if not negligible threat from Saputo importing cheese to the UK.
It's a near certainty Saputo will change very little and will certainly value their inherited supplying farmers who should view this as a great result and will simply see business as usual.

Another advantage is that Saputo will be in a strong position to fund and accelerate growth and expansion at the Davidstow processing facility.

Trade for First Milk shares is a buyers market (1^st March 2019)

Yesterday saw the second asset match monthly sale of First Milk C preference shares close where only 186,000 shares changed hands at 11p per share down almost 40% on last months sale average which saw 152,000 shares trade for 18p out of a total issue of 68.5 million shares..

Not good news for former First Milk suppliers seeking to cash in their investment.

George Eustice quits as Environment Minister (1^st March 2019)

George Eustice, who was a big supporter of Brexit, has resigned over The Prime Ministers promise to allow MP’s to vote on a Brexit delay if her deal is rejected on the 12^th March.

He is basically against the government going to the EU only 17 days before 29^th March begging for an extension.

Snow storm takes 1800 cows (1^st March 2019)

A combination of serious snowfall and extreme temperatures in Southern Washington (USA) has seen 1800 cows perish bringing with it a bill of over £3 million excluding lost milk which was dumped.

1.25ppl milk price reduction for suppliers to Pensworth (liquid) – from 1^st March (15^th February 2019)

This result in a standard liquid litre price of 26.35ppl.

1ppl milk price reduction for suppliers to OMSCO – from 1^st March (15^th February 2019)

The price change will affect 250 OMSCO supplying farmers and is a direct reflection on the challenging uncertainties OMSCO face as a no deal Brexit looms closer to reality.

In addition members have been notified it is unlikely there will be and 13^th payment for the 2018/19 milk year.

At the same time the Co-op is also introducing an A & B milk pricing mechanism in a bid to limit the impact of the additional litres they have to handle both in terms of increasing production and in the event OMSCO’s successful dairy product exports come to a sudden halt on 27^th March.

0.75ppl milk price reduction for suppliers to Wensleydale Creamery – from 1^st February (15^th February 2019)

This is highly likely to be the final February 1^st price change which was notified to producers at the end of January,

The result s a standard manufacturing litre milk price of 28.7ppl and based on a standard liquid litre 27.75ppl.

0.75ppl milk price reduction for suppliers to Grahams Dairy Scotland from - 1st March (15^th February 2019)

Producers supplying Grahams received letters this morning notifying them of the 0.75ppl reduction which results in a standard liquid litre milk price of 26.75ppl.

First Milk to hold its Members Milk Price for March (15^th February 2019)

This means First Milks members manufacturing standard litre price remains at 28.43ppl and based on a liquid standard litre 27.5ppl.

Belton Farm to hold its producer milk price for March (15^th February 2019)

This means until 1^st April the Belton standard manufacturing litre milk price will be 28.75ppl and based on a standard liquid litre 28ppl.

Grahams Dairies renew its supply contract with Aldi (15^th February 2019)

Grahams Dairies of Scotland have agreed a 5 year extension to its contract with Aldi to supply 85 Scottish Aldi stores with a range of products made from Scottish milk including milk, butter, yoghurt, creams etc.

The deal is worth North of £55 million and continues a partnership between the two businesses which started in 2010. The contract is the largest Grahams have agreed.

Muller to fix its lack of profitability (15^th February 2019)

Muller are embarking on a £100m cost saving exercise called project Darwin which on the face of it will come from activities beyond the farmgate which milk supplying farmers will be pleased to hear.

The project is expected to be completed with 2 years of starting and is already in train.

It’s a big project and will cover logistics, back office, administration, processing and some of Muller’s customers could find they are axed if their business to Muller is loss making.

Clearly Muller is simply making no money in its GB business and this is a major review to make the business profitable and sustainable because current losses cannot continue.

Muller supply over 50% of all GB liquid milk and if liquid milk consumption declines by 1% per annum that’s 70 million litres a year which has to find a new home. So after 3 years of 1% declines a 210 million litre liquid processing factory should be closed for the industry to standstill/tread water. That’s not happening hence today we have over capacity in the liquid sector with everyone chasing volume on wafer thin or non existent margins.

Arla 10,000 plus members in 7 countries – one contract (15^th February 2019)

Arla are starting to sign over 10,000 members to one common milk supply contract which will apply to its Co-op members in GB, Germany, Holland, Belgium, Sweden, Denmark and Luxemburg.

The new contract will mean equal rights, terms, rules and obligations for all.

Signing the new contract will be compulsory for any member who wishes to supply Arla and the deadline for signing is 30^th April 2019. Any farmers who do not sign the contract will be able to supply Arla until 30^th April 2020 on which date their membership will terminate. Signing will be done electronically via DocuSign for those who are IT enabled and capable.

England & Wales Dairy Farmer decline warning (15^th February 2019)

AHDB dairy are suggesting the Food Standards Agency claim that 222 dairy farmers representing 2.4% have exited the industry in the past four mouths should be “treated with caution”.

Evidently the FSA often rely on Red Tractor data to identify farmers who have ceased production and that is not as timely as it perhaps should be and tends to be an accumulation over many months.

In addition Ian is aware that a number of farmers have either changed their business type from Dairy or ceased trading on Google Maps and with the FSA in order to avoid their details appearing on anti dairy interactive maps. These adjustments will certainly disrupt the figures and indicate a greater decline in dairy farmer numbers that the reality on the ground but at least it offers some protection from the activists.

1.25ppl shock price drop for Muller Direct producers from 1^st March (31st January 2019)

Muller have shocked the majority of the Dairy Industry with a 1^st March price drop amounting to 1.25ppl.

Muller say one of the key reasons for the drop is a surge of unplanned milk smashing all forecasts and expectations.

Muller have indicated they were irresponsibly scare mongered by various organisations that on farm winter production would be hit hard following last summers drought. The reality is the opposite has occurred with a significant production surge.

Muller, and others, are having to handle the biggest GB milk output for more than 25 years and say they simply cannot absorb the extra milk and associated cost especially in the ridiculously cut throat and marginless liquid packing business.

This 1.25ppl drop reduces the February standard litre price for 700 Muller Direct Farmers from 28ppl to 26.75ppl a price which includes the 0.5ppl Muller premium which an estimated 80% of Muller Direct producers achieve and is paid annually in arrears to those who quality who are not under notice to leave. Some refer to it as a loyalty bonus!

Without that 0.5ppl premium the standard litre price is 26.25ppl.

Mullers spin Doctor has certainly been taking steroids and is keen to remind everyone that around one third of the 700 Muller Direct producers will continue to receive 28ppl for the portion of their milk output they committed under the fixed price contact option.

There can be no doubt Muller have broad shoulders and “big balls” especially given they are one of the few remaining voluntary code complaint milk buyers and offer a short 3 month farmer notice period.

All eyes will now be on Arla when they declare their 1^st March milk price. If Arla do manage to announce a no price change it will leave a whopping 2.81ppl standard liquid litre price gap between them and Muller (or 2.31ppl if the Muller Premium is included). If that happens the big question will be how and why this gap can happen.

In addition its looking very much like Muller could be one of the lowest March prices however it’s a fact a bunch of middle ground liquid processors will be breathing a huge sigh of relief as they really battle to breakeven. Watch out for the introduction of A + B pricing by some as a solution.

What message does Ian think Muller are sending to the Industry (31st January 2019)

Muller were unavailable for coment today but Ian thinks their message is very simple.

“We can’t make money in the UK liquid market having invested a shed load of money. The NFU’s are insisting farmers share the risks and rewards with milk processors. Consequently we have cut the farmer milk price to share the risks and lack of rewards with our farmer suppliers just as the NFU’s are insisting.”

So Muller could now be fully on board with the NFU’s and their contract reform demands.

Unfortunate Market Intelligence comment from AHDB (31st January 2019)

Within minutes of the Muller price drop announcement came an AHDB Dairy Market weekly update with a headline:

“Boost to market value of milk may halt drops in farmgate prices.”

The news item pointed to a reversal of “the direction of market trends “ which could put an end to downward pressure on market farmgate prices. Very unfortunate timing by AHDB Dairy Market Intelligence.

Dairy Crest Direct (Davidstow) to hold its milk price for March (31st January 2019)

This means that for March deliveries the Dairy Crest standard Manufacturing litre milk price remains at 29.9ppl and based on a standard liquid litre is at 28.82ppl

UK Milk Futures Equivalent (UK MFE) prices take a battering (31st January 2019)

The FC store milkprices.com UKMFE forward trades took a battering last week with weaker prices for butter, and SMP plus a further strengthening of sterling against the euro.

www.milkprices.com calculate that in the past 4 weeks these combined price movements equate to 1.48ppl drop in milk values and takes the net UK MFE milk price to 27.10ppl

Wyke Farms to double its capacity (31st January 2019)

Farmhouse cheese makers Wyke have secured planning permission which when complete will almost treble its output from the current 18,000 tonnes to around 50,000 tonnes. The new facility will be named Ivys Dairy after the familys famous grandmother and will be built in stages over 8 years.

Crediton Dairy unveil its £12m Expansion (31st January 2019)

Starting next month Crediton will invest £12 million in its flavoured milk processing facility boosting its processing capacity. Completion is planned for August 2019.

Since the Management buyout less than 6 years ago this will take the total Crediton investment will amount to £26 million.

EU Aged SMP is sold (31st January 2019)

At last the European Union has almost cleared the last of close to 400,000 tonnes of Intervention SMP. This is good news and eliminates a big black cloud which has hung over Europe and the world dairy industry for almost 4 years.

The tonnage started to accumulate in the summer of 2015. Its sale will certainly help the current price of fresh SMP.

Save the date

DIN CONFERENCE MAY 9-10, 2019 (31st January 2019)

This year’s Dairy Industry Newsletter annual dairy conference will be May 9-10 in London, at the Tara