Dairy Industry news and features

This page was last updated at 15^th February 2019 (Press your refresh/reload button for the latest information)

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

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

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

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 Copthorne Hotel as usual. The theme is ‘Will Dairy Supply Continue to Outstrip Demand?’ As the world’s dairy markets become more and more interlinked and world commodity dairy prices become more globalised, supply and demand also becomes more globalised, with events on one side of the world having an impact on the other. Recent studies suggest that world demand for dairy products will exceed supply in the medium to long term. Is there any evidence of this yet? 

Email Carolyn Moore for bookings info: carolyn@dairyindustrynewsletter.co.uk

Confirmed speakers so far include Eric Meyer (Highground, US), Patrick Müller (Müller UK), Jukka Likitalo (Eucolait), Nick Saphir (OMSCo, UK), Torsten Hemme (IFCN, Germany), James Neville (Volac, UK).

Arla hold its February member milk price (25^th January 2019)

Arla has stood on with both its 1^st February conventional and organic member milk price which is highly likely to translate to all other milk processors having to fall into line especially given the earlier announcement from Muller that it is holding its Muller Direct price for February.

The Arla standard litre member prices for January and February are

Liquid Manufacturing

Conventional 29.06ppl 30.24ppl

Organic 42.72ppl 44.45ppl

Given the UKs latest production figures and the proximity of spring the fact the two dairy processing giants have held prices through February is very encouraging.

0.65ppl milk price reduction for suppliers to Wyke Farm (cheese)-from 1^st February (25^th January 2019)

In what could easily be the final February milk price reduction announcement Wyke Farms will reduce Farmgate milk prices by 0.65ppl. The reduction means a 1^st February standard manufacturing Litre milk price of 28.99ppl and based on a standard liquid litre 28ppl.

December milk production at a 25 year high (25^th January 2019)

DEFRA’s latest UK December milk production data suggest UK milk production was 1.234 billion litres the highest December output for 25 years or more. Compared to December 2017 total milk was up 2%.

Yeo Valley launches conventional direct supply contract (25^th January 2019)

Yeo Valley is recruiting its own direct conventional milk pool with milk going into its Blagdon and Cannington processing facilities destined for  own label yoghurts for the majority if the UK’s major retailers.

The contract and recruitment is a partnership with First Milk who are administering the contract and this will certainly be of interest to farmers within the Somerset and Devon and Dorset Borders

It appears to be a premium contract along with a a floor price feature offering protection in the form of a minimum price guarantee of  not less that the average  www.milkprices.com monthly price of a basket involving Arla members, Muller direct and First Milk Midlands which is a fairly strong floor price.

The initial requirements are believed to be circa 20 million litres and our info suggests some of this was signed up this week only days after the launch, First Milk are the guys to contact if anyone is interested.  

2.03ppl milk price reduction for suppliers to Freshways (18^th January 2019)

According to wwwmilkprices.com the 2.03ppl reduction is split into two parts with a 0.972ppl reduction for December deliveries and a further 1.058ppl for January deliveries based on Freshways basket tracker.

The reductions result in a standard liquid litre milk price of 27.77ppl on January 1^st and 28.83ppl based on a standard manufacturing litre.

1ppl milk price reduction for suppliers to Paynes Dairies – from 1^st January (18^th January 2019)

This results in a standard liquid litre of 27.5ppl

0.5ppl milk price reduction for suppliers to Dale Farm GB but 30p plus is a great result (18^th January 2019)

Dale Farm suppliers to its Cumbrian processing facility from December 1^st were still paid a standard liquid litre price of 30.14ppl following this latest reduction which is without doubt one of the leading prices paid on December.

0.5ppl milk price reduction for suppliers to Belton Farm (Cheese) – from 1^st February (18^th January 2019)

This results in a standard manufacturing litre price of 28.75ppl and based on a standard liquid litre 28ppl.

0.25ppl milk price reduction for members of 1^st Milk- from February 1^st (18^th January 2019)

This results in a standard manufacturing litre price of 28.43ppl and based on a standard liquid litre 27.5ppl.

GDT bounces up again by a further 4.2% (18^th January 2019)

Tuesdays GDT Auction saw the average all products price up a further 4.2% which is its 4^th consecutive rise and follows hot on the heels of rises of 2.2%, 1.7% and 2.8%. This is yet more encouraging news to emphasise the necessity for farmgate milk prices to at least stabilise from March 1^st at the latest.

In less than two months the average price has now bounced up by 12% from $2727 to average $3057 tonne.

Key movers were

SMP + 10.3% to average $2405 tonne

Butter + 4.6% to average $4262 tonne

Cheddar + 4.2% to average $3504 tonne

WMP + 3.0% to average $2777 tonne

Total tonnage sold 27,909 tonnes. The next GDT Auction will be held on 6^th February.

1.41ppl milk price increase for Marks & Spencer’s aligned producers – from 1^st January (3^rd January 2019)

This results in a standard liquid litre milk price of 32.82ppl

1ppl milk price reduction for suppliers to Dairy Crest Direct (Davidstow) cheese – from 1^st February (3^rd January 2019)

This results in a standard manufacturing litre milk price of 29.9ppl and based on a standard liquid litre 28.82ppl, The 1ppl reduction is actually in two parts 0.5ppl milk price reduction and removal of the 0.5ppl supplementary payment to help Dairy Crest farmers cope with the additional costs arising from last summers drought which DC have paid for the past 5 months.

0.75ppl milk price reduction for Arla direct (non member) suppliers – from 1^st February (3^rd January 2019)

This results in a standard liquid litre milk price of 27ppl and based on a standard manufacturing litre 28.14pp.

0.75ppl milk price reduction for suppliers to Crediton Dairy (liquid) from 1^st February (3^rd January 2019)

This results in a standard liquid litre milk price of 28ppl.

0.75ppl milk price reduction for suppliers to South Caernarfon Creameries (cheese) from 1^st February (3^rd January 2019)

This results in a standard manufacturing litre milk price of 28.78ppl and based on a standard liquid litre 27.81ppl.

0.5ppl milk price reduction for suppliers to Barbers (cheese) from 1^st February (3^rd January 2019)

This results in a standard litre manufacturing litre milk price at 29.13ppl and 28.09ppl based on a standard liquid litre.

0.5ppl milk price reduction for suppliers to Wensleydale (cheese) – from 1^st January (3^rd January 2019)

This results in a standard manufacturing litre milk price of 29.45ppl and based on a standard liquid litre 28.5ppl.

0.3ppl small milk price reduction for Co –operative retail store aligned producers from 1^st February (3^rd January 2019)

This tiny decrease results in a standard liquid litre milk price of 30.01ppl.

Muller to stand on for February (3^rd January 2019)

The Muller direct standard liquid litre price will remain at 28ppl.

Pensworth Dairies (liquid) stand on for February (3^rd January 2019)

The Pensworth standard liquid litre price remains at 27.6ppl.

YEW TREE DAIRY (AKA Woodcocks) stand on for February (3^rd January 2019)

The Yew Tree standard liquid litre price remains at 27.5ppl.

Grahams Dairies (liquid) stand on for February (3^rd January 2019)

The Grahams standard liquid litre price remains at 27.5ppl.

Glanbia (cheese) stand on again for February (3^rd January 2019)

Glanbia are one of the few milk producers who have held suppliers manufacturing standard litre milk prices at 29ppl for both January and February. The equivalent standard liquid litre price remains at 27.99ppl.

Meadow Foods (3^rd January 2019)

At the time of going to print Meadow have yet to declare their February milk price but given their previous track record as markets bottom out the smart money will be on them standing on at 27.5ppl for a standard liquid litre in February.

Pattemores Dairy (liquid) stand on for February (3^rd January 2019)

The Pattemore standard liquid litre price remains at 28.5ppl and based on a manufacturing standard litre 29.45ppl.

GDT auction clocks up its third consecutive increase (3^rd January 2019)

Wednesdays first 2019 GDT Auction saw the average price up a further 2.8% which followed two previous auction increases of 1.7% and 2.2%.

Since the recent low point off US $2727 tonne recorded on the 20^th November the average has risen almost 10% to reach US$2826 tonne this week.

In addition behind the numbers is the encouraging statistic that all product categories on offer recorded increases in their average sale price.

Key Movers were:

SMP + 7.9% to average US $2201 tonne.

Butter + 3.9% to average US $4076 tonne.

Cheddar + 3.2% to average US $3371 tonne.

WMP + 1.2% to average US $2705 tonne.

The outlook for milk prices in 2019 (3^rd January 2019)

All the signs point towards more than a glimmer of hope that farmgate milk prices might just be on the brink of stabilising.

Futures prices are now posting small daily and weekly positive increases. In addition Intervention stocks of (aged) SMP are now reduced to only 100,000 tonnes from the 380,000 tonnes over hang in store only 9 months ago in March 2018.

There are two tenders for the remaining 100,000 tonnes in January and the sooner its all sold the better.

In addition most dairy product prices appear to be stable if not rising.

It’s all nudging in the right direction. If both Arla and Muller hold for February (Note Muller has already announced a February price hold) any price reductions for March must be challenged.

New Zealand culls 100,000 Cattle cows (3^rd January 2019)

New Zealand has already culled 50,000 cattle in a bid to eradicate Mycoplasma bovis and a further 50,000 are estimated to be in the pipeline still to be slaughtered. New Zealands aim is to be the first country in the world to completely eradicate the disease from 1,000 infected farms.

Mycoplasma bovis disease was first detected in New Zealand in July 2017 and the slaughter programme will certainly dent New Zealands milk output.

Belton (cheese) acquires Wrexham based Bridgehead Food Partners cheese packing (3^rd January 2019)

Belton have purchased the cheese packing equipment for an undisclosed sum from the liquidators. Note Bridgehead previously packed cheese for Belton thus this deal safe guard’s continuity of Belton’s cheese packing needs.

1.5ppl milk price reduction for suppliers to The Fresh Milk Company (Lactalis Cheese) – from 1^st January (21^st December 2018)

This results in a standard manufacturing litre price of 28.5ppl and based on a standard liquid litre 27.5ppl.

In addition, Lactalis have guaranteed producers that this will be a minimum floor price until 1^st April 2019.

1.33ppl milk price reduction for Arla members – from 1^st January (21^st December 2018)

This results in standard manufacturing litre price of 30.24ppl and based on a standard liquid litre 29.06ppl. These two prices include the positive 0.02ppl quarterly currency smoothing adjustment which impacts on the Arla member organic milk price resulting in the organic standard liquid litre price for January 42.72ppl and the manufacturing standard litre price of 44.45ppl.

Arla comment that “The outlook for the milk price for the coming months seems somewhat stable.” This could be cautiously optimistically interpreted that there is a real possibility this will be the final Arla milk price reduction. For sure, if this materialises and Arla members can move into spring at these levels it will be a great result and is sure to put pressure on others to follow suit with stable or increasing prices.

1.2ppl milk price reduction for Pensworth (Liquid) suppliers – from 1^st January (21^st December 2018)

This results in a standard liquid litre price of 27.6ppl.

1ppl milk price reduction for suppliers to Grahams Dairies (Liquid) Scotland – from 1^st January (21^st December 2018)

This results in a standard liquid litre price of 27.5ppl.

0.75ppl milk price reduction for First Milk members – from 1^st January (21^st December 2018)

This results in a standard liquid litre price of 27.75ppl and based on a standard manufacturing litre 28.69ppl.

GDT auction prices rise for the second consecutive time in December (21^st December 2018)

It’s a positive end to 2018 for not so cheery GDT auction year with this month the average all products price rising by a further 1.7%. This was a consecutive back to back rise on the 2.2% recorded 2 weeks earlier.

The only downside is the ever increasing milk output from New Zealand resulting in a 17% increase in WMP tonnage available.

Notable prices were:

Butter up 4.9% to average US$3928 tonne

SMP up 3.4% to average US$2042 tonne

Cheddar up 2.2% to average US3263 tonne

WMP up 0.3% to average US$2674 tonne

Muller completes a £15million investment in its Scottish Bellshill facility (21^st December 2018)

The investment covers several areas in the plant and is easily the largest single investment in a Scottish dairy plant for more than 10 years.

The Bellshill plant processes around 370 million litres from 230 Scottish Muller farmer suppliers and is viewed as a very positive signal from Muller as to the confidence it has in the future of the Scottish dairy industry.

£2billion is expected to be spent on cheese (21^st December 2018)

According to research commissioned by Arla involving 2,000 UK consumers the average spend on our cheesy festive fare will be £37.50 with an average of 8 out of 10 cheeses bought will be British. Arla estimates its cheddar cheese sales into UK retailers in December will be in excess of 7,000 tonnes.

Entitlement trading kicks in to action as 2018 SFP money lands in farmers’ bank accounts (7^th December 2018)

A significant number of farmers have received their full 2018 Single Farm Payment this week, which has come as both a welcome surprise and a boost to our Entitlement trading, which has now left us hunting for sellers, in particular Non SDA (normal) Entitlements having cleared our books of £120.00 & £125.00 lots

If you know of anyone with any surplus Entitlements, please contact us.

1ppl milk price reduction for suppliers to Meadow Foods – from 1^st January (7^th December 2018)

This results in a standard liquid litre price of 27.5ppl.

1ppl milk price reduction for suppliers to Yew Tree Dairy – from 1^st January (7^th December 2018)

The results in a standard liquid litre price of 27.5ppl.

1ppl milk price reduction for suppliers to Belton Farm (Cheese) – from 1^st January (7^th December 2018)

This results in a standard manufacturing litre price of 29.25ppl and 28.5ppl based on a standard liquid litre

GDT auction prices turn a corner (7^th December 2018)

After almost 7 months of no upward movement in the average all products auction price this week’s average increased by 2.2% to average US$2819.

The rise took many by surprise and was not only the first rise since May 2018 but it also lifted prices from 2 year lows. The global market fundamentals are still weak and whilst one swallow doesn’t make a summer it’s a welcome positive sign and the hope will be the upward trend continues for the final GDT auction of 2018 on the 18^th December.

All prices increased with the exception of cheddar:

Butter up 2.7% to average US$3745 tonne

WMP up 2.5% to average US$2667 tonne

SMP up 0.3% to average US$1970 tonne

Cheddar down 2.2% to average US$3184 tonne

Fonterra revises its forecast farm gate milk price down again (7^th December 2018)

Fonterra has revised its farm gate milk price forecast down again from $6.25 to $6.50 reduced to between $6.00 to $6.30 per kg of milk solids. Based on today’s exchange rate this gives a UK standard liquid litre price of 24.4ppl to 25.62ppl. Note, if the exchange rate used in October had been used the range would have been 22.51ppl to 23.63ppl.

1.25ppl milk price reduction for suppliers to Crediton Dairy – from January 1^st (3^rd December 2018)

This takes members’ standard liquid litre price to 28.75ppl.

1ppl milk price reduction for suppliers to Muller Direct farmers – from January 1^st (3^rd December 2018)

This takes members’ standard liquid litre price to 28ppl.

The 28ppl includes the 0.5ppl Muller Direct Premium and the 1^st January price matches the 28ppl Muller Direct Fixed Price Contract option, which cushions against volatility for which more than 230 of 700 Muller Direct farmers have committed up to 50% of their annual output.

1ppl milk reduction for Arla Direct suppliers – from 1^st January (3^rd December 2018)

This results in a standard liquid litre milk price of 27.75ppl and 28.92ppl based on a standard manufacturing litre.

1ppl milk price reduction for suppliers to Barbers (Cheese) – from 1^st January (3^rd December 2018)

This results in a standard manufacturing litre milk price of 29.65ppl and 28.59ppl based on a standard liquid litre price.

1ppl milk price reduction for suppliers to Joseph Heler (Cheese) – from January 1^st (3^rd December 2018)

Their standard litre price is so top secret even their producers can’t compare it to their competitors!!

1ppl milk price reduction for suppliers to South Caernarfon Creameries – from 1^st January (3^rd December 2018)

This results in a standard manufacturing litre milk price of 29.53ppl and 28.55ppl based on a standard liquid litre.

1ppl milk price reduction for suppliers to Wyke Farms (Cheese) – from 1^st January (3^rd December 2018)

This results in a standard manufacturing litre milk price of 29.66ppl and 28.65ppl based on a standard liquid litre.

0.5ppl milk price reduction for suppliers to Wensleydale Creamery (Cheese) – from 1^st December(3^rd December 2018) - Correction

This results in a standard manufacturing litre milk price of 29.95ppl and 29ppl based on a standard liquid litre.

1ppl milk price reduction for suppliers to Pattemores Dairy – from 1^st January (3^rd December 2018)

This results in a standard liquid litre milk price of 28.5ppl and 29.45ppl based on a standard manufacturing litre.

Glanbia (Cheese) – No change in price for January (3^rd December 2018)

This results in a standard manufacturing litre milk price of 29ppl and 27.99ppl based on a standard liquid litre.

Dairy Crest – No change in price for January (3^rd December 2018)

In addition the 0.5ppl supplementary payment will continue. This gives a standard manufacturing litre milk price of 30.4ppl and 30.9ppl when the 0.5ppl is added.

AMPE and MCVE continue heading South (3^rd December 2018)

The November AMPE (27.01ppl) and MCVE (31.06ppl) market indicator prices are the lowest recorded since March and keep slowly sliding down.

AHDB Dairy’s bean counters report there is a clear correlation between these two market indicators and farm gate milk prices with a typical 3 month delay, which does not bode well for February 2019. Note, neither AMPE nor MCVE figures include the cost of transport from the farm to the dairy.

In terms of wholesale markets whilst the seasonal boost in cream demand will provide limited short term relief it looks likely to be downhill post Christmas. As EU intervention stocks have declined fresh SMP prices have nudged up to their highest point in 2018, which is one positive sign and fingers crossed it marks a U-turn in SMP prices.

Meanwhile, cheddar prices continue to trend south.

All in all it’s not a very rosy picture to start 2019.

England v Czech Republic EURO 2020 1^st Qualifier Tickets (3^rd December 2018)

Ian has access to tickets for this match at a discounted rate, including £20 for seats in the England home end.

Venue: Wembley

Time: 19:45 hours

Date: Friday 22^nd March 2019

Email ianpotter@ipaquotas.co.uk as soon as possible

1ppl milk price reduction for suppliers to Payne’s Dairies – from 1^st December (26^th November 2018)

This takes producers standard liquid litre price to 28.5ppl. (www.milkprices.com)

0.86ppl milk price decrease  for Arla Members - from 1^st December (27^th November 2018)

Arla have announced what should be the final 2018 milk price announcement which is a 0.86ppl standard liquid litre milk price reduction (0.89ppl reduction based on the standard manufacturing litre).

This takes producers’ standard liquid litre price to 30.35ppl and 31.57ppl based on the manufacturing standard litre.

1.72ppl milk price increase for Arla Organic members - from 1^st December (27^th November 2018)

An Arla Organic members milk price increase for liquid of 1.72ppl takes the standard liquid litre price to 42.71ppl and the 1.79ppl manufacturing increase takes the standard manufacturing litre price to 44.43ppl.  Both prices exclude the derogation penalty of 3 Euro cents/litre.  Note, this Arla members organic milk price increase only applies to GB members with mainland Europe Arla members organic milk price unchanged for December.

Muller to pay an extra 0.5ppl for participation in its herd health initiative (26^th November 2018)

Around 700 Muller non aligned conventional and organic suppliers now have the opportunity to participate in three new herd health and cow welfare standard programmes from January 1^st in return for which they will be paid on additional 0.5ppl in January 2020 subject to compliance.

Payments will be made for all months producers participate and qualify for the premium and compliance for a full 12 months of 2019 is not a pre requisite to obtaining any payment.

Note any litres committed to Muller’s fixed price and/or futures trades are both ineligible for the premium for example those who locked into the 28ppl Lidl contract. Neither will producers under notice by 31^st December 2019 qualify for payment.

The three eligible Programmes producers will participate in are the National Johnes Management Plan, Muller Antibiotics Programme and Muller farm Insight Programme.

GDT continues to slide south – 3.5% (26^th November 2018)

Its grim following the GDT Auction results where for the 12^th consecutive auction there has been no upward price movement recorded. Last weeks auction saw the average all products price down 3.5% to average US $2727 tonne.

Notable movers were:

Butter down 9.6% to average $3637 (a two year low)

WMP down 1.8% to average $2599 (a two year low and 9 consecutive WMP auction falls)

SMP down 1.6% to average $1965

Cheddar up 0.2% to average $3252

Pensworth Dairy to cease milk processing opting for contract processing (26^th November 2018)

Pensworth will cease processing its producer’s milk in Southampton and will enter into a contract/toll processing agreement with Medina (80%) and Wells Dairies (20%).

The deal with Medina (AKA Watsons Dairies) includes TUPE transfer of existing Pensworth employees which is good news for safeguarding a significant number of jobs.

Pensworth have enjoyed a period of business growth which during the past two years has seen 48% growth valued at more than £20 million and gives the existing surplus liquid processing capacity it makes sense for them to toll process and not invest in shiny metal which for some is proving to be a disaster if not terminal. The processing location change will not affect Pensworth farmer suppliers.

0.46ppl backdated rebate for Sainsbury’s suppliers (16^th November 2018)

Sainsbury’s have back-dated a 1^st October additional 0.46ppl increase to  its SDDG suppliers following a recent review of it’s COP model involving family labour as operated by  Kite Consultancy.

Less than two months ago in this bulletin we featured a news item “Sainsbury’s under attack from its farmer suppliers”.  This followed the retail giants decision to pay its farmers only 0.6ppl out of a 0.9ppl loss having incorrectly costed Megalac and calf milk powder in the model at the feed wheat price.  Having identified the error this extra wasn’t backdated and yes Sainsbury’s pocketed the 0.3ppl.

In that same article Ian referred to the constant dilution of the COP model in ppl terms for family labour and now they have tried to correct this error.

The big question Sainsbury’s suppliers need an answer to is why their retailer model is so wrong and requiring surgery.  First the extra on feed and now extra on family labour.  It’s looking like a lot of back-tracking and a flawed/broken model.  Time for some answers and an independent review.

1ppl milk price reduction for suppliers to Grahams Dairies (liquid/Scotland) – from 1^st December (16^th November 2018)

This take producers’ standard liquid milk price to 28.5ppl (www.milkprices.com)

Stand on December milk price for First Milk members (16^th November 2018)

First Milk have declared their December 1^st milk price much earlier than normal (2^nd November) and members will be pleased to know that the co-op is holding its current price until at least 1^st January 2019.

The First Milk members liquid standard litre price remains at 28.5ppl and 29.47ppl based on a manufacturing standard litre. For First Milk’s Haverfordwest Cheese Group will continue to receive a manufacturing standard litre price of 30.97ppl.

To date we are unaware of any GB hard cheese producer who has announced a 2018 supplier milk price reduction unlike the situation liquid processors face.

Freshways losses are not unique (16^th November 2018)

For the year ending December 2017 Freshways have recorded a pre-tax loss of £4.2m compared to a £1.9m profit in the previous year. It’s an eye watering swing of £6.1m in only 12 months. Freshways bank borrowings were up 28% to £14.8m. Of more concern is the fact Freshways still has an ongoing HMRC investigation.

Whilst these figures are not good news and highly unlikely to be reversed in the current year Freshways have significantly more security and collateral than many others in the same sector. They are by no means expected to be at the bottom of a pile of liquid processors financial results, which are anticipated in one or two instances to be grim and potentially end up with one on life support. Watch this space for further results between now and the year end.

Cornish clotted cream to China (16^th November 2018)

The name Roddas = Clotted cream and their luxury product is now heading for China following this week’s Food & Hotel China exhibition in Shanghai.

Discovery 4 Commercial Van from 2013 (16^th November 2018)

It has had Landrover dealer fitted genuine full 7 seat interior so identical to a normal car. Commercial registered van, so fully vat reclaimable running costs are business expenses annual road tax around £220 a year. 96,600 miles. Brand new set tyre just fitted. Fully valeted. Host of extras. £19,500 + VAT. Location Yorkshire. For further details email ianpotter@ipaquotas.co.uk

Ian will be joining a panel at AgriScot next Wednesday – 21^st November at 1pm to 2pm (16^th November 2018)

Ian’s contribution is certain to be enlightening, lively and honest.

Speakers

Rory Christie - Dairy Farmer

Tom Hind - Chief Strategy Officer at AHDB

Roddy McLean - Director of Agriculture, Royal Bank of Scotland

Ian Potter - Industry Commentator and PIA

GDT continues to fall (6^th November 2018)

It’s now 11 consecutive GDT auctions with no upward average price movement. Today’s auction recorded an average price of US$2851 down a further 2% from the US$2885 recorded 3 weeks ago although SMP recorded an increase.

Notable movers were:

Cheddar down 4.6% to average US$3250 tonne

WMP down 2.9% to average US$2655 tonne

Butter down 1.7% to average US$4045 tonne

SMP up 1.2% to average US$1997 tonne

MILK PRICES UP

0.43ppl milk price increase for Waitrose aligned suppliers – from 1^st December (6^th November 2018)

This results in a standard liquid litre milk price of 31.85ppl

MILK PRICES DOWN

Muller break the log jam with a 1ppl 1^st December price cut (6^th November 2018)

Given the fact Muller are one of only a few milk purchasers who remain Voluntary Code compliant they were always set to be the dam busters and have confirmed a 1ppl price drop for 1^st December, which has come as no surprise to those who study the markets.

The Muller standard liquid litre price for November 1^st is 29.5ppl and from December 1^st will be 28.5ppl

Note, whilst Muller are the first GB milk purchaser to declare a price reduction according to our records back on 30^th April Muller were the first to break the log jam with a 0.75ppl increase for 1^st June, which others followed. So they were first up and first down. Watch out for one or two who could be last up and first down!

1ppl milk price reduction for Glanbia (Cheese) suppliers – from 1^st December (6^th November 2018)

This results in a standard liquid litre milk price of 27.99ppl and standard manufacturing price of 29.00ppl

1ppl milk price reduction for Meadow Food suppliers – from 1^st December (6^th November 2018)

This results in a standard liquid litre milk price of 28.5ppl

1ppl milk price reduction for suppliers to Pensworth (Liquid) - from 1^st December (6^th November 2018)

This results in a standard liquid litre milk price of 28.8ppl

1ppl milk price reduction for suppliers to Woodcocks/Yew Tree Dairy (liquid) - from 1^st December (6^th November 2018)

This results in a standard liquid litre milk price of 28.5ppl

MILK PRICES ON HOLD

Arla will hold its member’s milk price until 1^st December (6^th November 2018)

Arla have confirmed there will be no change in its November 1^st Milk price at 31.21ppl based on the standard liquid litre and 32.37ppl on a standard manufacturing litre

Wyke Farms (Cheese) will hold suppliers prices until at least 1^st January 2019 (6^th November 2018)

This results in a standard liquid litre milk price of 29.65ppl and standard manufacturing price of 30.69ppl

Lactalis (AKA The Fresh Milk Company) will hold suppliers prices until at least 1^st January 2019 (6^th November 2018)

This results in a standard liquid litre milk price of 29.00ppl and standard manufacturing price of 30.03ppl

South Caernarfon Creameries (Cheese) will hold suppliers prices until at least 1^st January 2019 (6^th November 2018)

This results in a standard liquid litre milk price of 29.55ppl and standard manufacturing price of 30.52ppl

Pattemores Dairy (liquid) will hold suppliers milk price until at least 1^st January 2019 (6^th November 2018)

This results in a standard liquid litre milk price of 29.5ppl and standard manufacturing price of 30.47ppl

Wensleydale Creamery (Cheese) will hold suppliers milk price until 1^st December (6^th November 2018)

This results in a standard liquid litre milk price of 29.5ppl and standard manufacturing price of 30.45ppl

Barber’s (Cheese) will hold suppliers milk price until at least 1^st January 2019 (6^th November 2018)

This results in a standard liquid litre milk price of 29.58ppl and standard manufacturing price of 30.68ppl

Grahams (Liquid) still to declare its 1^st December milk price position (6^th November 2018)

Paynes Dairies (Liquid) still to declare its 1^st December milk price positon (6^th November 2018)

First Milk (Cheese) will hold members’ milk price until 1^st December (6^th November 2018)

This results in a standard liquid litre milk price of 28.9ppl and standard manufacturing price of 29.47ppl

Spot Milk – for those who are interested spot milk is trading at 24ppl (6^th November 2018)

For Sale -  2 x Merlin Robotic Milking Cates (6^th November 2018)

In excellent working order complete with milk conductivity sensing and recording, automatic plant washing and auto cow identification. Adapted for Jerseys, could be converted for HF.

Fullwood Q3 vacuum pumping outfit and electric motor suitable for above.

Dry running compressed air outfit suitable for above.

Shuttle milk sampling system for NMR recording suitable for Fullwood or Lely robots x 2.

Stainless steel water heater.

Milk plate coolers x 2.

Bulk milk tank 5000 litre with A.P.V valve to allow auto milk transfer from robots.

For sale due to unforeseen circumstances

For any further details contact rm.cf.joyce@btinternet.com

Arla stand on with its producer price for November 1^st at 31.21ppl (31^st October 2018)

Arla have confirmed there will be no change in its November 1^st milk price at 31.21ppl based on the standard liquid litre and 32.37ppl on a standard manufacturing litre

Muller break the log jam with a 1ppl 1^st December price cut (31^st October 2018)

Given the fact Muller are one of only a few milk purchasers who are Voluntary Code compliant they were always set to be the dam busters and today have confirmed a 1ppl price drop for 1^st December, which has come as no surprise to those who study the markets.

During the next day or two it’s a near certainty a heap of milk purchasers, particularly those in the liquid middle ground area, will follow Muller with 1^st December price cuts and you wouldn’t rule out the odd cheeky and desperate milk buyer even cutting producer prices from 1^st November which would cause a stir!!

The Muller standard liquid litre price for November 1^st is 29.5ppl and from December 1^st will be 28.5ppl

0.21ppl milk price increase for Freshways suppliers- from 1^st October (PRODUCER NOTIFIED) (17^th October 2018)

This takes producers liquid standard litre price to 29.8ppl and is tipped to be the last GB price increase of 2018 and in the top 3 liquid prices from the league table below.

Fonterra revises its forecast milk price down by up to 1.88ppl equivalent (17^th October 2018)

Due to higher global milk supplies, particularly in Europe and the US, Fonterra has reduced its forecast farm gate milk price for the current 2018/2019 year from $6.75 per kg milk solids (25.32ppl) to $6.25 to $6.50 (23.44ppl to 24.38ppl)

The CEO of Fonterra commented “Global demand is simply not matching current increases in supply”

GDT clocks up its 10^th consecutive fall (17^th October 2018)

Yesterday’s GDT recorded its 10^th consecutive average price fall all though this latest fall was only slight at -0.3% with the all products average price falling from US$2901 tonne to US$2885 tonne, the lowest average price recorded since October 2016.

Notable movers were:-

Cheddar down 1.8% to average US$3404 tonne

WMP down 0.9% to average US$2729 tonne

SMP no change US$1977 tonne

Butter + 2.4% to average US$4114 tonne

October 1^st runners and riders league table - September milk prices shown in brackets (17^th October 2018)

Liquid Manufacturing

Standard litre Standard litre

Arla Co-op Members 31.21 (30.16) 32.47 (31.38)

Crediton Dairy 30.00 (30.00) -

Freshways 29.80 (29.59)

Wyke Farms 29.65 (29.65) 30.69 (30.69)

Barbers 29.58 (29.58) 30.68 (30.68)

South Caernarfon Creameries 29.55 (29.55) 30.52 (30.52)

Wensleydale Creamery (Cheese) 29.50 (29.50) 30.45 (30.45)

Payne’s 29.50 (29.50) -

Meadow Foods 29.50 (29.50) -

Yew Tree Dairies 29.50 (29.50) -

Belton 29.50 (29.50) 30.25 (30.25)

Muller 29.50 (29.50) -

Dairy Crest Davidstow 29.32 (29.32) 30.40 (30.40)

Fresh Milk Company (Lactalis) 29.00 (29.00) 30.03 (30.03)

Glanbia 28.99 (28.99) 30.00 (30.00)

First Milk Co-op Members 28.50 (28.50) 29.47 (29.47)

Arla Direct 28.75 (28.00) -

Joseph Heler (Cheese)

CORRECTION (17^th October 2018)

In the last bulletin we incorrectly suggested that First Milk were the only buyer to stand on for October. This was a big error as can be seen above where 13 out of 17 stood on for October 1^st.

Arla launches its UK360 programme standards with Aldi support (17^th October 2018)

Following a 6 month trial involving 79 farmers Arla have launched their UK360 programme, which is a new set of higher standards than the basic Red Tractor Standards, which encompass the best on farm practice for animal welfare, animal health, people/staff development, environmental and natural resources, community engagement as well as economic resilience and reinvestment.

Aldi is the first retailer to sign up to the new standards and ongoing discussions are understood to be at an advanced stage with other Arla customers. Aldi will pay a premium to a named and selected group of Arla members as part of the Aldi Dairy Farm Partnership in return for these farmers delivering the higher standards at farm level.

More on this in Ian’s next Dairy Farmer article but it’s certainly a very different approach to what has become the norm of retailers setting the farm standards.

Note, Arlagarten will continue to set the baseline standards for all Arla members with UK360 linked to retailers and food service customers’ appetite to come on board and pay a premium to those farmers who can and want to help protect the industry and retailer brands by adopting the 360 standards.

First Milk unveils there initiatives, including a 13^th payment (17^th October 2018)

Business at First Milk continues to make positive steps forward and today the co-op has announced three member initiatives/changes.

1. Capital contribution targets will be frozen at members’ current level meaning members who want to expand will no longer be compelled to fund increased capital contributions.

2. The introduction of an annual 13^th payment from April 2019.

This 13^th payment will commence from April 2019 at 0.25ppl and will be paid in April 2020 but adjusted accordingly to each member’s capital target. For example, if a member has 100% of their capital target they will receive the full 0.25ppl. If they are at 200% they will receive 0.5ppl (the maximum) conversely if they are 50% of target they will only receive 0.125ppl.

3. Transparent member share trading from December 2018 via the Asset Match platform, which will particularly benefit retired members and be free to use.

Muller has finished its integration with the Dairy Crest Liquid Business (17^th October 2018)

Muller has announced completion of Britain’s largest ever dairy integration following its acquisition of the Dairy Crest Liquid business which it claims gives it a 25% share of Britain’s 12.4 billion litre farm gate milk business (3.1billion litres) making them number 2 to Arla who process 3.8 billion litres (31%).

The two businesses process 56% of all Britain’s milk.

First Milk winners of its new Responsible Farming Awards (17^th October 2018)

First Milk are upping the stakes on farm assurance recognising their highest achieving members with awards for Animal, Environment and People categories.

Alan Conway, Northumberland won the Animal category for on farm improvements to animal welfare.

Collingthwaite Farm, Nottinghamshire won the Environment category.

The Pritchard’s from Fishguard and Maughans Farm, Cumbria were joint winners of the People award.

FOR SALE – 1962 Fordson Super Major on original RF60 Buff Log Book (17^th October 2018)

It’s Ian who is selling this on Ebay Item number 273504226468 – ends this Sunday – see link below:

https://www.ebay.co.uk/itm/1962-Fordson-Super-Major-barn-find-on-original-RF60-buff-log-book/273504226468

For Sale -  2 x Merlin Robotic Milking Cates (17^th October 2018)

In excellent working order complete with milk conductivity sensing and recording, automatic plant washing and auto cow identification. Adapted for Jerseys, could be converted for HF.

Fullwood Q3 vacuum pumping outfit and electric motor suitable for above.

Dry running compressed air outfit suitable for above.

Shuttle milk sampling system for NMR recording suitable for Fullwood or Lely robots x 2.

Stainless steel water heater.

Milk plate coolers x 2.

Bulk milk tank 5000 litre with A.P.V valve to allow auto milk transfer from robots.

For sale due to unforeseen circumstances

For any further details contact rm.cf.joyce@btinternet.com

1.07ppl milk price increase for Tesco/TSDG aligned producers – from 1^st November (2^nd October 2018)

This increase arises as a result of Promars review of the annual Tesco cost tracker figures as budgeted to 31^st March 2019. This increases the cost of production from 30.17ppl to 31.24ppl.

Variable costs 18.15ppl

Overhead costs 11.22ppl

Depreciation 1.87ppl

31.24ppl

0.75ppl milk price increase for Arla direct suppliers – from October 1^st (2^nd October 2018)

This takes producers’ standard liquid litre milk price to 28.75ppl and based on a manufacturing standard litre 29.96ppl.

Muller stand on price for a second consecutive month for November (2^nd October 2018)

Mullers 29.5ppl liquid standard litre price paid on October deliveries will continue for all deliveries in November.

First Milk stand on price for a second consecutive month for October 1^st (2^nd October 2018)

First Milk members 28.5ppl standard liquid litre price on September deliveries and based on a manufacturing standard litre 29.47ppl will continue in October. First Milk, according to our records, are the only GB processor to stand on for October deliveries.

Barbers stand on price for the third consecutive month (2^nd October 2018)

Barbers (Cheese) 30.68ppl standard manufacturing litre and 29.8ppl on a liquid standard litre price paid on September and October deliveries will continue for all deliveries in November to make it three months in a row.

The milk price for Barbers producers over base litres for September has reduced by 1.34ppl to 29.84ppl.

Dairy Crest and DCD gain top marks for milk price stability into 2019 (2^nd October 2018)

Reporting that Dairy Crest’s Davidstow milk for cheese producer price for November will remain at 30.4ppl based on a manufacturing standard litre and 29.32ppl on liquid would normally be of passing interest and more or less falling into line with others.

However, this stand on floor price has been guaranteed until 1^st February 2019, which is both a surprise and very welcome for which credit should be given to Dairy Crest and DCD for agreeing this move.

Dairy Crest increased its manufacturing standard litre milk price to 30.4ppl (liquid 29.32ppl) from 1^st August then from 1^st September introduced a 0.5ppl winter supplement to take the manufacturing price to 30.9ppl and liquid to 29.82ppl. This latest move results in Dairy Crest Suppliers benefitting from 6 months of price stability at the enhanced manufacturing rate of 30.9ppl.

GDT Auction Prices fall again for the 9^th Consecutive time (2^nd October 2018)

Todays GDT Auction has fallen for the 9^th Consecutive time and everyone hopes it turns the corner soon.

Total quantity sold today 41,981 tonnes to average US $2901 tonne (-1.9%)

Notable prices at today’s auction were:

Butter down 5.9% to average US $4016 tonne

WMP down 1.2% to average US $2753 tonne

Cheddar down 1.2% to average US $3468 tonne

SMP down 0.3% to average US $1982 tonne

The Outlook (2^nd October 2018)

Stand on prices are now mainstream particularly for November deliveries unless you supply Arla who are still increasing producer prices for October.

As stated last week wholesale markets are under pressure with particularly the cream and butter price in decline, which AHDB report fell by £330 (butter) and £100 (bulk cream) in September. The FCStoneMilkprices.com UKMFE forward price curve has now recorded its 6^th consecutive drop with this month (October) having recorded a 5.24ppl drop in that 6 week period. Against these prices SMP nudged up £30 tonne and mild cheddar prices for September were unchanged but the direction is regrettably but firmly south.

It’s now a case that any holds/stand on milk prices for November onwards should be considered a favourable announcement. That’s until someone breaks rank which almost seems inevitable will be in 2018 rather than 2019.

2018 SFP Exchange rate confirmed at 0.89281 (2^nd October 2018)

This is a fraction lower (0.2%) than the 2017 rate of 0.89470 which means the RPA payment per entitlement is likely to be very similar to last year.

Volvo 8 Ton Timber Harvester For Sale in Scotland with a stroke head (2^nd October 2018)

Fully guarded, including bullet proof Marguard windscreen and built  by Caledonian Forestry Services Ltd only 3 years ago. Reason for sale is because the family have acquired a bigger capacity machine.

If interested or you require further information or photographs please email  angus@kirkside.net  or call Angus 07794 623 975.

Ian and Carole need your help to raise as much money as possible for the chances for Children Charity Buttle UK (www.buttleuk.org) (2^nd October 2018)

Background  -  Back in 2015 Ian & Carole travelled to New Zealand and joined the Pork Pie Charity Run (www.porkpie.co.nz) in a classic Mini and raised £6,600 for charity.  In 2017 the intrepid duo “squeezed” behind the wheel again and drove  Ian’s 1963 Mini Cooper S to Rotterdam for a weekend to raise money in the 20^th and final Regis Ladies Classic Car Tour. They scooped the Award for the team who raised the most money for two Cancer Charities raising over £3,000.

Later this month they are off again this time to Italy with The Italian Job  www.italianjob.com

Carole & Ian are joining classic MINI enthusiasts from all over the UK, Europe and further afield for a charity fund-raising trip of a lifetime, following in the tyre tracks of Michael Caine’s 1969 film, through the Swiss Alps, across Italy and even onto the rooftop test track of the world famous Fiat factory building in Turin.

Since 1990 The Italian Job Event has already raised over £3 million for children’s charities and this year the beneficiary will be the Childrens charity Buttle UK. Buttle UK plan to use the monies raised to give 1000 children a bed to sleep in. The Charity estimate that over 400,000 children in the UK do not have a bed of their own which leads to children lacking sleep, affecting concentration and therefore academic achievement.

It is a fantastic cause and Ian and Carole will be grateful for any donations.

100% of your donations will go to the Charity, as Ian & Carole are once again self funding all their own expenses, entry fees, fuel and accommodation.

If you can dig deep and find a few spare pounds it will all be very much appreciated.  It’s not a competition who can give the most but if you do value this FREE  regular Dairy bulletin and Ian’s monthly Dairy Farmer article (now 26 years and still going) then please give a little to show your appreciation.

The event is not a charity challenge, but more of a non-competitive social week with like minded classic Mini enthusiasts aiming to have a tour at the same time as raising money for a great UK Childrens charity. 

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

Please donate on line by clicking on: https://www.justgiving.com/fundraising/englishbulldogsontour

OR

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

“Buttle UK “

Ian’s target is to raise £2,500 or more

Thank you all in advance

News

A matching scheme to boost fundraising efforts. An anonymous donor of Buttle UK’s has offered to match, pound for pound, the total funds raised by the 5 most successful jobbers in this year’s rally, up to a maximum of £30,000!!

So for example Ian & Carole raise £2,500 and were one of the top 5 fundraising totals our contribution to Buttle UK’s Chances for Children campaign would actually be worth £5000! The 5 winners will be announced at the Reunion Dinner March 2019 but for sure Ian plans to be in that top 5 with your help.

1.09ppl – Welcome but surprise Arla member milk price increase – from 1^st October (25^th September 2018)

Arla have announced a 1.09ppl milk price increase compromising of a 0.9ppl base price increase plus 0.19ppl quarterly currency adjustment.

The resulting 1^st October standard litre price is 31.21ppl and based on the manufacturing standard litre is 32.47ppl, which, if anyone plays milk processor Top Trumps they will struggle to beat Arla in 2018.

The Arla UK organic milk price remains unchanged whilst it increases in Sweden (3 Euro Cents) and Denmark (2 Euro Cents). Arla UK organic farmers will, however, receive the 0.19ppl currency adjustment.

For Arla’s UK organic members the standard liquid litre price is 40.99ppl and based on the manufacturing standard litre is 42.64ppl.

This latest increase certainly puts the cat amongst the pigeons and comes at a time when most milk purchasers were hoping Arla would stand on possibly even or cut its price.

1.2ppl additional forecasted 13^th payment for Arla members (25^th September 2018)

As it’s calculated a further 1.2ppl is pencilled in by Arla as a 13^th payment, which whilst still to be approved by Arla’s BOR and depends on the current business performance continuing until March 2019, will be additional money to be added to an already healthy looking Arla member milk price.

0.9ppl milk price increase for Sainsburys aligned suppliers – from 1^st October (25^th September 2018)

This takes producers’ standard liquid litre price to 29.39ppl but see below for trouble at Sainsburys!

0.57ppl increase for Marks & Spencer’s (Muller aligned) - from 1^st October (25^th September 2018)

This takes producers’ liquid standard litre milk price to 31.41ppl

Milk price outlook is not good (25^th September 2018)

All eyes are now focussed on Muller this weekend and whether it confirms any price movement from November 1^st.

Ian’s moles suggest a Muller price cut is very much on the cards, which is not what Muller or any dairy farmers will want to hear. Given Muller’s 1^st October liquid standard litre price is 29.5ppl and Arla’s is 31.21ppl the gap is now an unexplainable 1.71ppl. Also note in today’s announcement Arla state “The outlook for milk price for the coming months remains stable”, indicating the possibility of stand on or close to stand on prices depending on market movements in the next month.

Muller farmers will be praying for a November stand on but it’s looking challenging and if Muller drop the dam will burst as price cuts rain in for November and December.

Anything Ian writes will not change the fundamentals, so don’t shoot the messenger.

GDT prices continue to drop, futures have been falling for the past 5 consecutive weeks, UK production is up, German production +2.8% and imports of cheese from Ireland in 2018 are at eye-watering record levels. Arla’s increase is great news but stand on prices for November should not be criticised.

GDT Auction prices continue to slide south for the 8^th consecutive auction (25^th September 2018)

Key movers in last Tuesday’s GDT auction were:

Cheddar down 3.5% to average US$3503 tonne

WMP down 1.8% to average US$2768 tonne

SMP down 1.1% to average US$1980 tonne

Butter down 0.1% to average US$4270 tonne

Average down 1.3% to average US2934 tonne with 39,143 tonnes sold.

This means in the last 8 GDT auctions the average price has dropped by close to 20% to prices last seen in October 2016.

Sainsburys under attack from its farmer suppliers (25^th September 2018)

Sainsburys farmers in the North of England and Scotland are furious with the retailer to the point several are claiming they are immediately seeking a new milk buyer and want to exit the Sainsburys Dairy Development Group because “its heads Sainsburys win and tails its dairy farmers lose.” On a practical note finding a new milk buyer in Scotland looks challenging!

Sainsburys are half way through a series of regional farmer meetings, which haven’t gone according to plan and parachuting any spin doctors and head honchos in hasn’t placated some of their loyal switched on farmers.

The problem is if cost savings of 2p are achieved Sainsburys intend to pocket the entire 2ppl with no sharing or benefit of the rewards to their farmers. This means efficient farmers are victims of their own success which is unfair and unacceptable.

In addition, the Sainsburys farm units have, on average, expanded but the fixed amount added in for family labour at 1.44 head at the national agricultural workers pay is being constantly diluted in the ppl COP as on farm production increases. One simple solution is to change the model to a ppl labour cost but that doesn’t suit Sainsburys because it will cost them money.

The way the Sainsburys COP model deals with bought in feed is also under attack, particularly from its 20 or so Scottish farmers. The cost of feed per tonne is that charged by the Sainsburys buying groups price for all feed, however, Scottish farmers can’t buy their feed at that price and are not part of the group buying.

Either the Scottish farmers feed price should be factored in to the model or alternatively consideration to a Scottish regional Sainsburys COP will have to be considered. One Sainsburys farmer claims his actual COP is 4ppl above the model.

The final straw has been the recognition that for years the Sainsburys COP model has costed calf milk powder and Megalac in at the feed wheat price, which Sainsburys have held their hands up and agreed to correct.

The difference in costings is now recognised by Sainsburys as amounting to 0.9ppl, which farmers have lost.

As further proof that Sainsburys don’t really care about their farmers COP they have decided that of the 0.9ppl deficit farmers will be given 0.6ppl but Sainsburys will retain 0.3ppl and, at the moment, there are no moves by Sainsburys to back-date any of the missing money to its farmers to reflect the shoddy calculations in previous years.

The Sainsburys farmers have had to scrutinise the costings themselves and the end result is, after 11 years of working with British farmers, Sainsburys appear to be on a suicide mission to wreck all the trust they have built up.

Some Sainsburys farmers no longer trust the COP model, no longer trust Sainsburys and generally feel very disappointed and let down. All they are asking for is fair treatment from the retail giant.

Back in 2015, Sainsburys took out large adverts in The Times, Telegraph, Mail, Express and Star where the strapline was:

“At Sainsburys we support our British fresh milk farmers, does your supermarket?”

followed by:

“We believe the farmers who produce our milk should also make a living.”

These were fantastic supportive statements, which some of its Scottish and North of England farmers now believe to be false in 2018.

Do Sainsburys still “want to work with (its dairy) farmers to offer long term relationships with stable profitable prices?”

The jury is out on this question but unless Sainsburys attitude towards its 250 or so remaining SDDG farmers changes they look set to lose even more dissatisfied producers. The situation is best described as “fragile”.

Dairy Crest’s profits look good for the first 6 months (25^th September 2018)

Dairy Crest have announced a trading update for the last 6 month and anticipate profit for the period to be above the same period 12 months earlier as well as reporting a reduction in nett debt. Dairy Crest’s interim results will be published on November 7^th.

First Milk (25^th September 2018)

Have published their financial results for the year to 31^st March 2018. The key numbers are:

Members’ Capital Investment up £2.1m to £75.5m

Turnover up 22% to £252.7m (2017 - £206.5m)

Nett Bank Borrowings up 16% to £44.9m (2017 - £38.6m)

Nett Profit Down 47% to £3.2m (2017 - £6m)

Total Group Capital Reserves up 25% to 27.4m (2017 - £22m)

First Milk might still be in the bottom handful of milk purchaser’s standard litre milk price league tables but at least they have significantly narrowed the price gap and strengthened their position, in recent years. Significant cost, especially overhead cost, has been stripped out under the captaincy of Shelagh Hancock and this reflects in the numbers.

First Milk’s membership milk has halved in recent years but for sure First Milk member moans are almost unheard of now and it’s an indisputable fact that with no sales and marketing team, due to the long term deal struck with Ornua, their focus is on making consistently high quality cheese with minimal downgrades and they appear to be succeeding at it.

Freshways wind up its Dairystix business (25^th September 2018)

Freshways have wound up their UHT Dairystix business directly affecting 17 employees. The Dairystix brand was launched in 2007 but by 2012 was in administration before it was resurrected. Freshways took the business on in 2014. Further details to follow but the numbers rumoured will leave some creditors with a migraine.

Construction of a 30 million litre dairy farming commences (25^th September 2018)

Construction of an eye watering 30 million litre fully integrated dairy has started in Russia and will cost circa $633 million (£484 million) with funds coming from a group who are recognised as the largest Vietnamese agricultural investors.

This is the first of five farms in the pipeline with construction of all five to commence by 2020.

The farm/unit will be fully integrated from the cow to the distribution of dairy products and will house 50,000 cows at 5,800 litres/cow or 30,000 at just under 10,000 litres a cow. Now that’s what you call big!

Russia’s goal is to be self sufficient in dairy, replacing all dairy imports, within the next 8 years, which translates to the necessity to increase domestic production by 25%.

Dairy Industry Woman of the Year Award (25^th September 2018)

Jeanette Prince was presented with the Dairy Industry Woman of the Year National Award at last week’s presentation dinner.

Jeanette is a Staffordshire organic farmer supplying Arla. She is also a founder member of the Staffordshire Women’s Farming Union, Vice President of Staffordshire YFC and has devoted many days to promoting and progressing the UK dairy industry.

The Regional Award was presented to Ceri Cryer a farmer and cheese maker from Wiltshire who under the Brinkworth dairy brand sells her products to local markets and at London Farmers’ Markets.

FOR SALE- 2 Lely A4 Robots – Location Cumbria (25^th September 2018)

Installed in January 2012, regularly serviced & updated, washed out regularly since the cows were sold. Reason for the sale is the farm has been sold.

They come with the facility to feed liquid as well as cake, which is automatically calculated. No weigh cells but concrete work already installed. Sold along with computer, 130 collars, exit gates and two milk recording samplers.

For further details email ianpotter@ipaquotas.co.uk

WANTED BY IAN (25^th September 2018)

14 tonne JCB ditching bucket with circa 60mm pin fixings.

Note, not a 3 CX size this is for a proper JCB 814 digger not a Fisher Price digger! If you know where there is one please email ianpotter@ipaquotas.co.uk

0.85ppl milk price rise for suppliers to Pensworth Dairy – from 1^St October (4^th September 2018)

This takes producers liquid standard litre price to 29.8ppl.

0.5ppl milk price increase for suppliers to Wensleydale Creamery – 1^st September (4^th September 2018)

This takes members’ standard liquid litre price to 29.5ppl and standard manufacturing litre price to 30.45ppl.

0.5ppl milk price increase for suppliers to First Milk – from 1^st September (4^th September 2018)

This takes members’ standard liquid litre price to 28.5ppl and standard manufacturing litre price to 29.47ppl.

0.5ppl milk price increase for suppliers to Payne’s Dairies – from 1^st September (4^th September 2018)

This takes members’ standard liquid litre price to 29.5ppl.

AMPE and MCVE climb higher (4^th September 2018)

AMPE is up +4.4% from July to 33.6ppl and MCVE + 0.6% to 33.6ppl (see above). In addition, AHDB Dairy report that Cream income is now worth 13.09ppl to a liquid processor.

During August AHDB report increases in wholesale prices for cream, butter and SMP all mainly weather driven, which is making traders nervous, especially over possible declines in winter milk production which all farmers are anticipating and by the time the trade realise its happening nothing they do will reverse the decline!

AHDB are anticipating further small farm gate milk price increases up to and including November based on the current milk market value (a weighted average of AMPE & MCVE). That may be what the number crunching suggests but it’s certainly not what a large number of GB milk processors are budgeting for with most aiming to hold prices.

Arla plans to pay out its 2018 profits to its farmers (4^th September 2018)

In a welcome, if not surprise, move Arla has confirmed it proposes to pay its entire 2018 profits to its farmers recognising many face serious financial pain as a result of the drought. The proposal will be put to the Arla Board of Representatives at its October meeting.

If Arla’s nett profit target of 2.8% to 3.2% of revenue is achieved the numbers indicate a potential supplementary payment of circa £20,000 for a 1 million litre producer, however, this needs to be split into a circa £9000 as a 13^th payment producers are already entitled to receive so the additional money paid out will be around £11,000 per farmer.

The total payment will likely be approved in February 2019 when Arla’s end of year results are known.

It’s highly likely this proposal has been instigated by the Danish and Swedish Arla farmers who have both clout and face some serious financial additional costs as a result of the drought.

The point to ponder is whether Arla executives are now assuming (possibly planning) that on October 1^st, November 1^st and December 1^st it will be a farm gate milk price hold stand on with little, if any, chance of further farm gate milk prices increases

Straw exiting GB and hay going into power stations (4^th September 2018)

Ian has spoken to two people who have confirmed that significant quantities of straw have already been delivered to Iceland, Denmark and Belgium with a further enquiry to deliver to Norway and demand from all four countries is very strong.

In addition, one haulier is taking hay into a power station due to the shortage of straw. Anyone playing the straw market is unlikely to have budgeted for straw going to Iceland in curtain sided trucks on back loads.

36% profit slump for European giant milk processor Friesland Campina (FC) (4^th September 2018)

Friesland Campina’s half year results show a whopping 35.6% year on year profit slump.

Friesland Campina previously announced the early 2018 closure of two processing operations in France, both of which have severely influenced these latest half year figures. The closures were announced a year ago as part of Friesland Campina’s wholesale transformation scheme.

Arla UK’s half years results (4^th September 2018)

Arla’s half year UK revenue increased by 2.3% to £961million with nett profit 2.2% versus 2.1% in 2017.

Arla’s 2018 financial year nett profit of 2.8% to 3.2% is considered achievable.

UK secures £240million deal with China (4^th September 2018)

China has agreed a five year deal to import UK dairy products worth an estimated £240 million

Farm Foods 40ppl offer opens up a Pandora’s Box (4^th September 2018)

In the last bulletin we asked readers to crack the milk code for the supplier of incredibly cheap milk on sale by Farm Foods at 40ppl!

Numerous readers collected the Potter equivalent of a Crackerjack pencil and all identified the supplier as Payne’s Dairies.

What Ian wasn’t prepared for were details of allegedly how Farm Foods have played out their recent October milk supply tender.

The three incumbent suppliers to Farm Foods today are Payne’s, Medina and Grahams Dairies (Scotland). Allegedly once Farm Foods received new tenders from Medina and Payne’s they served notice to terminate all three supply contracts with the suggestion that one of the big two GB liquid processors was involved and had successfully tendered and taken them all by storm as sole supplier to Farm Foods with a table topping price.

Whether this was 100% accurate is debatable but for sure when three are given notice one or more is likely to bite back and drop their prices even lower than what is rumoured to already be an eye watering price of under 35ppl.

Reports indicate the outcome is that Medina retains its region and Payne’s retains its region and takes Grahams region in Scotland. So the losers, if you can call it that, are Grahams Dairies and the winners are certainly Farm Foods.

This certainly appears to have been a particularly aggressive tender and one processor called it a blood bath another said it was tactical Farm Foods tendering.

Payne’s have certainly gained more volume and highly likely for less revenue in ppl. Why is Payne’s so particularly keen to build its total sales volumes?

That leaves one question? Who’s the villain and who’s the hero in this process?

September 1^st Milk Price league based on www.milkprices.com standard litres (August 1^st prices in brackets) (4^th September 2018)

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.

Liquid Manufacturing

Standard litre Standard litre

Arla Co-op Members 30.16 (30.16) 31.38 (31.38)

Crediton Dairy 30.00 (29.00) -

Wyke Farms 29.65 (29.15) 30.69 (30.18)

Barbers 29.58 (29.08) 30.68 (30.16)

South Caernarfon Creameries 29.55 (28.81) 30.52 (29.78)

Wensleydale Creamery (Cheese) 29.50 (29.00) 30.45 (29.95)

Payne’s 29.50 (29.00) -

Meadow Foods 29.50 (28.50) -

Yew Tree Dairies 29.50 (28.50) -

Belton 29.50 (28.50) 30.25 (29.25)

Muller 29.50 (28.00) -

Dairy Crest Davidstow 29.32 (29.32) 30.40 (30.40)

Fresh Milk Company (Lactalis) 29.00 (29.00) 30.03 (30.03)

Glanbia 28.99 (28.03) 30.00 (29.00)

First Milk Co-op Members 28.50 (28.00) 29.47 (28.95)

Arla Direct 28.00 (28.00) -

Joseph Heler (Cheese) (Answers on a postcard)

Information request on Halloumi (4^th September 2018)

Do you know anyone in the UK who producers Halloumi? If you do please email ianpotter@ipaquotas.co.uk

FOR SALE- 2 Lely A4 Robots – Location Cumbria (4^th September 2018)

Installed in January 2012, regularly serviced & updated, washed out regularly since the cows have been sold. Reason for the sale is the farm has been sold.

They come with the facility to feed liquid as well as cake, which is automatically calculated. No weigh cells but concrete work already installed, Sold along with computer, 130 collars, exit gates and two milk recording samplers.

For further details email ianpotter@ipaquotas.co.uk

ENGLAND V USA (4^th September 2018)

Venue: Wembley Stadium

Date: Thursday 15^th November – KO 19:45 hours

Up to 4 tickets available at £10.00 per ticket discount.

Email ianpotter@ipaquotas.co.uk, if you are interested.

1.5ppl increase for suppliers to Grahams Dairies, Scotland – from 1^st September (21^st August 2018)

This takes producers’ liquid standard litre milk price to 29.5ppl.

1ppl increase for suppliers to Meadow Foods – from 1^st September (21^st August 2018)

This takes producers’ liquid standard litre milk price to 29.5ppl and based on the www.milkprices.com manufacturing standard litre price of 29.88ppl (Chester) & 29.75ppl (Cumbria).

0.5ppl increase for suppliers to Wyke Farms (Cheese) – from 1^st September (21^st August 2018)

This takes producers’ liquid standard litre milk price to 29.65ppl and the www.milkprices.com manufacturing standard litre price to 30.69ppl.

0.5ppl increase for suppliers to Pattemores – from 1^st September (PRODUCER NOTIFIED) (21^st August 2018)

This takes producers’ liquid standard litre milk price to 29.5ppl and the www.milkprices.com manufacturing standard litre price to 30.47ppl.

Arla members milk price stand on for September @ 30.16ppl/31.38ppl (21^st August 2018)

Arla have announced a stand on milk price from September 1^st for both its organic and conventional suppliers.

The standard liquid litre price for August and September will be 30.16ppl. and for TSDG farmers 31.58ppl with Morrisons farmers receiving 31.14ppl. Based on a manufacturing standard litre the price remains at 31.38ppl.

With only First Milk left to declare its September milk price once it’s confirmed we will pull together and publish a 1^st September standard litre milk price league table.

GDT auction results continue to head South (21^st August 2018)

Below are the last two GDT auction results, including today’s, which come as a warning that internationally prices are no longer levelling out. All prices quoted are in US$. Note, today’s tonnage was down by 6% and the number of bidders down by 17.3% (33 bidders).

7^th August 21^st August (today)

Average Price $3136 $3044/tonne (-3.6%)

Quantity Sold 34076 tonnes 32041 tonnes (-5.9%)

Number of Bidders 191 158 (-17.3%)

Butter $4802/tonne (-3.2%) $4392/tonne (-8.5%)

Cheddar $3663/tonne (-1.3%) $3484/tonne (-4.7%)

WMP $2958/tonne (-0.1%) $2883/tonne (-2.1%)

SMP $1972/tonne (-0.3%) $1951/tonne (-1.3%)

Brief Market Outlook (21^st August 2018)

The on farm position requires no explanation it’s set to be a very expensive autumn and winter for many UK dairy farmers with little chance of production forecasts being achieved given that most are well into first cut silage and second cut silage is either non-existent or second class in terms of milk production.

Most processors realise that at current milk prices coupled with increasing costs production is set to fall.

Generally, EU and world wholesale markets are cooling off in terms of butter, cheese and powder. The same is reflected in futures pricing. GB production is now declining with AHDB dairy reporting that weekly milk deliveries are running at almost 1% below the equivalent week in 2017.

26.08ppl Fonterra forecast 2017/2018 farm gate milk price (21^st August 2018)

New Zealand co-op Fonterra has revised its 2017/2018 farm gate milk forecast to NZ$6.70 per kg milk solids equivalent to a UK liquid standard litre price of 26.08ppl. Note, this is for last year not the current year.

2.67ppl organic milk price reduction for Arla members who utilise a derogation (21^st August 2018)

It’s a hot potato but Arla have confirmed that any UK organic supplier who utilises a derogation to use non-organic forage, including those who only use the derogation for young stock, will suffer a 2.67ppl deduction and their milk will be segregated and go into the Arla conventional pool. Arla’s organic milk price for September is held at 40.8ppl based on a liquid standard litre and 42.45ppl based on a standard manufacturing litre.

Arla to help distribute Forage Aid for UK farmers (21^st August 2018)

Arla is offering logistics support to help Forage Aid by delivering emergency supplies of animal feed to livestock farmers during the extreme drought conditions.

Graham Wilkinson talks about why it is important for farmers to support farmers in these challenging conditions;

"Last year our logistics colleagues did a fantastic job of supporting Forage Aid by helping them distribute emergency supplies to farmers impacted by the Cumbrian floods and now we have a very different threat to our farmers and their livestock due to the extreme drought conditions. Forage Aid is a fantastic charity and it makes me extremely proud that a farmer owned business like ours can support other farmers at their time of need in this way."

Forage Aid is the charity that supports farmers whose livestock has been affected by an extreme weather event by providing forage and/or bedding to those in need.

40ppl milk on offer by FarmFoods – Who’s the processor? (21^st August 2018)

A jaw dropping promotion by FarmFoods of 4 litres of whole or semi-skimmed milk for £1.60 has caused a bit of a stir. From the leaflet the code reads like UKOHO29EC. Two middle ground usual suspects names are in circulation but rather than setting hares running it would be good to crack the code and print the name of the processor. If any reader can crack the code please email Ian (ianpotter@ipaquotas.co.uk)

1.5ppl milk price increase for suppliers to Grahams Dairies Scotland – from 1^st September (3^rd August 2018)

This takes producers standard liquid litre price to 29.5ppl

1.5ppl milk price increase for suppliers to Muller – from 1^st September (3^rd August 2018)

This takes producers standard liquid litre price to 29.5ppl

1ppl milk price increase for suppliers to Belton Farm (Cheese) – from 1^st September

This takes producers standard liquid litre price litre to 29.5ppl and based on a standard manufacturing litre to 30.25ppl (3^rd August 2018)

1ppl milk price increase for suppliers to Yew Tree Dairies – from 1^st September (3^rd August 2018)

This takes producers standard liquid litre price litre to 29.5ppl

1ppl milk price increase for suppliers to Glanbia (Cheese) – from 1^st September (3^rd August 2018)

This takes producers standard liquid litre price to 28.99ppl and based on a standard manufacturing litre to 30ppl

1ppl milk prices increase for suppliers to Joseph Heler Cheese – from 1^st September (PRODUCER NOTIFIED) (3^rd August 2018)

1ppl milk price increase for suppliers to The Fresh Milk Company – from 1^st August (3^rd August 2018)

This takes producers standard liquid litre 29ppl manufacturing 30.03ppl

1ppl milk price increase for suppliers to Wensleydale Creamery – from 1^st August (3^rd August 2018)

This takes producers standard liquid litre 29ppl manufacturing 29.95ppl

1ppl milk price increase for suppliers to Pensworth – from 1^st September (3^rd August 2018)

This takes producer’s standard liquid litre 28.95ppl

0.8ppl milk price increase for Payne’s Dairies – from 1^st August (3^rd August 2018)

This takes producer’s standard liquid litre to 29ppl

0.8ppl milk price increase for suppliers and members of First Milk – from 1^st August (3^rd August 2018)

This takes producers standard liquid litre price to 28ppl and based on a standard manufacturing litre to 28.95ppl

0.75ppl milk price increase for suppliers to South Caernarfon Creameries (Cheese) – from 1^st September (3^rd August 2018)

This takes producers standard liquid litre price to 29.55ppl and based on a standard manufacturing litre to 30.53ppl

0.7ppl milk price increase for Arla direct suppliers – from 1^st August (3^rd August 2018)

This takes producers standard liquid litre price to 28ppl and manufacturing 29.19ppl

0.5ppl milk price increase for suppliers to Barbers (Cheese) – from 1^st September (3^rd August 2018)

This takes producers standard liquid litre price to 29.58ppl and based on a standard manufacturing litre to 30.68ppl

0.5ppl Extreme weather supplement for suppliers to Dairy Crest Davidstow (cheese) – from 1^st September (3^rd August 2018)

This is a supplement which will be reviewed monthly and is not a price increase but is a payment to assist supplying farmers who are struggling with the drought and additional expense.

This means no increase in milk price so a Dairy Crest Producer will continue to receive 29.32ppl from September 1^st based on a standard liquid litre and 30.4ppl based on a standard manufacturing litre.

Paine Partners sell their Meadow Foods share after less than 2 years ownership (3^rd August 2018)

Their has been no secret that US based Paine and Partners have been keen to exit their Meadow Foods investment and have now sold their shares to Exponent a UK private equity firm after less than two years of buying them from the Pickering and Chantler families.

At last AHDB production figures confirm reality on the ground (3^rd August 2018)

Several farmers have been questioning reports from AHDB claiming UK milk production was not dropping in July.

One such farmer stated “How on earth can AHDB Dairy claim on farm production has not dropped with no grass anywhere, a serious shortage of fodder, following a sh*t spring, many cattle on full winter rations?”.

Well according to its latest update production dropped below those of July 2017 with week ending 21^st July down 1.2%/day

Arla’s Organic stance turns sour (3^rd August 2018)

Arla’s 30^th July statement concerning its No Stance on organic feed derogations is certainly causing a stir and could soon turn sour on the European Giant.

The main bone of contention is the words “Please be aware that Arla’s position is that this (the no stance on utilising a derogation) will also include exemptions for the feeding of non-organic forage to dairy young stock”.

So, on the one hand the two organic certification bodies viz OF&G and the Soil Association are willing to issues derogations under the EU regulations but Arla are saying that’s not good enough for us.

Ironically the Soil Association certify Arla for its organic milk intake!

For the man in the street feeding non-milking young stock non-organic feed on welfare grounds when fodder is short is unlikely to be of concern.

Arla may have to revisit this decision because some of its organic suppliers are clearly unhappy as are the two organic certification Authorities.

It’s a complicated area and includes things like TB derogations. Question is will Arla stick 2 fingers up and say to O F & G and the Soil Association stuff your regulations, we are doing our own thing crisis or no crisis. For some organic farmers it’s just adding pressure to what’s set to be a very difficult and extremely expensive Autumn and Winter.

Correction to Ian’s August Dairy Farmer Article (3^rd August 2018)

The responses to this weeks August article was frankly phenomenal, so thankyou for all those who emailed Ian. However most respondents supporting my jottings were on the ball in pointing out Ian’ obvious typo when stated that Germany and the UK have more than 200 million flexitarians. It should have stated 20 million. Apologies

August 1^st Milk Price league based on www.milkprices.com standard litres (3^rd August 2018)

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.

Liquid standard litre Manufacturing standard litre (cheese)

Arla Co-op members 30.16 31.38

Crediton Dairy 30.00 -

Dairy Crest Davidstow 29.32 30.4

Wyke Farms 29.15 30.18

Barbers 29.08 30.16

Fresh Milk Company (lactalis) 29.00 30.03

Wensleydale Creamery (cheese) 29.00 29.95

Payne’s 29.00 -

South Caernarfon Creameries 28.81 29.78

Yew Tree Dairies 28.50 -

Belton 28.50 29.25

Meadow Foods 28.50 -

Glanbia 28.03 29.00

Arla Direct 28.00 -

Muller 28.00 -

First Milk Co-op members 28.00 28.95

Joseph Heler (cheese)

0.85ppl milk price increase for Arla members – from 1^st August (24^th July 2018)

This is a 1 Euro Cent increase, which equates to 0.85ppl addition to the standard liquid litre to give a 1^st August price of 30.16ppl and a 0.88ppl addition to the standard manufacturing litre to give 31.38ppl.

No change in respect of the Arla organic milk price, which remains at 40ppl (liquid) and 40.8ppl (manufacturing)

This increase has been attributed to the confirmed hot weather, which has impacted negatively on Arla’s European milk intake.

Arla says no organic feed derogations (24^th July 2018)

Arla has decided not to utilise any milk from UK farms who obtain a derogation to feed non-organic fodder/feed as a measure to maintain consumer confidence in Arla’s branded organic products.

It is expected that derogations will be issued by various authorities very soon as a result of the exceptionally hot weather, including the UK.

Any farmer who uses the derogation and feeds non-organic feed will find his or her milk excluded from Arla’s organic products until six months after the farm returns to full organic forage. It is anticipated that from September 1^st Arla will have two organic milk pool prices viz: farmers who continue to feed only organic feed and a lower price for those who obtain a derogation. Sadly for some farmers the need to obtain a derogation asap will not be optional.

First Milk appoints new Chairman (24^th July 2018)

First Milk has appointed Chris Thomas as non-executive Chairman to replace Clive Sharpe from 1^st August.

Chris has held a number of senior executive positions in businesses like Tulip UK, St Ivel, PepsiCo and Mars.

First Milk to invest £6.5million in its Haverfordwest Creamery (24^th July 2018)

This will come over the next 2 years and will boost the sites cheese output and efficiency.

1ppl milk price increase for suppliers to Crediton Dairy plus 30ppl 2018 guaranteed minimum – from 1^st September (20^th July 2018)

Crediton’s latest 1ppl price increase takes producers’ standard liquid litre milk price to 30ppl, a price which Crediton have committed to hold until at least 31^st December 2018 as a minimum floor price not a maximum.

1ppl milk price increase for suppliers to Pattermores – from 1^st August (PRODUCER NOTIFIED) (20^th July 2018)

0.75ppl milk price increase for suppliers to Pensworth Dairies – from 1^st July (20^th July 2018)

This takes producers’ standard liquid litre milk price to 27.95ppl

Auction average down another 1.7% (20^th July 2018)

Last week’s GDT auction produced the 4^th consecutive average price fall in only 6 weeks with the average achieved down 1.7% to US$3222 to its lowest point in 2018 and hot on the heels of an eye-watering 5% drop only two weeks ago.

Volumes available were down 4% to 25,454 tonnes and the negative trend is a concern, particularly for New Zealand dairy farmers.

Notable prices were:

Butter down 8.1% to average US$4953 tonne

Cheddar down 3.3% to average US$3596 tonne

SMP up 0.8% to average US$1959 tonne

WMP up 1.5% to average US$2973 tonne

Market Update (20^th July 2018)

The general trend is still negative.

Butter futures on the EEX were down 1.43% on the week, which takes the accumulated total drop to 11% in the past 6 weeks.

SMP futures on the EEX were down 1.63% on the week, which takes the accumulated total drop to 5% in the past month.

To make matters worse the value of sterling strengthened against the Euro.

Intervention Sales (20^th July 2018)

The EU sold only 2,400 tonnes of its June 2016 SMP stocks this week at prices ranging from €1125 tonne to €1200 tonne (£1,004 to £1,071).

This is a disappointing result both in terms of tonnage sold and the price achieved compared to the tender result achieved only a month earlier when 23,532 tonnes sold (10 x this months) for between €1195 to €1400 (£1,067 to £1,250)

The Commission now look unlikely to achieve their goal of clearing all remaining Intervention SMP stocks by the end of 2018. Note, for the October & November tenders there will be two tenders each month.

Production (20^th July 2018)

EU total milk production January to April is up 2% year on year.

Denmark saw its May production the largest on record since quotas were introduced in May 1984. Germany up 3.2% (January to April 2018), France +3.7%

Glanbia Cheese to build a new 45,000 tonne Mozzarella factory (20^th July 2018)

Glanbia Cheese have announced plans to build a state of the art 45,000 tonnes per annum Mozzarella cheese factory in Portlaoise, Co Laois, Central Southern Ireland.

At the moment Glanbia produce around 90,000 tonnes of Mozarella at two plants one in North Wales and one in Northern Ireland. So, if all three plants are operational the new output will represent a 50% increase in output.

The expectation is for the new plant to be operational by 2020, subject to planning permission. It involves an investment of €130 million (£117 million) creating 78 full time jobs.

Belton Farm announces £1.25 million investment (20^th July 2018)

Belton Farm cheese-makers from Shropshire have announced a significant £1.25m investment programme to upgrade and upscale its current processing facility. Belton is enjoying sales increases, particularly with of its Red & White fox as well as its Belton Farm branded cheeses, both domestically and abroad, particularly in the US market as well as in Canada, South Africa, Australia and the EU.

In addition, Belton are seeking to selectively recruit a handful of new local milk suppliers to join its existing family of 80 supplying farmers.

Arla and Yeo Valley deal is cleared by the CMA (20^th July 2018)

The Competition & Markets Authority (CMA) has given the unconditional green light to the February 2018 announcement that Arla Foods had agreed terms for a licence to utilise the Yeo Valley brand for Arla’s organic liquid, cheese and spreads.

Yeo Valley yoghurts, cream and dairy desserts business will remain under the ownership of The Mead family. Suppliers to the Coombe Farms Milk Group will move across to supply Arla.

Arla warns that Brexit could hjt UK dairy consumers pockets (20^th July 2018)

Following a report “The Impact of Brexit on the UK Dairy Sector” produced by the London School of Economics, Arla has issued a warning that if the findings in the report prove to be correct in terms of restricted access to labour and non-tariff barriers, UK consumers will likely see the availability of butter, yoghurts and cheese restricted and at higher prices.

The report not only points to the potential economic consequences of a farm labour shortage but also in terms of vets, lorry drivers, etc.

The report also notes the UK has the second largest dairy trade deficit in the world at up to 16% with 98% of the UK’s dairy imports currently originating from the EU and no doubt a big slug from Arla!

Warble Fly Warning (20^th July 2018)

A reader from North Devon has alerted us to the presence of a significant infestation of warble flies and the urgent need to be vigilant and take precautions. They even provided a photograph of the unwelcome beast on a cow, which fortunately had been treated.

If you encounter warble fly or any other unusual and unwanted pests in this dry spell, please email us.

1.5ppl milk price increase for suppliers to Blackmore Vale Farm – from 1^st August (9^th July 2018)

This takes producers’ standard liquid litre price to 29ppl.

1.25ppl milk price increase for suppliers to Barbers Farmhouse Cheesemakers – from 1^st August (9^th July 2018)

This takes producers’ standard manufacturing price to 30.16ppl and standard liquid litre price to 29.08ppl. Barbers continue to maintain a very healthy rolling 12 month pay out over 30ppl (30.08ppl) based on a manufacturing standard litre with 31.23ppl paid for June milk above 104% of base milk volume, which is effectively a transparent B milk price.

1.25ppl milk price increase for suppliers to Wensleydale Creamery, Hawes – from 1^st July (9^th July 2018)

This takes producers’ standard manufacturing price to 28.95ppl and based on a standard liquid price of 28ppl.

1ppl milk price increase for suppliers to Belton Farm (Cheesemakers) – from 1^st August (9^th July 2018)

This takes producers’ standard manufacturing price to 29.25ppl and the standard litre price to 28.5ppl

0.89ppl milk price increase for suppliers to Muller’s Co-operative Dairy Group – from 1^st August (9^th July 2018)

This takes producers’ standard liquid price to 28.88ppl

0.5ppl milk price increase for suppliers to Meadow Foods – from 1^st August (9^th July 2018)

This takes producers’ standard liquid litre price to 28.5ppl and based on a manufacturing standard litre 28.88ppl (Chester) and 28.75ppl (Cumbria)

0.5ppl milk price increase for suppliers to Yew Tree Dairies (AKA Woodcock’s) – from 1^st August (PRODUCER NOTIFIED) (9^th July 2018)

This takes producers’ standard liquid litre price to 28.5ppl

What are Arla tipped to do for August? (9^th July 2018)

Our inside knowledge that Muller would stand on with its August milk price at 28ppl proved to be bang on the money and similar reliable intelligence has firmly indicated that Arla will likely do the same for August and remain at 29.31ppl (standard liquid litre price) to be followed by a 1^st September increase.

Certainly this weather is hurting and escalating on farm milk production costs both for this winter and the here and now for those who are attempting to maintain forecast production. Without more money in the kitty to pay for the additional cost and to repay the previous price drop financial mess many will likely say blow the production or even worse throw in the towel. Time will tell whether our information on Arla’s non movement for August is as good as Ian believes it is.

July and August will see Mother Nature have the last say on milk production and by default determine milk prices and will be a favourite to win a tug of war against claims weakening cream and butter prices.

AMPE & MCVE both pushing north (9^th July 2018)

The June AHDB dairy indicator prices show AMPE price 33.23ppl, whilst its sister, MCVE 32.77ppl. (See above table)

5% Crash in GDT Auction results (3^rd July 2018)

Today’s 10^th anniversary GDT auction is no reason for farmers to celebrate as the average price crashed back by a whopping 5% to average $3232 for the 26,519 tonnes sold, which  is the third consecutive fall in only 4 weeks.

Notable prices were:

WMP down 7.3% to average US $2905 tonne

SMP down 4.6% to average US $1913 tonne

Cheddar down 4.3% to average US $3713 tonne

Butter down 4.0% to average US $5390 tonne

The overall index has fallen by US $405 (11.1%) in only 7 weeks.

The auction started in July 2008 just as the global crash in dairy prices started to go in freefall. During these 10 years more than $22 billion (£16.7 billion) of dairy products have been traded to buyers in more than 80 countries.

1.75ppl milk price increase for Dairy Crest suppliers - from 1^st August (29^th June 2018)

This takes producers’ standard manufacturing price to 30.40ppl

1.5ppl milk price increase for Wyke Farms (Cheesemakers) - from 1^st August (29^th June 2018)

This takes producers’ standard manufacturing price to 30.18ppl and standard liquid price to 29.15ppl

1.5ppl milk price increase for Lactalis/The Fresh Milk Company (Cheesemakers) suppliers – from 1^st July (29^th June 2018)

This takes producers’ standard manufacturing price to 28.99ppl and standard liquid price to 28ppl

1.25ppl milk increase for South Caernarfon Creameries suppliers - from 1^st August (29^th June 2018)

This takes producers’ standard manufacturing price to 29.78ppl

1ppl milk price increase for Glanbia Cheese Suppliers – from 1^st August (29^th June 2018)

This takes producers’ standard manufacturing price to 29ppl and standard liquid price to 28.03ppl

1ppl milk price increase for Paynes Dairies suppliers – from 1^st July (29^th June 2018)

This takes producers’ standard liquid price to 28.2ppl

0.75ppl milk price increase for Joseph Heler Cheese – from 1^st July (29^th June 2018)

0.33ppl milk price increase for Tesco/TSDG dedicated suppliers - from 1st August (29^th June 2018)

This increase is as a result of the quarterly review of prices for feed fertilizer and fuel. This takes producers’ standard liquid price to 30.17ppl

No price change for Muller suppliers in August (29^th June 2018)

Muller have confirmed that there will be no price change for its suppliers in August, which is what we were informed 10 days ago and resulted in us commenting in last week’s bulletin “and in one case almost decided privately not to push through an August price increase.” The Muller standard liquid litre price for August will therefore remain at 28ppl.

What’s the headline outlook (29^th June 2018)

Commodity prices for SMP and butter continue to weaken in the forward and spot markets, which is of concern. However, the current spell of hot weather across Europe was the main talking point at  this week’s Dairy UK Dinner and Seminar with most realising production is set to drop below forecast unless the weather changes.

Spot milk is reflecting the mood of buyers with trade now at 35ppl and trending up on almost a daily basis.

Several milk purchasers have notified producers of July and August milk price increase stressing the need to maintain profiles and supplies as well as updated forecasts.

As we all know mother nature can wreck any predictions in a matter of days and the only sure way to guarantee farmers will feed compound to replace lost milk production is if the milk price incentivises them.

Arla are now leading the charge and from the figures above some are certainly struggling to keep up with them.

Dale Farm secure Number 1 position as cheddar supplier to Lidl (29^th June 2018)

Lidl has signed a deal with Northern Ireland based co-op subsidiary Dale Farm to supply cheddar cheese to 8,000 Lidl stores in 22 countries, including the UK, Europe and USA.

In turn Lidl is now Dale Farm’s biggest cheddar cheese customer. The co-op is the UK’s largest indigenous co-op with 1300 members.

There will likely be one or more losers but we haven’t found out yet who they are and whether the cheese was made from UK milk.

1.92ppl milk price increase for Arla members from July 1^st puts Arla back in front (22^nd June 2018)

On the day Ash Amirahmadi takes up his position as top honcho in Arla UK (see story below) his co-op members will be in a UK milk league table champions league position with this latest increase.

This takes the 1^st July standard liquid litre price to 29.31ppl and based on a manufacturing standard litre to 30.5ppl with a clear hint that the expectation is for further increases to follow soon. This price increase serves as a challenge to most other milk purchasers some of whom will be scratching  their heads having considered  and in one case almost decided privately not to push through an August price increase. This policy will need to be revisited and as one farmer emailed Ian it’s a wake up call to others to up their game and quickly, especially if they want to recruit more suppliers or even retain existing ones. The race to the top is back on.

Arla’s organic standard litre price remains unchanged at 42.85ppl (manufacturing) and 40.80ppl (liquid) mainly due to the fact organic milk supply continues to increase.

2ppl milk price increase for Arla Directs – from 1^st July (22^nd June 2018)

This takes producers standard liquid litre milk price to 27.3ppl

1.5ppl milk price increase for suppliers to Crediton Dairy – from 1^st August (22^nd June 2018)

This takes producers standard liquid litre milk price to 29ppl

1.25ppl milk price increase for Grahams Dairies suppliers – from 1^st July (22^nd June 2018)

This takes producers standard liquid litre milk price to 28ppl

0.674ppl milk price increase for Freshways suppliers – from June 1st (PRODUCER NOTIFIED) (22^nd June 2018)

This takes producers standard liquid litre milk price to 26.95ppl

GDT auction index down 1.2% (22^nd June 2018)

This week’s GDT auction saw second consecutive average decline.

Notable prices were:

Cheddar down 3.6% to average US$3848 tonne

SMP down 1.1% to average US$2003 tonne

WMP down 1.0% to average US$3189 tonne

Butter up 0.8% to average US$3488 tonne

Correction (22^nd June 2018)

In last week’s bulletin we made a typo error when we quoted the new Sainsburys standard litre price as 24.48ppl when it should have been 28.48ppl. Apologies and the error was quickly corrected on our website www.ipaquotas.com/quotanews.htm

European Commission sell a further 23,533 tonnes of Intervention SMP (22^nd June 2018)

The total offered in this month’s tender was 144,844 tonnes and the cheapest sold was at €1195 tonne, circa £1050. This leaves around 280,000 tonnes in store. Back in May 41,958 tonnes were sold.

Viking rule of Arla UK comes to a sudden  end (19^th June 2018)

Danishman Thomas Pietrangeli will leave his position as UK MD of Arla UK in 10 days time to be replaced by Ash Amirahmadi, who has quickly risen through the Arla ranks since he joined the business in 2004 and is popular in many quarters.

This is a seismic move by Arla, who for more than 10 years have always had one of 3 Danish rulers heading up Arla’s UK operation.  Now it’s essentially a home grown non-Danish person heading up the UK operation which most will welcome.

Ash has certainly had a good grounding having worked on the farmer member, retail, trading and the commercial divisions of Arla.  There are certainly some big changes taking place at Arla and this one looks like a change in Danish attitude and perhaps the realisation that if a fourth Dane had been parachuted in to take charge of the UK, the business could have had a backlash to wrestle with.

1.2ppl milk price increase for Pensworth Dairy suppliers – from 1^st July (15^th June 2018)

This takes producers’ standard liquid litre price to 27.2ppl.

1.2ppl milk price increase for First Milk members – from 1^st July (15^th June 2018)

This takes producers’ standard liquid litre price to 27.2ppl and based on a standard manufacturing litre to 28.12ppl.

1ppl milk price increase for South Caernarfon Creameries suppliers – from 1^st July (15^th June 2018)

This takes producers’ standard liquid litre price to 27.6ppl and based on a standard manufacturing litre to 28.53ppl.

1ppl milk price increase for Meadow Foods suppliers – from 1^st July (15^th June 2018)

This takes producers’ standard liquid litre price to 28ppl and based on a standard manufacturing litre to 28.38ppl (Chester) and 28.25ppl (Cumbria).

0.36ppl milk price increase for Sainsburys Dairy Group suppliers – from 1^st July (15^th June 2018)

This takes producers’ standard liquid litre price to 28.48ppl (Muller) and 28.36ppl (Arla). The increase is based on the quarterly cost tracker review, in particular an increase in the cost of feed.

Concerning Discounts (15^th June 2018)

1. Tesco do half price Cathedral City

In a surprise move Tesco are now selling No. 1 cheese brand, Cathedral City Cheddar at an eye watering £5 per kilo. One headline described the deal as “insanely cheap”.

The normal Tesco price for Cathedral City is or rather was £10 kilo.

2. Cash & Carry’s discount Yew Tree milk to only 65p

Notorious Wolverhampton cash & carry dairy suppliers, Johal Dairies, are evidently the suppliers of milk, which is advertised as Yew Tree milk at 65p for 2 litres suddenly down by 27% from 89p. The price drop started in the first week of June.

1ppl milk price increase for suppliers to Paynes Dairies – from 1^st June (4^th June 2018)

This takes producers standard liquid litre price to 27.2ppl

1.5ppl milk price increase for suppliers to Pattemores – from 1^st July PRODUCER NOTIFIED (4^th June 2018)

This takes producers standard liquid litre price to 28ppl and based on a manufacturing standard litre to 28.93ppl

1ppl milk price increase for suppliers to Belton Farm (Cheese) – from 1^st July (4^th June 2018)

This takes producers standard liquid litre price to 27.5ppl and based on a manufacturing standard litre to 28.25ppl

1.25ppl milk price increase for Muller Directs – from 1^st July (4^th June 2018)

This takes producers standard liquid litre price to 28ppl

1ppl milk price increase for suppliers to Glanbia Cheese – from 1^st July (4^th June 2018)

This takes producers standard liquid litre price to 27.1ppl and based on a manufacturing standard litre to 28ppl

0.65ppl Milk Price for Suppliers to Dairy Crest Davidstow – from 1^st July (4^th June 2018)

This takes producers standard liquid litre price to 27.57ppl and based on a manufacturing standard litre to 28.65ppl

Market Outlook and Statistics as 30ppl for June Milk quickly becomes an unexpected reality (4^th June 2018)

In general the outlook is cautiously optimistic and those at the most responsive end of commodity market movements will receive over 30ppl for June deliveries.

Yew Tree Dairy have already notified producers on their ingredients contract that their June price will be over 30ppl based on standard manufacturing contract and in excess of 29ppl based on a standard liquid litre.

Meanwhile, Barbers Farmhouse Cheesemakers suppliers receive 31.08ppl on their over base litres (AMPE 33.08 minus 2ppl). So a farmer with a base of 100,000 litres for the month has 4% added and if he produces say 110,000 litres he receives 31.08ppl on the 6,000 litres above the 104%. On the 104,000 litres for May, June & July the Barbers price has been a constant 28.87 based on a manufacturing standard litre.

During May AHDB dairy calculated average UK butter prices increased by 11% (£520 tonne) to £5180.

Despite the fact the European Commission sold 42,000 tonnes of Intervention SMP at a knock down price it appears to have help boost the price for fresh SMP which in May increased by 14% (£165 tonne) to £1320.

Last but not least cream values increased by 13% (£270 tonne) to £2350 this increase is worth an extra 1.6ppl to a liquid processor.

Spot milk is trading circa 25p litre but most processors are close to capacity and unable to take much if any advantage from this price.

169 jobs to go at Arla as Llandyrnog and others are closed (4^th June 2018)

Arla has announced that 169 jobs are under consultation in the UK as part of its 3 year calcium transformation programme.

Today’s announcement will see Arla’s Llandyrnog Creamery close impacting on 97 staff, its Malpas cheese packing site close impacting on 43 jobs, closure of its Lockerbie cheese packing facility impacting on 14 jobs plus a further 15 roles at its Leeds HQ.

The total anticipated redundancy comes to 169 and the work from all three facilities will be redistributed to Arlas other premises. A further 180 job cuts are understood to have been announced in mainland Europe.

The Llandyrnog factory has undoubtedly been severely affected by Arla’s loss of the Sainsburys cheese business, estimated to be somewhere between 13 to 14,000 tonnes year, which must have been the final nail in the coffin for a factory operating at below 50% capacity.

So whilst Arla is or perhaps was one of the UK’s largest cheese producers as well as the worlds 5^th largest dairy processor it is certainly finding life tough and indeed downsizing at the same time as two of its main GB competitors are making major investments to increase production.

Last week Dairy Crest announced a £75 million investment in its Davidstow Creamery to boost factory output by 23,000 tonnes. In addition, Wyke Farms have just announced the building of a new dairy which will see its existing 18,000 tonnes increased by almost 3 fold to 50,000 tonnes once its various phases are completed.

Challenging times for Arla both in the UK and globally and today’s announcement is expected to be the first of several.

Arla serves notice on 11 supplying farmers (4^th June 2018)

Its not a good week for Arla globally with the news that 11 of its 33 supplying farmers to its Hollandtown, Wisconsin USA plant have received termination notices due to a serious milk over supply.

These are the latest in an alarming list of notices served on US dairy farmers, including 75 farmers supplying Grassland Dairy and 100 under notice from Dean Foods. Several believe more farmers are likely to receive similar notices to these 186 farmers.

Wyke Farms to build 50,000 tonne cheese factory (4^th June 2018)

Wyke from Somerset are set to build Ivy’s Dairy a 50,000 tonnes facility named after the Clothier family’s famous Grandmother Ivy Clothier. The dairy will be built over a period of eight years.

Muller signs up gold medallist as part of its brand ambassador (4^th June 2018)

Commonwealth Games and World Indoor Championship gold medallist Katarina Johnson-Thompson has been signed up as the Muller brand ambassador and joins a squad of 10 top athletes promoting the Muller brand which ranks 7^th in the Grocers Top 100 British Brands

1.15ppl increase in Arlas standard litre price from 1^st June (25^th May 2018)

Arla have announced a 0.88ppl (1 Euro Cent) member price increase from June 1^st. In addition, the 0.27ppl artic loading supplement is now achieved by more that half of Arla members and consequently this amount will be added to both the liquid and manufacturing standard litre prices published by www.milkprices.com.

The 1.15ppl total increase gives the following standard litre prices

Liquid standard litre 27.51ppl

Manufacturing standard litre 28.58ppl

1ppl milk price increase for Arla direct suppliers from 1^st June - This increases the standard litre price to 25.3ppl (25^th May 2018)

0.8ppl milk price increase for Helers Cheese suppliers from 1st June (25^th May 2018)

The UK’s peak daily production passes as MCVE & AMPE both increase (25^th May 2018)

Last weekend saw the UK reach its peak daily production in what has been undoubtedly a much smaller spring flush as a result of nature’s intervention.

At the same time the May AMPE increased to 33.08ppl up 4.18ppl in 4 weeks with MCVE up to 32.33ppl an increase of 0.95ppl

Muller / Lidl 28ppl fixed price contract closes fully subscribed (25^th May 2018)

The innovative fixed price hedge offered to Muller direct suppliers to fix up to 50% of their milk for up to three years is now fully subscribed and closed.

Almost all of the 180million litres on offer has been allocated with percentages committed varying from 10% to the maximum 50% and averaging 40% for each farmer with the majority of the deals  for the maximum 3 years.

It has certainly been a successful launch and no doubt Muller will be hoping farmers don’t leave signing up and committing to similar deals in future until the last 48 hours as happened with this offering but that’s wishful thinking and reminds Ian of the quota trading years.

GDT average increases by 1.9% with talk of new butter record prices to come (25^th May 2018)

Last Tuesday’s GDT auction recorded a 1.9% all products average increase to US $3637 compared to that achieved two weeks ago.

The butter average was up a further 2.4% and has jumped by 30% in the past six months. There is now talk of a likely global butter shortage which is tipped to top trump and eclipse the record highs recorded in 2017.

Key price changes were

Cheddar index up 4.4% to average US $4205 tonne

SMP index up 3% to average US $2047 tonne

Butter index up 2.4% to average US $5787 tonne

WMP index up 0.2% to average US $3226 tonne

Dairy Crest to invest £85 million and will require an additional 200 million litres/ year (25^th May 2018)

Of the total £85 million spend £75 million will be invested in Dairy Crests flagship  Davidstow Creamery and will result in the cheese output from the factory increasing from 54,000 to 77,000 tonnes a year by 2023.

The creamery in Cornwall will require an additional 200 million litres a year from a combination of its existing 330 suppliers as well as some new recruits

0.5ppl May milk price reduction cancelled by Grahams Dairies (11^th May 2018)

In a move other milk purchasers should take note of Grahams Dairies have rescinded their confirmed 0.5ppl milk price reduction, which took effect from May 1^st. This results in an above average producer standard liquid litre price of 26.75ppl for May deliveries.

In a letter to its suppliers, Grahams Dairies focus on the fact they are agile and that markets have strengthened.

So whilst others have retained their May milk price cut Grahams appear to have done the right thing by their farmers. They could easily have gone down 0.5ppl for May and back up 0.5ppl for June and banked the difference. The big question is whether rescinding price cuts will be permitted in the government’s new compulsory milk contracts, which removes milk buyer discretion and agility. An idea of the contracts detail is anticipated very soon.

In the letter Grahams point out that actual deliveries to the dairy are currently running 3% below farmers forecast, which appears to be representative of the rest of GB and indeed Europe. (See below)

1ppl milk price increase for suppliers to Meadow Foods – from June 1^st (11^th May 2018)

This takes producers’ standard liquid litre price to 27ppl and based on a manufacturing standard litre to 27.38ppl (Chester suppliers) and 27.25ppl (Cumbria suppliers).

The key influencing factor is the improvement in wholesale cream values.

The only way is up baby (11^th May 2018)

That’s the opening lyrics to the Yazz and The Plastic Population record and its now the only way UK, European and world dairy prices are moving. Key influencers are:

Milk deliveries are 3 to 5% lower than budgeted.

Futures prices are increasing, especially for the second half of 2018 due to product availability concerns.

Wholesale prices for most, if not all, dairy products are rising globally.

Paynes offer a fixed price option for 28ppl (11^th May 2018)

Paynes Dairies are offering a fixed price contract at 28ppl, which will run until November 2019. The positive interest and uptake has been excellent with a couple of exceptions who declined on the basis it’s not enough money! Initially all Paynes suppliers have been offered the opportunity to fix up to 2% of their production, which could prove to be an administrative nightmare. The identity of the customer offering the fixed price is currently embargoed, however, it is anticipated they will recognise the benefits of publically attaching their name to the initiative. Charlie Payne has confirmed to Ian that he is in negotiations with other customers over similar smoothing mechanisms.

Tesco selling milk for £480.18 per litre (11^th May 2018)

One eagle eyed regular reader spotted Britain’s most expensive milk in a Tesco store.

It was Tesco branded 1% milk proudly stating “Tesco fair for farmers guarantee”. If Tesco pay the farmers a fair share of £480.00 litre they will certainly rise to the top of the tank with the cream.

Meanwhile Tesco have reduced the shelf price of 4 pints from £1.10 by 1ppl to £1.09. Are we to believe shoppers will bother over a 1ppl reduction??

0.75ppl milk price increase for Muller Direct suppliers – from 1^st June breaks the log jam (4^th May 2018)

This takes Muller Directs standard liquid litre milk price to 26.75ppl as a result of strengthening markets (see below)

Stand on prices for June will not be reported (4^th May 2018)

Apologies to any processors who feel that trumpeting a June stand on price is worthy of a mention in this bulletin but it won’t be. Only GB price increases for June will be reported.

Prices are certainly trending up both on the spot and with futures prices and remember both AMPE and MCVE are both up (see above). The mood is both positive and cautiously optimistic for continuing gradual increases

April wholesale dairy prices were positive (4^th May 2018)

AHDB’s April dairy wholesale round up confirms cream increased by £150 tonne worth just under 1pp to a liquid processor and making the total value of cream to a liquid processor 12.16ppl

Butter was up £440 tonne and even SMP recorded a small increase, as fresh SMP became harder to find.

GDT auction prices down 1.1% to average US$3465 tonne (4^th May 2018)

An increased tonnage of 19,508 tonnes (+1.3%) saw the average price fall predominantly due to the fall in WMP.

Notable movers were:

SMP up 3.6% to average US$1999 tonne

Cheddar up 3.1% to average US$4024 tonne

Butter stand on to average US$1990 tonne

WMP down 1.5% to average US$3231 tonne

Friesland Campina down again but still returning 29ppl (4^th May 2018)

Although it’s their 6^th consecutive price drop the European dairy giants latest equivalent 0.27ppl price drop results in a standard liquid litre price of 29.019ppl, which most in GB can only dream about.

Muller open their recruitment doors (4^th May 2018)

There is no secret that Muller have had a good 2018 in terms of quietly recruiting a number of large producers across GB. Now the doors are publically open as Muller’s planned investments mean they require more milk than their existing 1700 suppliers are expected to be able to deliver.

0.5ppl milk price reduction for supplies to Grahams Dairies (Scotland) – from May 1^st (27^th April 2018)

This takes producers standard liquid litre price down to 26.25ppl. This could be the last 1^st May price cut.

AMPE and MCVE continue to head North (27^th April 2018)

The April AMPE price weighs in at 28.90 a 2.22ppl increase in a month, whilst MCVE stands at 31.38ppl for April, a monthly increase of 0.33ppl. The AMPE increase is almost entirely down to the rise in the value of butter, however, SMP also increased in value.

First Milk to hold its member milk price (27^th April 2018)

This means the standard liquid litre price for May will remain at 26ppl and based on a manufacturing standard litre will remain at 26.88ppl.

Cheese exports up 23% (27^th April 2018)

According to AHDB Dairy UK cheese exports increased by 23% in 2017 compared to 2016 with a value in excess of £615 million involving in excess of 170,000 tonnes.

The majority was exported from the UK to the EU27, in particular to Ireland, France and Holland.

Relief for all as Arla confirm no further price cut for May deliveries (25^th April 2018)

Arla members conventional standard liquid litre milk price for May will be a stand on at 26.39ppl and based on a manufacturing standard litre equates to 27.43ppl.

However, for members supplying organic milk the supply continues to increase consequently UK members will see a 0.88ppl (1 Euro Cent) reduction taking the standard liquid litre to 40.43ppl and based on a manufacturing standard litre equates to 42.04ppl. Arla organic suppliers in both Denmark and Sweden receive a cut twice as large at 2 Euro Cents (1.78ppl).

400 million Euro cost saving target over 3 years for Arla (25^th April 2018)

Arla has publicised its “calcium” cost cutting programme where the aim is to reduce cost by an eye watering 400 million Euro and the target is for 300 million (£263 million) of these savings to be returned to its 11,200 farmer members with the remaining 100 million Euros of savings to be re-invested in the business. This equates to an extra £23,500 per member assuming the savings targets are achieved.

Arla senior management are certainly under intense pressure to deliver better milk prices to members in all 7 countries and many in mainland Europe are very unhappy about the hit the weaker pound is having in this post Brexit vote period, which is estimated to have cost the co-op around £130 million plus. One key person commented to Ian “Arla’s GB operation and members are a real pain in the A”

It’s a big number with a huge internal transformation plan and will inevitably result in job losses and potentially premises closures. At least Arla are doing something big and positive in an effort to boost the co-op’s performance whether it will come quick enough is debatable.

1.5ppl milk price drop for suppliers to Tomlinson’s Dairies – from April 1st (PRODUCER NOTIFIED) (20^th April 2018)

This takes producers’ liquid standard litre price to 26ppl. The price for May deliveries will be held at 26ppl.

1.5ppl milk price reduction for suppliers to South Caernarfon Creameries – from 1^st May (20^th April 2018)

This takes producers’ manufacturing standard litre price to 27.53ppl and based on a liquid standard litre price to 26.64ppl.

1ppl milk price reduction for suppliers to Crediton Dairy – from 1^st May (20^th April 2018)

This takes producers’ liquid standard litre price to 27ppl.

0.88ppl milk price reduction for suppliers to Muller Co-operative Group (CTRG) – from 1^st May (20^th April 2018)

This takes producers’ liquid standard litre price to 27.99ppl.

0.6ppl milk price reduction for suppliers to Waitrose – from 1^st May (20^th April 2018)

This takes producers’ liquid standard litre price to 30.94ppl.

0.32ppl milk price increase for Tesco (TSDG) suppliers – from 1^st May (20^th April 2018)

This takes producers’ liquid standard litre prices to

29.84ppl Muller Milk Group

29.59ppl Arla suppliers

The price adjustment is based on the quarterly cost tracker review.

Muller Directs option to fix up to 50% of their milk at 28ppl for 3 years (20^th April 2018)

This is a very interesting initiative between Muller and Lidl we previously featured and certainly ups the anti on fixed price contracts and ex-farm gate milk price volatility management. The farmer uptake at 28ppl for 3 years will be very interesting to monitor but you would expect it to be high, if not over subscribed.

GDT bounces up and Intervention stock of SMP diminish (20^th April 2018)

Tuesday’s GDT auction saw the average price increase by 2.7% to $3587/tonne, which is the first increase in 2 months where the previous four auctions have all recorded consecutive falls. All products offered for sale recorded gains.

Notable movers were:

Cheddar up 4.6% to average US$3855 tonne

SMP up 3.6% to average US$1913 tonne

Butter up 2.9% to average US$5654 tonne

WMP up 0.9% to average US$3111 tonne

Meanwhile, just under 25,000 of the circa 380,000 tonnes of ageing Intervention SMP were sold by the Commission this week, which is good news despite the fact it has had to be offloaded cheaply.

First Milk to sell its Scottish creameries (20^th April 2018)

First Milk have publically put the For Sale sign up on its two Scottish creameries in Arran and Campbeltown, having unsuccessfully tried for at least three years to sell them under the public radar to numerous potential purchasers.

Whilst Arran and Mull of Kintyre Cheddar are both popular quality branded cheeses the fact is First Milk have battled to make any money from them so commercially they have to be disposed of as the co-op continues to divest itself of loss making enterprises and downsizes.

For the 28 supplying farmers who produce circa 30 million litres of milk each year the news will be a blow but certainly not a complete surprise. Whilst the farmers will be hoping and praying someone will rescue both creameries they will realise that if no buyers can be found, one or both creamery doors could be closed for good.

Finding buyers looks like a challenge and as one potential punter commented to Ian “I can’t decide whether they are hospital cases or whether there is potential with a gem or a jewel to be had?” Will the supplying farmers be persuaded it’s financially sound to back some form of management buyout?

Farmers involved certainly need to be asking for clear timescales and a commitment from First Milk as well as what safety net will be available if no buyers can be found within given time frames. Will First Milk commit to collect and process their milk long term?

Farmers will realise that if the doors are closed and if no commitment is given it will potentially immediately be followed by closure of their dairy farms unless they do a deal to sell their milk to a mainland processor and abandon the two brands. The main problem is transporting milk from this area is costly as is the cost of production.

Once First Milk have exited the two creameries they will be left producing bulk unbranded cheddar for Ornua at their Haverfordwest and The Lake District creameries as well as their important partnership with Nestle. The obvious question is whether there is any reason First Milk need to retain a head office in Glasgow or anywhere else for that matter. One option must be for First Milk to cut cost and run its various departments from either of the two creameries.

Whilst First Milk’s CEO is based in the Midlands the existing departmental skills base is in Glasgow and will not be easy to relocate or replicate.

Eat less dairy say 52 organisations (20^th April 2018)

What has been described as “a powerful alliance of 52 organisations” has produced a report, “Principles for Eating Meat and Dairy More Sustainably : the less and better approach”

They have delivered the report to DEFRA as their submission to the government’s consultation on the post Brexit Agriculture Policy, which we all know is badged as a green Brexit.

The report highlights eight reasons why eating less meat and dairy will impact on the climate, animal welfare, nature, health, worldwide access to food, effectiveness of antibiotics, resource use and waste and even the livelihoods of farmers.

The report points the finger at what it calls industrial livestock production and calls on government to step forward by encouraging farming practices that benefit animal welfare, the environment and our health.

The alliance claims almost a 1000% increase in demand for vegetarian options in 2017 in the UK alone.

The 52 members of the eating-better alliance include Friends of the Earth, WWF and Compassion in World Farming. Whether our politicians listen to their views remains to be seen but they certainly won’t be ignored or dismissed and the fear is the new post Brexit policy could be hi-jacked and dictated by these organisations and the so-called Green Lobby.

The report can be downloaded at:

https://www.eating-better.org/uploads/Documents/2018/better_meat_report_FINAL.pdf.

Or a summary at: http://bit.ly/EB2018lessandbettersummary

Dairy UK respond quickly to the Eating Better Report (20^th April 2018)

Dairy UK were quick to respond to the report and cut straight to the chase in stating that “the environmental and nutritional contribution of the dairy sector has been wilfully misrepresented”. The response then proceeds to accurately address and challenge the reports eight key punch points.

It’s worth reading the one page response from Dairy UKt …….. http://www.dairyuk.org/media-area/press-releases

Barry Wilson receives the 2018 RABDF Princess Royal Award (20^th April 2018)

Barry Wilson was certainly long overdue some recognition for his lifetime contribution to the dairy industry and his direct commentary on dairy politics for more than 40 years.

The RABDF have rectified this with their 2018 Princess Royal Award. The two publications Barry had under his wing were The Dairy Industry Newsletter and British Dairying.

Muller set to exit supplying milk to 3,000 non-domestic deliveries (20^th April 2018)

Having purchased most, if not all, of these 3,000 customers when Muller bought the Dairy Crest business 2 years ago they have decided to cut their circa £5million a year losses and go to consultation on simply closing the doors and it appears there is no plan to sell the operation to a third party.

A 45 day consultation has started involving around 250 jobs who are involved in deliveries to businesses, restaurants, pubs, bakeries and food service caterers etc.

0.5ppl milk price reduction for Muller Direct suppliers – from 1^st May (3^rd April 2018)

This takes producers’ standard liquid litre milk price to 26.0ppl, however, with the re-introduction of the retail supplement the figure increases to 26.2ppl.

In addition, Muller have confirmed Muller Direct suppliers’ April deliveries are expected to receive a retail supplement of circa 0.15ppl.

0.84ppl to 1.15ppl milk price reductions and a 26ppl liquid milk price for First Milk members – from 1^st April (3^rd April 2018)

This is an across the board harmonisation of the matrix of regional First Milk member milk prices, which results in a standard liquid litre milk price of 26ppl. This will be under the heading of First Milk liquid in addition to which will sit a First Milk manufacturing milk price 26.88ppl. Going forward First Milk will only have the two contracts and two milk prices.

1.5ppl milk price reduction for Graham Dairies suppliers – from 1^st April (3^rd April 2018)

This takes producer’s standard liquid litre milk price to 26.75ppl

1.25ppl milk price reduction for Wensleydale Creamery (Hawes) – from 1^st April (PRODUCER NOTIFIED) (3^rd April 2018)

This takes producers standard manufacturing litre milk price to 27.7ppl and based on a standard liquid litre to 26.75ppl.

1.1ppl milk price reduction for Freshways suppliers – from 1^st April (PRODUCER NOTIFIED) (3^rd April 2018)

This takes producers standard liquid litre milk price to 26.28ppl (www.milkprices.com)

Dairy Crest and DCD in deadlock as a 1ppl price cut is imposed – from 1^st May (3^rd April 2018)

Dairy Crest have imposed their first price reduction of 1ppl for May having failed to reach agreement with DCD for the first time since the formation of the DPO.

This 1ppl reduction takes producers standard manufacturing litre milk price to 28ppl and based on a standard liquid litre to 26.92ppl, which it has to be said is a healthy May price.

Deadlock means that any DCD Davidstow farmers can leave only serving 3 months termination notice as opposed to the contracted 12 months. Any who do leave will automatically forgo their 1ppl loyalty bonus for the three months. The resignation opportunity is open for 30 days.

Whilst on the face of it it sounds like a big call the alternative milk purchasers are unlikely to see orderly queues of DCD farmers wanting to sign up given their current prices.

GDT down 0.6% for the fourth consecutive auction (3^rd April 2018)

Today’s GDT auction saw the average all products price fall for the fourth consecutive auction by 0.6% to average US$3477 tonne.

Notable price movements were:

SMP down 1.8% to average US$1849 tonne

WMP up 1.6% to average US$3278 tonne

Cheddar up 2.2% to average US$3679 tonne

Butter up 4.1% to average US$5494 tonne

Muller clocks in 7^th position as The Grocer’s 2018 Britain’s Biggest Brands (3^rd April 2018)

Muller will no doubt by delighted to be the only dairy brand to make The Grocer’s Top 10, having retained its 7^th position for a second year. Other dairy brands were Lurpak 19^th (19^th in 2017) Arla 22^nd (26^th in 2017) and Yeo Valley 53^rd (50^th in 2017)

Wyke Farms opens its recruitment book (3^rd April 2018)
Wyke Farms, Somerset, has opened its recruitment door seeking at least 25million litres of extra milk. The milk is required due to increased exports with Wyke after new producers ideally within a 50mile radius of the dairy in Bruton over an area which extends into Gloucestershire, Somerset, Wiltshire, Devon & Dorset

FarmFoods selling 8 pints of milk for only £1.50 (3^rd April 2018)

The information received indicates the discounted milk was supplied by Paynes Dairies.

3ppl milk price reduction for suppliers to Lactalis – from 1^st April (PRODUCER NOTIFIED) (23^rd March 2018)

It sounds like the mother of all price drops and it is but to balance this drop is the fact that Lactalis have held their producer price since November at 29.91ppl.

Similarly this latest price is guaranteed by Lactalis for a minimum for three months until July 1^st.

The resulting manufacturing standard litre price is 26.91ppl and based on a liquid standard litre will be 26ppl.

1.75ppl milk price reduction for suppliers to Meadow Foods – from 1^st April (23^rd March 2018)

This takes producers’ standard liquid litre milk price to 26ppl and based on the manufacturing standard litre it calculates to 26.37ppl (Chester based) and 26.25ppl (Cumbria) (www.milkprices.com)

1ppl milk price reduction for suppliers to Wyke Farms (Cheese) – from 1^st April (23^rd March 2018)

The resulting manufacturing standard litre price is 28.62ppl and based on a standard liquid litre 27.65ppl.

1ppl milk price reduction for suppliers to Paynes Dairies – from 1^st April (PRODUCER NOTIFIED) (23^rd March 2018)

This should result in a standard liquid litre price of 26.2ppl

Arla April milk price is stand on with an extra 0.32ppl currency increase (23^rd March 2018)

Arla will not reduce its conventional milk price for April and the likelihood and expectation is that the next time Arla members milk price moves it will be upwards.

In addition, the April to June currency smoothing mechanism results in a 0.32ppl increase, which results in a 1^st April standard liquid litre price of 26.39ppl and a manufacturing standard litre price of 27.43ppl.

Meanwhile, the Arla member organic standard liquid litre price for April will be 41.28ppl and on a manufacturing litre 42.92ppl. However, for Arla’s Danish and Swedish producers they have a 1 Euro Cent a litre price reduction.

Last month’s Arla member price drop of 2.16ppl was a big bombshell, however, one month ago in this bulletin Ian stated that whilst the whopping cut was unwelcome if it was a case of cut once and cut deep it should be considered a reasonable result by farmers involved and that price drops under 26p looked less likely now.

Whether farmers like it or not as things look today most, if not all, GB milk purchasers will be under pressure to follow Arla’s lead. That means fewer, if any, further price cuts are likely and possibly none for May 1^st unless suppliers want to play Russian Roulette with their supply base. To have a stand on liquid price of 26.4ppl plus through the spring flush, whenever spring arrives, is good news.

Correction Reference Wensleydale milk price cut (23^rd March 2018)

In our last bulletin we stated that the producer notified 1ppl milk price cut for suppliers to Wensleydale Creamery took effect from 1^st April. Two producers have confirmed that the cut was actually announced with immediate effect from 1^st March

GDT index fall for the third consecutive auction (23^rd March 2018)

This week’s GDT auction saw the average price fall 1.2% to average US$3632 tonne. Note, the quantity on offer was down 3.4% to 18,635 tonnes.

Key price movements were:

SMP down 8.6% to average US$1887 tonne

Cheddar down 3.9% to average US$3609 tonne

Butter no change average US$5281 tonne

WMP up 0.1% to average US$ 3226 tonne

Muller Milk Group Board (MMG) appointments (23^rd March 2018)

Democracy has certainly played its part in the recent elections which have seen four out of six candidates elected to join three others making a total of 7 who represent 1700 Muller suppliers along with the 20 members of Muller’s Farmer Forum.

David Halhead and Ian Speed were the two unsuccessful candidates who now step down from their existing board positions and the successful four were David Herdman, Philip Rowney, Ray Gibbins and Richard Pearman.

Around 19 million litres of GB milk were dumped (23^rd March 2018)

AHDB Dairy estimate the recent snow resulted in around 19 million litres of milk failing to be collected in GB between 28^th February and 3^rd March

Muller & Grahams Dairy Scotland scoop 3 year Lidl deal (22^nd March 2018)

Grahams The Family Dairy and Muller will start a 3 year partnership for the supply of liquid milk and butter to Lidl  from June 1^st this year.

From June 1^st Muller’s total share of Lidl’s business increases by what Ian estimates to be around 70/80 million litres. Meanwhile Grahams retain their sales as Lidl’s main milk and cream supplier in Scotland whilst Trewithen Dairy, Cornwall also retains its current regional contract. 

Ian estimates Lidl’s total milk requirements are around 240 million litres based on 12 RDC outlets averaging 20 million litres each and Muller’s June 1^st  share will be around 200million litres or more based on its contract to serve 10 x RDC’s.

The Muller increases come at the expense of Medina who have lost an estimated 40 million litres to  two RDC’s and Arla who lose an estimated 30 million litres to  two RDC’s.  Neither Medina or Arla will be supplying Lidl with any milk from June 1st

The switch in literage is certainly newsworthy, however, as always the real commercials are undisclosed.  Certainly, the innovative 3 year partnership and the offer of fixed price ex-farm gate milk prices from the Muller/Lidl partnership will be of particular interest to Muller farmers and the industry.

Under the deal Muller direct farmers will be able to lock in to a fixed price of 28ppl for a portion of their milk.  The locking in time frame is yet to be confirmed but the expectation is it will be a minimum 1 year and could even be a 3 year hedge deal for farmers, which is a new direction and massive step forward for a major retailer as both Lidl and Muller try to offer farmers real options and solutions to minimise the effects of volatility.  Further details are expected shortly.

1.5ppl milk price reduction for suppliers to Joseph Heler Cheese – from 1^st April (PRODUCER NOTIFIED) (9^th March 2018)

1.5ppl milk price reduction for liquid contracted suppliers to Yew Tree Dairy – from 1^st April (9^th March 2018)

This reduction takes producers’ standard liquid litre milk price to 26.5ppl

1.5ppl milk price reduction for suppliers to Belton from – from 1^st April (9^th March 2018)

This reduction takes producers’ standard litre liquid litre milk price to 26.5ppl and based on a manufacturing standard litre price to 27.25ppl.

1.25ppl milk price reduction for suppliers to Pensworth Dairy – from 1^st April (9^th March 2018)

This reduction takes producers’ standard liquid litre milk price to 26ppl

1ppl milk price reduction for suppliers to Wensleydale Creamery – from 1^st March (9^th March 2018)

This takes producers’ standard liquid litre milk price to 28ppl and based on a standard manufacturing litre to a healthy 28.95ppl.

GDT average falls for the second consecutive auction (9^th March 2018)

This week’s GDT auction saw the average price ease to $3593 down 0.6% and the second consecutive fall in 2018. In addition, the average price for the key product WMP declined by 0.8% the first WMP price fall in 2018.

Notable results:

Butter down 1% to average US$5280 tonne

WMP down 0.8% to average US$3232 tonne

Cheddar up 1.7% to average US$3759 tonne

SMP up 5.5% to average US$2051 tonne

Dairy farmers’ contracts terminated with only 3 months notice (9^th March 2018)

Around 24 farmers who sell their milk to Dean Foods in Pennsylvania US have been given only 90 days (3 months) to find a new milk purchaser.

It’s not the first time a US milk purchaser has made a similar move because in 2017 Grassland Dairy gave producers only 30 days to find a new home.

The move is blamed on a surplus of milk combined with the fact consumers are buying less liquid milk. Coincidently in the same region as Dean Foods contract terminations have been issued Walmart have built their liquid milk processing plant which is expected to be fully operational by the end of May. Prior to this Dean Foods bottled Walmart’s Great Value own label milk hence the reason why most people have joined the dots up themselves!

The expectation is that Dean Foods and others will terminate more farmer contracts at short notice as the spring flush results in milk flooding onto the market.

On a global scale whilst production in New Zealand is down, due to weather, production in the EU and US are both up.

1.5ppl milk price reduction for suppliers to Muller Direct contracted producers – from 1^st April (2^nd March 2018)

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

1.5ppl milk price reduction for suppliers on Arla Direct contracts – from 1^st April (2^nd March 2018)

This reduction takes producers standard liquid litre price to 24.3ppl and for a manufacturing standard litre 25.32ppl, which means it is on course to be the lowest April GB farm gate milk price.

1.5ppl milk price reduction for Glanbia Cheese suppliers – from 1^st April (2^nd March 2018)

This reduction takes producers standard liquid litre price to 26.1ppl

1.32ppl milk price reduction for Freshways suppliers with more to come – from 1^st March (PRODUCER NOTIFIED) (2^nd March 2018)

This reduction takes producers standard liquid litre price to 27.37, including the 0.6ppl volume bonus for those supplying 1 million litres plus (www.milkprices.com). In addition, Freshways have informed its supplying famers that they anticipate a further price reduction in April.

1.3ppl milk price reduction for Paynes Dairies suppliers – from 1^st March (PRODUCER NOTIFIED) (2^nd March 2018)

This reduction takes producers standard liquid litre price to 27.2ppl (www.milkprices.com).

1.25ppl milk price reduction for suppliers to Crediton Dairy – from 1^st April (2^nd March 2018)

This reduction takes producers standard liquid litre price to 28.5ppl (www.milkprices.com)

1.25ppl milk price reduction for Dairy Crest Davidstow suppliers – from 1^st April (2^nd March 2018)

This reduction takes producers standard liquid litre price to 27.92ppl and based on a manufacturing standard litre to 29ppl (www.milkprices.com)

1ppl milk price reduction for Barbers Cheesemakers suppliers – from 1^st April (2^nd March 2018)

This reduction takes producers standard liquid litre price to 27.842ppl and based on a manufacturing standard litre to 28.87ppl (www.milkprices.com)

Friesland Campina March farm gate milk price is 30.4ppl (2^nd March 2018)

The small 0.25 Euro Cents kg milk price reduction from 1^st March for suppliers to the European giant Friesland Campina converts to 30.361ppl based on a liquid standard litre according to www.milkprices.com It’s certainly a price UK farmers will envy.

The Friesland organic standard liquid litre milk price converts to 43.19ppl for March as a result of a 1^st March increase of 1.5 Euro Cents kg.

Glimmers of light slowly emerging (2^nd March 2018)

In last week’s bulletin under the heading of “The Outlook” we suggested that there is a real possibility that the bombshell 2.16ppl March price drop for Arla members could be close to the last and that this could be close to if note already at the bottom.

AHDB Dairy have today posted a news item headed “Market Indicators suggest end to price cuts” in which they state farm gate milk prices are heading towards settling and could even move up post the Spring flush.

It’s another positive sign all we need now is for Spring to appear and these positive signs and predictions to convert to reality.

Intervention SMP is released at rock bottom price (2^nd March 2018)

The Commission have sold 4,337 tonnes of the 380.000 tonnes in stock for only €1,100 tonne (£976.00 tonne). This is easily the lowest price they have sold at and its €145/tonne below feed grade SMP. The market certainly doesn’t need much of this cheap low grade SMP releasing at this moment in time.

Arla to pay for milk they are unable to collect (2^nd March 2018)

Arla has announced that in the current extreme weather conditions they will pay members for milk they are unable to collect, which farmers are forced to dispose of. The change takes effect from 26^th February and runs until the weather is declared as improved. Note, it is the members duty to clear their farm drive/entrance as a prior qualification to this offering.

Surprisingly and indeed shamefully Arla report that a small number of farmers on Thursday decided to threaten and abuse Arla staff, including tanker drivers, which Arla have made very clear is unacceptable. It’s a wonder such threats are not grounds for terminating membership of Arla. At the end of the day everyone is trying to do their best in these arctic conditions.

Meadow Foods is in acquisition mode (2^nd March 2018)

Meadow Foods who handle over 650 million litres of milk annually have acquired Roil Foods Limited of Wrexham, who manufacture a range of dairy based oils, which are new products to the Meadow dairy ingredients portfolio. Clearly the new Meadow appear to be in acquisition mode.

Government’s Consultation on “The Future for Food, Farming and the Environment” is now live (2^nd March 2018)

For further details log onto ‘Health and Harmony: the future for food, farming and the environment in a Green Brexit’. . This is the key document on the future thoughts as to the direct and shape of the post Brexit. Responses need to be received by 8^th May.

Tomas Pietrangeli, Managing Director of Arla Foods UK, commented:

“Today’s announcement provides welcome clarity for our farmer owners as to how the Government sees the future of agriculture in this country. We are pleased to see that the Environment Secretary intends to involve the industry in the process through consultation.

“Arla is already in consultation with its farmer owners over how today’s announcement will affect them. We look forward to continuing to engage with Government and policymakers as we work towards the future of agriculture in the UK.”

Whilst a 64 page Government document isn’t a top read in the normal course of circumstances its perhaps the one we all should study.

2.16ppl milk price drop for Arla members is a blow (23^rd February 2018)

Whilst most people who study and understand the dairy markets expected a 1.5 to 2 Euro Cents Arla member price drop for March no one anticipated a whopping 2.5 Euro Cents, which converts to an eye watering 2.16ppl manufacturing member price drop. Note, Arla’s organic milk price remains unchanged.

This reduction results in a liquid standard litre price of only 26.08ppl and a manufacturing standard litre price of 27.11ppl.

This means in the space of three months Arla’s member price has gone from being one of the best (liquid 31.05ppl and manufacturing 32.3ppl) to the worst in the UK, subject to any further announcements from other companies.

This drop has not gone down well with members and two emails received today by Ian are even questioning whether such a brutal cut would have happened on Jonathan Ovens’ watch, compared to Johnnie Russell’s being in situ. While it can’t be proven it’s a fact Ovens would have certainly fought hard against such a brutal cut. It’s up to Arla members to decide whether Russell fought hard against it. Or even at all.

It certainly didn’t stop Russell leaving yesterday’s board meeting to go on holiday to Spain and his G&T and sun lounger, and whilst he is quoted in the official Arla press release he has made himself uncontactable and unaccountable to the members he represents, and who are demanding answers to what is one of Arla’s biggest ever price cuts.

1.25ppl milk price reduction for First Milk producers – from 1^st March (23^rd February 2018)

This reduction results in the following standard litre prices:

Liquid Manufacturing

Lake District                                     27.19ppl           28.2ppl

Midlands & East Wales                   27.15ppl

Scotland                                            26.84ppl

Haverfordwest                                  27.31ppl   28.32ppl

(excluding the Tesco Cheese bonus)

1ppl milk price reduction for suppliers to Grahams Dairies (Scotland) – from 1^st March (23^rd February 2018)

This takes producers’ standard liquid litre milk price to 28.25ppl

GDT auction is a mixed bag (23^rd February 2018)

Recent gains in the fortnightly GDT auction were brought to a grinding stop this week as the average index fell 0.5% to US$3623 tonne.

Notable prices were:

Butter up 1.1% to average US$5334 tonne

WMP up 0.3% to average US$3246 tonne

Cheddar down 1.3% to average US$3686 tonne

SMP down 3.0% to average US$1832 tonne

The outlook (23^rd February 2018)

Firstly, let’s not forget Arla’s milk price is a European milk price and is impacted by several different dynamics to the UK price. This means others do not have to follow Arla’s move just because they can in a downward spiral race to the bottom.

Whilst the NFU’s Chief Dairy Advisor and others have had several pops at two industry commentators forecasts (namely, Walkland and yours truly) over our price predictions going back to November, they are now looking remarkably accurate. At this week’s Dairy Breakout session the clear suggestion from the NFU was that prices WILL be rising. We don’t agree.

If Arla’s latest drop to 26ppl for liquid is a low point and prices recover post the flush then Ian calls that a result. It could be a case of one deep cut, and if they are unlucky a little bit more still to come, but for sure a 25ppl or less milk price looks less likely now than it did.

European production and Mother Nature will have a part to play but Ian still believes the likely Arla member milk price low point will be between 25p and the current 26ppl.

Spot prices have firmed in the last 2 weeks by around 2ppl due to a surprise surge in cream prices and for liquid prices are around 25 to 26ppl, but little is trading and the market is very finely balanced. Whether this cream price surge is sustainable is questionable given the fundamentals.

Meanwhile, Arla have announced their 2017 results this week.

Sales increased 8.37% to £1.94 billion (from £1.79 billion) and net profit was within the co-op’s target of 2.8% of revenue.

Gross profit fell 5% to €2.28 billion with profit before tax down 19% to €321 million compared to €398 million in 2016.

There’s lots of emphasis by Arla on the strength and importance of Arla’s brands which “delivered the greatest revenue growth” but with today’s major member price cut understandably several members are questioning whether their member investment in these brands is producing a return to them. Also note at the NFU Conference Arla’s UK MD, Thomas Pietrangeli stated “I am measured on paying the highest possible milk price to the owners.” Need we say anymore.

NFU AGM & Conference (23^rd February 2018)

Congratulations to Minette Batters who is the first female President of the NFU and she certainly takes to the reins at a very challenging and important time for UK agriculture. Along with her new Vice President, Stuart Roberts and re-elected Guy Smith as Deputy President, they will certainly be kept very busy and have to hit the ground running.

This year’s NFU Conference saw a record attendance of 1560 delegates and whilst it was a bit of a gamble at the time, credit for the move to the ICC goes to the then NFU Vice President, Gwyn Jones. The move has been a huge success.

In terms of the papers whilst the Secretary of Stated for EFRA, The Rt Hon. Michael Gove gave a very good stage performance but his paper told delegates nothing they couldn’t have heard from him 12 months earlier. In summary, he should have done better. More on this another day and on the interesting elements of the Dairy Breakout.

1.5ppl milk price reduction for suppliers to Wyke Farming (cheese) from 1^st March (16^th February 2018)

This takes producers’ standard manufacturing litre price to 29.66ppl and based on a standard liquid litre to 28.65ppl.

RABDF submits an inquiry to the EFRA committee (16^th February 2018)

Following its research into the labour situation on more than 1000 British dairy farms, carried out by yours truly Ian Potter Marketing Services, the RABDF has made a submission to the EFRA Committee (Environment, Food and Rural Affairs Committee).

From the survey 17% of dairy units have foreign workers as part of their workforce and the evidence points to a “potential cliff edge labour shortage facing dairy farms” in the post Brexit world. The survey was carried out in conjunction with Kite Consulting who’s founder, John Allen, commented that the supply of skilled dedicated foreign workers is critical to the success and long term prosperity to the British dairy sector.

1.25ppl milk price reduction for supplies to Meadow Foods – from 1^st March (PRODUCER NOTIFIED) (9^th February 2018)

The decrease takes producers’ standard liquid litre price down to 27.75ppl (www.milkprices.com)

In addition, Meadow Foods B milk price paid for December deliveries was 23ppl.

1.25ppl milk price reduction for suppliers to Wensleydale Creamery – from 1^st February (9^th February 2018)

1.25ppl milk price reduction for suppliers to Crediton Dairy – from 1^st March (9^th February 2018)

This takes producers’ standard liquid litre price to 29.75ppl (www.milkprices.com)

GDT average bounces up 5.9% in two weeks (9^th February 2018)

This week’s GDT auction produced the third consecutive rise this year and the largest increase since November 2016 to average US$3553 tonne, an increase of 5.9%.

WMP was up 7.6%, it’s highest average for 8 months, with SMP up 7.2%, however, note due to the drought in New Zealand volumes on offer were once again down, this time by 5% when 22,197 tonnes were sold.

New Zealand analysts are warning that this recover might continue for the next auction on 20^th February but it’s likely to correct itself in March and will be lucky if recent gains can be sustained. New Zealand milk production is estimated to be down 1.5% in this dairy year.

Notable movers:

Butter +7.9% to average US$5277 tonne

WMP +7.6% to average US$3226 tonne

SMP +7.2% to average US$1932 tonne

Cheddar +7.2% to average US$3739 tonne

Arthur Fearnall to replace Jonathan Ovens on Arla Amba Board (9^th February 2018)

At yesterday’s Arla UK area forum the regional representatives elected Cheshire dairy farmer, Arthur Fearnall to join Johnnie Russel on the Arla Foods Amba Board to representing 2,500 GB Arla farmers.

Several reports indicate the meeting had its moments and body language was instantly interpreted to mean the result didn’t suit a couple of those who knew it before it was announced to the representatives but hey ho that’s democracy.

Fearnall certainly understands the business, is professional and savvy and can hit the ground running from today and won’t need to serve as an apprentice to anyone.

Based on the presentations given by the six candidates the general feeling was that one of the unsuccessful candidates should certainly be back for a second shot at the position possibly as early as next May when both Johnnie Russel and Arthur Fearnall are up for re-election.

It’s time for the top table jostling and unprofessional farmer politics to stop. Any legal action following the unfortunate handling of Ovens’ instant dismissal will simply take its course.

Fearnall has to hit the ground running and have the co-operation and support of ALL involved following yesterday’s election.

Arla acquire the business of Yeo Valley Dairies Limited (9^th February 2018)

The Mead family have agreed to sell its subsidiary Yeo Valley Dairies Limited, which will give Arla the branding license rights to utilise the Yeo Valley milk brand in liquid, cheese, butter and spreads. Note, the Yeo Valley yoghurt, cream, ice cream and desserts business remain with the Mead family and the deal does not include any processing facilities, employees or dairy farmer suppliers. OMSCo currently supply Yeo Valley with its liquid milk and this will continue for a minimum of 3 years.

It’s another clear signal that Arla (along with Muller) are investing long term in the UK dairy industry, which is positive.

The deal is subject to UK Competition Authority approval.

2ppl chart topping milk price reduction for suppliers to Pattemores – from 1^st March (PRODUCER NOTIFIED) (2^nd February 2018)

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

1.25ppl milk price reduction for Barbers Cheesemakers suppliers – from 1^st March (2^nd February 2018)

This takes producers’ standard manufacturing litre price to 29.91ppl and their standard liquid litre to 28.84ppl (www.milkprices.com)

1.2ppl milk price reduction for Arla Directs – from 1^st March (2^nd February 2018)

This takes producers’ standard liquid litre price to 25.8ppl and their manufacturing litre price to 26.89ppl (www.milkprices.com)

1ppl milk price reduction for Muller Direct suppliers – from 1^st March (2^nd February 2018)

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

1ppl milk price reduction for suppliers to Pensworth Dairy – from 1^st March (2^nd February 2018)

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

1ppl milk price reduction for suppliers to Belton Farm Cheesemakers – from 1^st March (2^nd February 2018)

This takes producers’ standard manufacturing litre price to 28.75ppl and their standard liquid litre to 28ppl (www.milkprices.com)

1ppl milk price reduction for suppliers to Glanbia Cheese suppliers – from 1^st March (2^nd February 2018)

This takes producers’ standard manufacturing litre price to 28.5ppl and their standard liquid litre to 27.55ppl (www.milkprices.com)

1ppl milk price reduction for suppliers to Joseph Heler Cheese – from 1^st March (PRODUCER NOTIFIED) (2^nd February 2018)

1ppl milk price reduction for suppliers to Yew Tree Dairies liquid contract – from 1^st March (2^nd February 2018)

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

0.769ppl milk price reduction for suppliers to Freshways – from 1^st February (2^nd February 2018)

This takes producers’ standard liquid litre price to 28.69 (www.milkprices.com)

0.75ppl milk price reduction for suppliers to South Caernarfon Creameries Limited – from 1^st March (2^nd February 2018)

However, this modest decline, compared to the others above, comes with some welcome news that SCC will hold this price until at least May 1^st. This takes producers’ standard manufacturing litre price to 29.03ppl. (www.milkprices.com)

0.75ppl milk price reduction for Dairy Crest Davidstow suppliers – from 1^st March (2^nd February 2018)

This takes producers’ standard manufacturing litre price to 30.25ppl and their standard liquid litre to 29.17ppl (www.milkprices.com)

0.5ppl milk price reduction for suppliers to Paynes Dairies – from 1^st February (2^nd February 2018)

Information required by Ian from readers of this bulletin on the following milk buyer’s price moves:

Lanchester

County

Buckleys

Average 2017 UK farm gate milk price was 28.75ppl (2^nd February 2018)

This is according to DEFRA calculations. The December average was 31.66ppl

Arla to invest in £460million of which £72million will come to the UK (2^nd February 2018)

Arla has announced a whopping £460 million European investment plan of which £72 million will be invested in the UK. Of this £72 million £34 million will be spent at its Aylesbury plant which will predominantly go into facilities for the production of lactose free dairy products. Ten out of twelve UK Arla processing facilities will receive a share of the investment money.

This is positive news from the Dairy giant demonstrating the long-term confidence Arla has to growing the UK Dairy Industry. A similar investment signal previously came from Muller last year so clearly both of our two largest processors have confidence. For Arla it’s the biggest annual investment in the UK excepting the commitment to build Aylesbury.

Ovens has no case to answer according to HMRC and starts legal proceedings (2^nd February 2018)

It is believed that HMRC have confirmed that Jonathan Ovens and the Arla EDL board have no case to answer re corporate hospitality expenses. This was one of the reasons put forward by Russell as to why Ovens had to be sacked. 

Ian has attempted to determine the exact date Russell was made aware that HMRC had made their decision, but without success. This will no doubt be a matter for discussion for the Arla farmer reps at their big meeting next Thursday (see later).

As was widely predicted at the time of his dismissal Ovens' dairy business D Mortimer & Sons are also known to have issued formal notices prior to the commencement of legal action against several companies and directors for loss of directorships, his tarnished reputation and loss of his Arla membership. It’s all lining up to be a very, very expensive mess, which will most likely cost £multi-millions in lawyers, court fees or most likely out of court settlements, and damages if Arla and the other implicated businesses and directors lose the cases. 

It is understood, and it’s no surprise, one of the legal notices has gone to the UKAF board, six of whom voted to expel Ovens, and with hindsight it’s likely some of those six are wishing they hadn't followed Russell like unquestioning disciples and had thought for themselves and waited until HMRC had declared their position.  It remains to be seen whether these six, including Russell and three of the candidates who have thrown their hats in the ring to replace Ovens (see below), have received individual notices of legal action for damages, but this must be a possibility.

It’s a bizarre but a very predictable set of circumstances, and the biggest worry for Arla and Arla members will be that litigation along these lines will take up a huge amount of Russell's and his five accomplices time to defend, and that’s time that should be put to better use working for members.

Six runners and riders to replace Jonathan Ovens as an Arla Board Member (2^nd February 2018)

Ovens’ boots are big ones to fill and personal preferences and allegiances need to be put to one side by those Arla reps who vote to ensure the elected candidate understands the business in detail, is professional, savvy and can get results for UK farmers.  He or she will have to hit the ground running, especially on issues like Brexit.

Six candidates have thrown their names into the hat for next Thursday’s elections to take the BOR position previously held by Ovens, at which up to 106 Arla Chairman and Vice Chairman will vote. The candidates are

Arthur Fearnall

James Thompson

Gaynor Wellwood

David Hyslop

Angela Rhodes

Tim Dale

Dairy Tech Event is next week (2^nd February 2018)

Next Wednesday, 7th February, will see a new event organised by RABDF, Dairy Tech. It will be an important day in the dairy calendar, with the exhibition booking over 250 stands. This has blown away all RABDF’s predictions. The event will be one for progressive dairy farmers who recognise that technology and science will be at the centre of dairy farming progress and future growth, including disease and illness diagnostics and treatment as well as helping reduce dairy farming’s environmental footprint. I wish the event well and hope it gets a good turnout of visitors.

Bill Gates Funds Super Cow Research (2^nd February 2018)

Microsoft tycoon Bill Gates has invested £29m in British research to breed a hybrid milk cow-productive but rugged-for Africa. The Bill and Melinda Gates Foundation have provided the money for Edinburgh-based GALVmed (Global Alliance for Livestock Veterinary Medicines), which is researching genetics and vaccines to breed a cow with milk yield comparable to that in Europe but with the high heat tolerance of indigenous cattle in Africa. Livestock were critical for helping to alleviate hunger and fight poverty in the developing world, Gates said. The Department for International Development is also funding the project. (Source: Dairy Industry Newsletter DIN)

1.73ppl (2 Euro Cents kg) milk price reduction for Arla members – from 1^st February (26^th January 2018)

This latest reduction for conventional milk only results in a 1^st February standard liquid litre milk price of 28.16ppl and a standard manufacturing litre milk price of 29.27ppl.

Arla’s organic milk price is stand on at standard litre prices of 40.96ppl (liquid) and 42.59ppl (manufacturing). Note, whilst Arla’s organic milk price is unchanged in the UK it reduces by 1 Euro Cent per kg in both Denmark and Sweden.

Next week’s bulletin will not make for happy reading because if Arla sneeze the majority end up with a cold. Mystic Chris Walkland’s farm gate milk price predictions, made in July, for January and February 2018 have both proved scarily close to reality.

1.75ppl milk price reduction for Pensworth Dairy suppliers – from 1^st February (19^th January 2018)

This takes producers’ standard liquid litre price to 28.25ppl

1.11ppl milk price reduction for Freshways suppliers – back dated to 1^st January (PRODUCER NOTIFIED) (19^th January 2018)

This takes producers’ standard liquid litre price to 29.46ppl

1ppl milk price reduction for First Milk members – from 1^st February (19^th January 2018)

This reduction results in the following standard litre prices:

Liquid Manufacturing

Lake District 28.44ppl 29.45ppl

Midlands & East Wales 28.40ppl

Scotland 28.09ppl

Haverfordwest 28.56ppl 29.57ppl

(excluding the Tesco Cheese bonus)

0.52ppl milk price reduction fro Co-op Dairy suppliers – from 1^st February (19^th January 2018)

This milk is supplied by Muller and takes producers’ standard liquid litre price to 28.87ppl

0.07ppl increase for Tesco suppliers – from 1^st February (19^th January 2018)

This takes producers’ standard liquid litre price to 29.52ppl (Muller Milk Group) and 29.27ppl (Arla). The price change is based on the cost tracker number crunching.

GDT up 4.9% (19^th January 2018)

Tuesday’s GDT auction saw prices bounce up on average 4.9% clearly as a result of lower volumes put forward by Fonterra due to continuing drought conditions in New Zealand. Total sold 23,319 tonnes down from 25,400 tonnes sold a fortnight ago.

Notable movers were:

Butter + 8.8% to average US$4897 tonne

SMP + 6.5% to average US$1818 tonne

Cheddar + 5.2% to average US$3486 tonne

WMP + 5.1% to average US$3010 tonne

Goat farmers under notice as milk supply eclipses demand (19^th January 2018)

Both Arla and Abergavenny Fine Foods have given notice to their goat farmers that they no longer require their milk.  Sadly the chances of the affected farmers finding an alternative milk purchaser look grim.

Arla have given 12 months notice to 9 farmers and once they all leave Arla will no longer be involved in the collection and marketing of goat’s milk in the UK.  If one or more of the Arla farmers does find an alternative outlet they are free to leave as soon as is convenient to them. In addition Arla have committed to hold producers price at the current level throughout the duration of the 12 month notice.

Meanwhile, this week Abergavenny Fine Foods gave its goat’s milk suppliers a brutal and cruel 6 weeks contract termination notice.  Ian emailed attempting to contact them to find out how many farmers had received notice but the request was unanswered as were other questions and one can only assume the farmers involved have had a rougher ride compared to the ones with Arla.

The news will be a huge blow to the farmers involved but the harsh reality is that demand has fallen and supply rocketed and the cost of dealing with the significant volume of unwanted goat’s milk is totally unsustainable and that’s the reason both have pulled the plug.

The book is open for what is the most important democratically elected job in the British dairy industry (19^th January 2018)

On the 8^th February up to 106 Arla district chairmen and vice chairmen representing 53 districts will be called to a meeting to vote in a new Arla AMBA board member to replace the ousted Jonathan Ovens.

This is without doubt one of the most important elected position in British dairying with the successful person effectively representing 25% of Arla’s total milk intake.

Whilst in theory any Arla member is encouraged to apply having been nominated to stand by one of the 106 elected representatives the successful candidate must surely come with some very special qualities and real calibre which should narrow down the runners and riders to only 2 or 3 with true ability, perhaps with the odd wild card.

One key tick box needs to be that the elected person has a detailed understanding of the intricacies of   how our rather unique relationships with retailers have evolved and be able to foster them.  Arla’s Commercial Team have chalked up a number of successes in recent months and they will be desperate to see a face emerge who can help them win business.  The last thing Arla need is for someone to be elected whose ambition eclipses their ability.  It’s not the time for confidence to triumph over ability and it’s not a trainee position with Russel playing coach and carer to a side kick

Then there is the need to bring 2,500 Arla UK members together and show real leadership in the next phase of Arla’s development not to mention the little matter of leadership through Brexit.

It’s going to need to be a strong person with experience in governance and calibre.  It’s a big job at a very important time both for Arla and the UK dairy industry.  The nominations book closes on 31^st January.  Time to think carefully and fingers crossed the right people step forward.

Interestingly, last spring when both Ovens and Russel were both up for re-election no one opposed them, so no election, which says something.

Muller launch a next generation initiative for young farmers (19^th January 2018)

Muller’s latest initiative is the launch of Muller Direct Next Generation where they aim to involve around 25 Muller Direct young farmers who have real dairy farming business potential.

The initiative is fully funded by Muller and will run for an initial 3 year period to provide participants with a range of tools and training to help them catapult their businesses forward in a post Brexit world.

It’s certainly another ambitious project by the dairy giant and joins others including its futures contract trading option.

Mike Gallacher returns to the UK dairy industry (19^th January 2018)

First Milk’s superhero turnaround guru and former CEO Mike Gallacher has made a part time return to the UK dairy as a Non-Executive Director of National Milk Records

1.25ppl milk price reduction for members of the co-op, South Caernarfon Creameries – from February 1^st (8^th January 2018)

This take producers’ standard manufacturing litre price to 29.78ppl and the standard liquid litre price to 28.81ppl

1ppl milk price reduction for Arla directs – from 1^st February (8^th January 2018)

This takes producers’ standard liquid litre price to 27ppl

1ppl milk price reduction for Dairy Crest (Davidstow) suppliers – from 1^st February (8^th January 2018)

This takes producers’ standard manufacturing litre price to 31ppl and 29.92ppl based on a standard liquid litre.

1ppl milk price reduction for suppliers to Joseph Heler Cheese – from February 1^st (8^th January 2018)

1ppl milk price reduction for suppliers to Belton Farm (Cheesemakers) – from 1^st February (8^th January 2018)

This reduces producers’ standard manufacturing litre price to 29.75ppl and the standard liquid litre price to 29ppl.

1ppl milk price reduction for suppliers Yew Tree Dairy – from 1^st February (8^th January 2018)

This takes producers standard litre price to 29ppl.

0.75ppl milk price reduction for suppliers to Meadow Foods – from February 1^st (8^th January 2018)

This takes producers’ standard liquid litre price to 29ppl.

0.5ppl milk price reduction for suppliers to Grahams Dairy Scotland – from January 1^st (8^th January 2018)

This takes producers’ standard liquid litre price to 29.25ppl

Crediton Dairy to hold its farm gate milk price at 31ppl until at least March 1^st (8^th January 2018)

The 31ppl is based on a liquid standard litre and this is likely to remain a chart topping farm gate milk price for at least the first two months of 2018. The 31ppl price has been paid for four consecutive months (November to February inclusive).

Barbers Farmhouse Cheesemakers to hold its farm gate milk price until at least March 1^st (8^th January 2018)

This means for four consecutive months (November to February inclusive) Barbers manufacturing standard litre price has been a healthy 31.193ppl and its liquid standard litre 30.074ppl.

Shock 332 million litres extra production previously unreported (8^th January 2018)

DEFRA are clearly still encountering problems reporting UK milk statistics and the latest bombshell came yesterday (4^th January) with a shock upward revision of production for the calendar year 2017.

The January to October UK production has been increased by a whopping 332million litre, equivalent to almost an additional 1.1 million litres everyday. A DEFRA spokesperson has commented to Ian that this revision is “due to new information becoming available for some companies in England and Wales”.

Novembers production totalled 1163.5 million litres identical to the amount produced in November 2015 and up 84.6 million litres (+7.8%) on November 2016 production.

AHDB Dairy have highlighted concerns over the figures on several occasions and still believe the DEFRA production data for the period May to December 2016 is around 20 million litres lower than AHDB expect. Consequently AHDB have stated “we would advise caution when looking at year on year changes”.

Arla take 100 million litres off Muller in battle to supply Aldi (8^th January 2018)

The outcome of the recent Aldi liquid tender is that Arla have won an additional two regions in England and Wales currently supplied by Muller which amount to around 100 million litres. From October Muller will supply Aldi in two regions with around 60 million litres annually, which will be less than 20% of the combined Arla/Muller literage. Ian calculates Arla will then be Aldi’s dominant supplier having easily in excess of 80% of Aldi’s liquid and cream business, especially given Aldi’s speed of growth. The deal is understood to be a 5-year contract.

Note, So far as Scottish Aldi stores are concerned it’s no change as Grahams Dairy retain their supply agreement and similarly Trewithen Dairy in Cornwall will retain their Aldi liquid business to their Southwest stores.

Muller will continue to supply Aldi with a range of non-liquid dairy products.

Last month Kantar confirmed that Aldi had regained its crown as Britain’s fastest growing supermarket with sales up 15% year on year with Aldi, now Britain’s 5^th largest supermarket.

Muller has taken one or two knocks too many from Arla, including the loss of volume from Sainsbury’s, Morrison’s and now Aldi and can’t afford to loose anymore literage and the gloves are sure to come off more than ever.

GDT’s first milk auction of 2018 was up 2.2% (8^th January 2018)

The average auction price this week was up 2.2%.

Key movers were:

WMP up 4.2% to average US$2886 tonne

SMP up 1.6% to average US$1699 tonne

Cheddar down 2.1% to average US$3317 tonne

Meanwhile, Fonterra has revised its forecast New Zealand milk output down by 4% due to seriously dry conditions, which has hit milk output. Fonterra has already reduced the volume of WMP offered for auction on the fortnightly GDT auction as a consequence of lower milk supplies.

New Strategy Director at AHDB Dairy (8^th January 2018)

Former Communication Director at First Milk, Paul Flanagan has started his new role as Strategy Director, at AHDB dairy stepping into the role for at least the next 6 months. The AHDB role will be challenging but Flanagan has a track record in this area having handled First Milks Communications for more than 11 years which was certainly challenging.

Chinese dairy processor to be the official milk sponsor for the 2018 World Cup in Russia (8^th January 2018)

Mengniu Dairy Company, the second largest in China, has been confirmed as the official World Cup dairy sponsor and will supply milk, yoghurt drinks and ice cream at the FIFA World Cup Finals in Russia this summer.

It is the first time in 36 years (1982) a dairy company has been involved in World Cup sponsorship.

Arla Elected representatives meeting is set to be lively (8^th January 2018)

Arla's first 2018 UKAF Area Forum to be held at Meriden, nr Coventry, this coming Thursday 11^th is set to be a lively meeting and will certainly challenge meeting Chairmanship skills of John Cook. A second forum will be held on Thursday 8^th February.

As a forerunner last week’s BOR meeting in London flushed out Ake Hantoft who flew over to support Johnnie Russel and those who took the decision to axe Jonathan Ovens business D. Mortimer as an Arla member.

It has now come to lights that both Russel and Hantoft during 2017 both independently asked Ovens face to face to resign and having failed then proceeded to rescind the membership as has already been well documented.

The surprise to several at last week’s BOR meeting was that when questioned Hantoft evidently pointed the finger at Ovens involvement in retail PO’s as the reason he was ousted which is either a U turn or a curve ball to the HMRC issues previously suggested as the reason for Ovens execution. It’s certainly far from clear as to the exact reason(S) behind his departure.

It’s a crying shame that Amirahmadi and the Arla Commercial Team are succeeding against fierce competition (see Aldi story above) but at farm level there is top table infighting and jostling for position which is almost certain to cost Arla reputationally especially if Ovens gets the bit between his teeth and this goes legal.

The expectation is that this week’s elected representatives meeting will be an opportunity for the executioners to re communicate Ovens guilt without declaring to those present the legal basis for his crime and punishment. That’s the point at which the temperature in the room will rise.

Some claim they will be demanding details as to why Ovens membership was rescinded and exactly what crime(s) he has committed. There goal is to satisfy themselves whether it was a kangaroo court and whether the punishment fits the crime and that the process used fully complies with Arla’s Corporate & Social Responsibility Standards , The rules of UK Arla Farmers Co operative as well as EU and UK law.

The likelihood of this weeks meeting seeing high level delegates attend without prior notice from Denmark and the finance team is a near certainty. Post the meeting the matter is highly unlikely to fade away.

350 Arla farmers in for March repayment (8^th January 2018)

As part of the deal for AFMP farmers to join Arla as full members all AFMP farmers were on the hook to pay 7.5ppl joining fee based on milk produced between 1^st October 2012 and September 2013.

Due to ongoing expansion around 350 farmers overpaid and are due repayments of hundreds of thousands of pounds with at least one due towards £150,000 in March 2018.

A HSBC loan to fast track AFMP members into full membership of Arla was masterminded by Ovens and his former EDL board. One of the terms was that for as long as there was an outstanding debt on part of the loan no repayments to farmers could be made as well as the request that Ovens presided over the loan during its duration.

According to comments made to one of the farmers due a refund by an EDL Director a loan has been arranged from Arla to facilitate the repayments. That has set hares running with some questioning whether this is permitted under the Co-op’s rules especially given the circumstances behind the loan.

By paying off an estimated £1 million to £2 million via a loan from Arla at least allows the 350 farmers to receive their overpayments in March of this year. This will be the final piece in the EDL jigsaw after which it’s likely EDL will be disbanded.

Going forward new Arla recruits do not require a loan facility and can either pay an upfront lump sum joining fee, pay via their 13^th payment or from their monthly milk cheque.

As the curtain comes down on 2017 farm gate milk prices, two or three announcements warrant a mention, two of which are positive, one of which has been described as stupid.

Muller to hold its milk price for February (29^th December 2017)

Having come in for a surprise battering from NFUS at the beginning of December (see below) when Muller announced its 1^st January Muller Direct 1.5ppl price cut comes an end of year welcome announcement from the dairy giant with the news that farm gate milk prices will be held until March 1^st with no change for February.

Lactalis (AKA The Fresh Milk Company) to hold its farmers milk price until April 1^st (29^th December 2017)

Lactalis operated differently to other processors throughout 2017 with its guaranteed minimum price and that model appears to be spilling over into 2018 with the announcement that no changes will be made to farmers’ milk prices before 1^st April, which should be a welcome New Year message for its suppliers.

NFU & NFUS are accused of being asleep at the wheel (29^th December 2017)

Arla’s actual milk price drop for 1^st January, admittedly before any additions, was 3.5 Euro Cents, almost 3ppl (2.96ppl) and NFUS was “disappointed”.

Muller’s 1^st January price drop was half the Arla one 1.5ppl and NFUS was “shocked by the steep price cut of 1.5ppl” and went on to say:

“At the first sign of cream and butter prices softening from what are historical highs, Muller has jumped at the opportunity to slash the price it pays to producers to shore up its own profits. “

Now this sort of commentary cannot go unchallenged.

If the Muller announcement was the first sign NFUS saw that cream prices and butter prices were softening they were either asleep or unable to understand the market realities. The warning signs have been abundantly clear since late summer to anyone who understands basic market intelligence.

It’s perhaps time the NFUS and their  dairy advisors and dairy boards took time to understand the figures and where UK markets fit in and to be up front with some genuine signposting as to what is coming down the line. This will require new adjectives from their dictionary but to pretend this is some sort of unforeseen shock is plain stupid.

Note, whilst the above majors on some of the unfortunate comments made by NFUS similar jaw dropping comments have recently emerged from Stoneleigh. One referred to “irresponsible commentators” accompanied by the bizarre suggestion that if every one stays quiet the current dairy commodity market problem and the rapid increase in supply will go away and/or nobody will notice that returns are reducing. This is worse than naive. Maybe they should instead study the uncomplicated data and show some leadership to farmers by advising them what they should do.

Variable & complicated nett milk price reduction for Arla members from January 1^st (21^st December 2017)

Arla’s milk price drop is far from straight forward but when you wade through the numbers the range of nett 1^st January price cuts between 2.11ppl and 0.56ppl.

All Arla farmers receive the benefit of +0.64ppl from currency smoothing plus an additional 0.21ppl cash flow balancing totally 0.85ppl.

In addition, 72% of Arla UK members benefit by 0.84ppl if they have signed up to Arlagarden plus what’s puzzling is why more haven’t signed up given the fact its worth an extra £10,400 each year to the average Arla member! Around 570 farmers have not signed up.

Then there are three components to the one collection initiative, which kick in on January 1^st

Artic Tanker Collection +0.17ppl

3” Outlet +0.13ppl

Independent Collection +0.4 ppl

0.7ppl

So the 2.11ppl worse case scenario milk price drop for some will reduce to only 0.57ppl (2.11ppl – 0.84ppl – 0.7ppl)

The Arla member 1^st January organic nett price ranges between a reduction of 1.72ppl to only 0.18ppl.

All of the conventional permutations apply to organic e.g. 1.72ppl less Arlagarden plus (0.84) less one milk collection incentives (0.7ppl) = a potential nett reduction of only 0.18ppl.

In terms of standard litre prices, which include the Arlagarden plus premium the 1^st January position is:

Conventional Organic

Liquid 29.82ppl 40.96ppl

Manufacturing 31.00ppl 42.59ppl

1.5ppl milk price reduction for suppliers to Paynes Dairies – from January 1^st (21^st December 2017)

1.5ppl milk price reduction for Dairy Partners, Newcastle Emlyn producers – from 1^st January (21^st December 2017)

This results in a manufacturing standard litre price (4.2% & 3.4%) of 29.04ppl. Dairy Partners are the second cheese processor to reduce its farm gate milk price from January 1^st, however, both are into Mozzarella production for which prices continue to alarmingly head South.

First Milk to stand on with its member farm gate milk price for January (21^st December 2017)

South Caernarfon Creameries Limited to stand on with its member farm gate milk price for January (21^st December 2017)

Bitter pill in final GDT auction of 2017 (21^st December 2017)

The news that yesterday’s final GDT dairy auction concluded with an average price of only US$2969 down 3.9% and representing a 14 month low has come as a bitter pill for dairy farmers to swallow ahead of what should be a festive period.

In addition, the concensus is prices will go lower in early 2018.

Notable movers

Cheddar down 7.9% to average US$3389/tonne

SMP down 4.8% to average US$1675/tonne

WMP down 2.5% to average US$2755/tonne

Butter down 2.3% to average US$4474/tonne

Fonterra reduces its 2017/18 forecast farm gate milk price (21^st December 2017)

Fonterra has announced a reduction in its forecast milk price reducing by 5% from $6.75 to $6.40kg milk solids.

Watsons Dairies reduce volume bonuses for 5,000 litre plus suppliers – from 1^st January 2018 (21^st December 2017)

For any farmer supplying 5,000 litres or more of milk each day to Watsons Dairies AKA Medina from January 1^st their volume bonus will be cut by 0.4ppl to a maximum of 1.6ppl for anyone supplying 15,000 litres/day or more which when multiplied up is certainly an annual reduction closer to £20,000 or more.

Look forward to Christmas Hangovers – (Source DIN) (21^st December 2017)

Barry Wilson’s latest DIN Market & Prices commentary pulls no punches and highlights the grim reality that we are currently experiencing a seasonal spike in demand “masking the brutal reality of what’s coming when it clears. It is not a pretty picture” commented Dairy Industry Newsletter.

“It’s going to be a brutal start. And then, come the flush, it will get worse.”