Dairy Industry news and features

This page was last updated at 15th June 2018  (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.

 

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

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

 

1.2ppl milk price increase for First Milk members – from 1st July   (15th 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 1st July    (15th 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 1st July    (15th 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 1st July     (15th 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     (15th 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 1st June (4th June 2018)

This takes producers standard liquid litre price to 27.2ppl

 

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

This takes producers standard liquid litre price to 28ppl

 

1ppl milk price increase for suppliers to Glanbia Cheese – from 1st July (4th 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 1st July (4th 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 (4th 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 (4th 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 5th 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 (4th 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 (4th 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 (4th 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 7th in the Grocers Top 100 British Brands

 

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

Arla have announced a 0.88ppl (1 Euro Cent) member price increase from June 1st. 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 1st June   - This increases the standard litre price to 25.3ppl    (25th May 2018)

 

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

 

The UK’s peak daily production passes as MCVE & AMPE both increase    (25th 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    (25th 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     (25th 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      (25th 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   (11th 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 1st.  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 1st    (11th 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   (11th 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   (11th 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   (11th 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 1st June breaks the log jam   (4th 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   (4th 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   (4th 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  (4th 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   (4th May 2018)

Although it’s their 6th 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   (4th 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.

 

Immaculate 2015 Honda Jazz for sale on Ebay   (4th May 2018)

Ebay item number 273181549254, ends 8pm on Monday 7th May - https://www.ebay.co.uk/itm/2015-HONDA-JAZZ-ES-1VTEC/273181549254

 

The car is a 5-door hatchback, with 16,000 miles on the clock, manual in stunning Azure Blue, 1340CC engine and you will not find a more pristine well looked after car for its year.  Sadly it’s for sale because the lady owner, who worked for Ian, passed away.  Further details see Ebay or email lydia@ipaquotas.co.uk or ianpotter@ipaquotas.co.uk

 

Discounted Conference fee for active dairy farmers  (4th May 2018)

There is a very attractive offer for a couple of dairy farmers to attend this year’s annual Dairy Industry News Conference in London on the 24th & 25th May 2018.

 

If you are interested email ianpotter@ipaquotas.co.uk

 

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

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

 

AMPE and MCVE continue to head North   (27th 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   (27th 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%   (27th 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.

 

Immaculate 2015 Honda Jazz for sale   (27th April 2018)

It will be listed on Ebay this evening, Friday 27th April, for 10 days, starting at 8pm and will end on Bank Holiday Monday at 8pm

 

Ebay item number 273181549254

 

The car is a 5-door hatchback, under 16,000 miles on the clock, manual in stunning Azure Blue, 1340CC engine and you will not find a more pristine well looked after car for its year.  Sadly it’s for sale because the lady owner passed away.  Further details see Ebay or email lydia@ipaquotas.co.uk

 

Relief for all as Arla confirm no further price cut for May deliveries   (25th 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    (25th 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)    (20th 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 1st May    (20th 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 1st May   (20th 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 1st May   (20th April 2018)

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

 

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

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

 

0.32ppl milk price increase for Tesco (TSDG) suppliers – from 1st May    (20th 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    (20th 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    (20th 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   (20th 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    (20th 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  (20th 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    (20th 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    (20th 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 1st May    (3rd 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 1st April   (3rd 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 1st April   (3rd April 2018)

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

 

1.25ppl milk price reduction for Wensleydale Creamery (Hawes) – from 1st April  (PRODUCER NOTIFIED)   (3rd 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 1st April (PRODUCER NOTIFIED)    (3rd 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 1st May    (3rd 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    (3rd 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 7th position as The Grocer’s 2018 Britain’s Biggest Brands   (3rd April 2018)

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

 

Wyke Farms opens its recruitment book   (3rd 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   (3rd April 2018)

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

 

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

 

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 1st April    (23rd 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 1st April    (23rd 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 1st April  (PRODUCER NOTIFIED)   (23rd 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    (23rd 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 1st 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 1st 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    (23rd March 2018)

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

 

GDT index fall for the third consecutive auction    (23rd 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    (23rd 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   (23rd March 2018)

AHDB Dairy estimate the recent snow resulted in around 19 million litres of milk failing to be collected in GB between 28th February and 3rd March

 

Muller & Grahams Dairy Scotland scoop 3 year Lidl deal   (22nd 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 1st this year.

 

From June 1st 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 1st  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 1st April (PRODUCER NOTIFIED)  (9th March 2018)

                            

1.5ppl milk price reduction for liquid contracted suppliers to Yew Tree Dairyfrom 1st April    (9th 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 1st April   (9th 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 1st April   (9th March 2018)

This reduction takes producers’ standard liquid litre milk price to 26ppl 

 

1ppl milk price reduction for suppliers to Wensleydale Creamery from 1st March   (9th 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    (9th 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   (9th 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 1st April    (2nd 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 1st April   (2nd 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 1st April    (2nd 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 1st March  (PRODUCER NOTIFIED)    (2nd 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 1st March  (PRODUCER NOTIFIED)    (2nd 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 1st April   (2nd 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 1st April    (2nd 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 1st April    (2nd 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    (2nd March 2018)

The small 0.25 Euro Cents kg milk price reduction from 1st 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 1st March increase of 1.5 Euro Cents kg.

 

Glimmers of light slowly emerging    (2nd 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    (2nd 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    (2nd 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 26th 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    (2nd 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    (2nd 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 8th 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    (23rd 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 1st March   (23rd 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 1st March   (23rd February 2018)

This takes producers’ standard liquid litre milk price to 28.25ppl

 

GDT auction is a mixed bag   (23rd 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   (23rd 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  (23rd 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 1st March   (16th 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   (16th 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 1st March (PRODUCER NOTIFIED)    (9th 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 1st February   (9th February 2018)

 

1.25ppl milk price reduction for suppliers to Crediton Dairy – from 1st March    (9th February 2018)

This takes producers’ standard liquid litre price to 29.75ppl (www.milkprices.com)

 

GDT average bounces up 5.9% in two weeks   (9th 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 20th 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   (9th 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   (9th 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 1st March  (PRODUCER NOTIFIED)      (2nd 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 1st March      (2nd 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 1st March    (2nd 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 1st March      (2nd February 2018)

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

 

1ppl milk price reduction for suppliers to Pensworth Dairy – from 1st March    (2nd 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 1st March    (2nd 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 1st March   (2nd 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 1st March (PRODUCER NOTIFIED)      (2nd February 2018)

 

1ppl milk price reduction for suppliers to Yew Tree Dairies liquid contract – from 1st March    (2nd February 2018)

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

 

0.769ppl milk price reduction for suppliers to Freshways – from 1st February      (2nd 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 1st March    (2nd 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 1st.  This takes producers’ standard manufacturing litre price to 29.03ppl.  (www.milkprices.com)

 

0.75ppl milk price reduction for Dairy Crest Davidstow suppliers – from 1st March      (2nd 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 1st February   (2nd 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     (2nd 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     (2nd 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   (2nd 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    (2nd 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   (2nd 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   (2nd 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 1st February  (26th January 2018)

This latest reduction for conventional milk only results in a 1st 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 1st February   (19th January 2018)

This takes producers’ standard liquid litre price to 28.25ppl

 

1.11ppl milk price reduction for Freshways suppliers – back dated to 1st January (PRODUCER NOTIFIED)   (19th January 2018)

This takes producers’ standard liquid litre price to 29.46ppl

 

1ppl milk price reduction for First Milk members – from 1st February   (19th 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 1st February   (19th 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 1st February    (19th 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%    (19th 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   (19th 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    (19th January 2018)

On the 8th 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 31st 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   (19th 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    (19th 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 1st   (8th 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 1st February   (8th January 2018)

This takes producers’ standard liquid litre price to 27ppl

 

1ppl milk price reduction for Dairy Crest (Davidstow) suppliers – from 1st February    (8th 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 1st    (8th January 2018)

 

1ppl milk price reduction for suppliers to Belton Farm (Cheesemakers) – from 1st February    (8th 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 Dairyfrom 1st February    (8th January 2018)

This takes producers standard litre price to 29ppl.

 

0.75ppl milk price reduction for suppliers to Meadow Foods – from February 1st    (8th January 2018)

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

 

0.5ppl milk price reduction for suppliers to Grahams Dairy Scotland – from January 1st     (8th 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 1st    (8th 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 1st    (8th 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     (8th January 2018)

DEFRA are clearly still encountering problems reporting UK milk statistics and the latest bombshell came yesterday (4th 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    (8th 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 5th 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%    (8th 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    (8th 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    (8th 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    (8th January 2018)

Arla's first 2018 UKAF Area Forum to be held at Meriden, nr Coventry, this coming  Thursday 11th 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 8th 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    (8th 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 1st 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 13th 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.  (29th December 2017)

 

Muller to hold its milk price for February   (29th December 2017)

Having come in for a surprise battering from NFUS at the beginning of December (see below) when Muller announced its 1st 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 1st with no change for February.

 

Lactalis (AKA The Fresh Milk Company) to hold its farmers milk price until April 1st    (29th 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 1st April, which should be a welcome New Year message for its suppliers.

 

NFU & NFUS are accused of being asleep at the wheel  (29th December 2017)

Arla’s actual milk price drop for 1st January, admittedly before any additions, was 3.5 Euro Cents, almost 3ppl (2.96ppl) and NFUS was disappointed”.

 

Muller’s 1st 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.

 

FOR SALE ON E BAY A GREAT MF 1200 ARTICULATED TRACTOR     (29th December 2017)

Auction ends on New Years day E Bay item number 272993372937

 

Click on  https://www.ebay.co.uk/itm/Massey-Ferguson-1200-Articulated-Tractor-MF-original-unmolested/272993372937?hash=item3f8fac4b09:g:7NMAAOSwB4BaPVHp

 

Variable & complicated nett milk price reduction for Arla members from January 1st   (21st December 2017)

Arla’s milk price drop is far from straight forward but when you wade through the numbers the range of nett 1st 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 1st

 

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 1st 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 1st 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 1st   (21st December 2017)

 

1.5ppl milk price reduction for Dairy Partners, Newcastle Emlyn producers – from 1st January  (21st 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 1st, 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   (21st December 2017)

 

South Caernarfon Creameries Limited to stand on with its member farm gate milk price for January   (21st December 2017)

 

Bitter pill in final GDT auction of 2017    (21st 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  (21st 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 1st January 2018   (21st December 2017)

For any farmer supplying 5,000 litres or more of milk each day to Watsons Dairies AKA Medina from January 1st 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)   (21st 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.”

 

Arla Correction    (21st December 2017)

In the last bulletin (8th December 2017) we foolishly got our decimal point in the wrong place and the annual gain for an Arla producer by signing up to Arlagarden plus was stated as £1040 for a 1.3 million litre producer. It should have read £10,400.  That’s a big error so apologies and we hope you all signed up in time.  Thank you to the numerous Arla readers who were very quick to alert us to the error.

 

However, of bigger concern are the reasons why 28% of Arla farmers haven’t signed up to the initiative to receive the extra money.

 

10,000 cow Chinese dairy farm   (21st December 2017)

The numbers are staggering as are the claims on the farms animal welfare, which they claim are among the most strict in the world.  Currently 2 x 80 point rotary parlours milk 3,000 cows 3 x day and the plan is increase to 10,000 cows.

 

The remaining news items relate to Arla/UKAF/EDL and what has been described as a bloodless coup – The three stories are in date order, concluding with a lengthy Q&A, which will be of particular interest to Arla farmers and is headed Arla – farmergeddon.  (21st December 2017)

 

Jonathan Ovens is No. 1 target for the Arla assassins  (11th December 2017)

Over the weekend rumours of a plot to execute current UKAF Chairman Jonathan Ovens have gathered pace and it certainly appears he is the number 1 target for what looks at the moment to be a kangaroo court with fellow UKAF board member Johnny Russell as chief prosecutor, judge, executor and undertaker all in one.

 

Speculation is rife with what appears to resemble a bloodful coup (AKA assassination) with suggestions that six of the ten current UKAF board members have had numerous secret meetings plotting to oust Ovens both as Chairman and as a supplying member of milk to Arla with at least two others potentially on the radar for similar treatment.

 

It is a fact, Ake Hantoft announced his intention to retire as Chairman of Arla Foods AMBA from May 2019 only a few days ago and this looks on the surface to have accelerated moves to oust Ovens to ensure he is completely out of the picture in terms of any succession planning to follow Hantoft.

 

It’s certainly explosive politics for the Arla co-op to be involved with and it’s not looking like this is going to end well for anyone in the battle for the position of top dog at Arla.

 

For sure this story is sure to run and run and run. We will post statements in response from the individuals concerned and or Arla as soon as they are received. 

 

Assassins creed. The deed is done.  (13th December 2017)

The plot to execute Jonathan Ovens succeeded on the morning of Tuesday 12th December following a UKAF Board conference call.

 

With immediate effect the dairy farming business of D Mortimer & Sons, of which Jonathan Ovens is a partner, had its Arla membership terminated, which automatically triggered his ineligibility to serve as an Arla AMBA board member.  That’s basically how 6 board members, and one in particular, Russell, succeeded in their quest to remove him as both a member and as a board member.

 

Ovens has confirmed that he is taking legal advice on a number of fronts including personally against those directors involved in his execution on a little known defamation technicality, but as of now Ovens claims the D Mortimer business has not received notification of the grounds or charges and Ovens claims neither does he have any right of appeal. He says he was given two choices to either resign from the UKAF board in return for retaining his Arla membership or, if not, the resolution would be put to the vote.

 

He refused the same ultimatum which was put to him at different times by both Ake Hantoft and Johnnie Russell because he doesn't think he has done anything wrong. So on Tuesday the resolution went to the vote and the 6 who had been working on this for some considerable time ensured the axe fell.

 

In the 24 hours following the shock decision, email, telephone calls and text have rained in to Ian from Arla members, some of whom love Ovens, some who clearly don’t love him but most acknowledge what he has achieved on their behalf financially. And this is from both AFMP members and some former Milk Link members. They know that their businesses and their families WILL be worse off long-term without Ovens battling their corner. Most don't give a monkeys about corporate governance and some can't even pronounce it. But they do understand the milk cheque and they know Ovens is a battler in a big bad world where every trick in the book and more are being used to screw down their price. Corporate governance or a higher milk price? It's a no brainer for the farmers to put those in order of priority. And at 17ppl the farmers wouldn't care if the devil or Ronnie Biggs negotiated their price if they got a higher one. 

 

It’s incredible that six farmers sitting as prosecution, judge, executor and undertaker have allowed a personal vendetta between Hantoft and Russell against Ovens to come over and above the best interests of the co-op, and to side-line Arla staff and senior management in this extraordinary chain of events. They've made it look as if the whole business is being run by a bunch of squabbling amateur farmers fighting over the top job just 11 days after it became vacant. It is scandalous and the best example in history of why farmers should not be involved in running the business. 

 

Whilst the gang of 6, dubbed by one farmer as the Klu Klux Klan, may have received legal advice they certainly don’t appear to have thought through the PR explosion this has triggered. The fallout from this will take some controlling now unless the evidence against Ovens is damning indeed. And if it is then why doesn't Arla publish it. It has certainly re-opened the Milk Link v AFMP battle front line and over the coming months many column inches will be devoted to this because it won’t be a storm in a tea cup. This looks like being nuclear and will be if or when Ovens sets up his Producer Group. 

 

Good luck Arla farmers because your co-op looks as if it has been dumped in the middle of the Mother of All Shit streets.  

Below is a joint statement from the Board of Directors of Arla Foods AMBA, which was allegedly prepared prior to Tuesday’s events and which we previously agreed to publicise. Before that and on a lighter note here are a couple of quips in from farmers.

 

1) Thank goodness the co-operative spirit is alive and well in Arla! They say that if you want to get three farmers to co-operate you have to shoot two of them. Well Hantoft is going so he doesn't count and Ovens has been shot, so that leaves Russell. Only another 11,999 Arla members to get through!

 

2) (One farmer to his mate) Apparently the management in Arla House in Leeds was very quiet yesterday. (Mate replies) Yes, six farmers and a bloke from Denmark dug them an effing big hole and dumped them in it without any ropes. But its OK now. The farmers have gone back home to do the milking.

 

“Statement from the Board of Directors of Arla Foods amba

 

Today the Board of Directors of Arla Foods amba has received notification from the UKAF board (the farmer governing body of Arla Foods UK cooperative) that it has taken the decision to terminate the membership of Mr Jonathan Ovens.

 

On behalf of the Board of Directors of Arla Foods amba, chairman Åke Hantoft states:

 

“As a consequence of the decision taken by the UKAF Board to terminate the membership of Mr Jonathan Ovens, which the Arla Foods amba Board agrees with, Mr Ovens is no longer eligible to serve as a board member of Arla Foods amba and therefore leaves open a position as UK representative on the Arla Foods amba Board of Directors.

 

The due process to elect the replacement to the Arla Foods amba Board of Directors will now commence and the UKAF board, governed by its byelaws, will discuss what steps are required to fill the open position.

 

Arla Foods amba will communicate to its members when a replacement is confirmed.”

 

Statement from UKAF Chairman Johnnie Russell

Regarding the decision made by the UKAF board today, UKAF chairman Johnnie Russell issued the following statement earlier today:

 

“Today, the UKAF board (the farmer governing body of Arla Foods UK cooperative) has taken the decision to terminate the membership of Mr Jonathan Ovens, trading as D Mortimer & Sons. This regrettable step has had to be taken as a last measure in a protracted process to resolve issues of corporate governance within Emerald Debtco Limited and takes place with immediate effect. Mr Ovens has been offered a direct contract by UKAF for the supply of milk.

 

As part of the wider Arla Foods amba Cooperative owned by over 11,000 farmers the UKAF Board must act in the best interests of both its UK farmers and all Arla Food’s farmer owners across Europe and in accordance with the Arla Foods Corporate Social Responsibility guidelines. It has been determined that serious failings in corporate governance by Mr Ovens in his role as Chairman of Emerald Debtco Limited are prejudicial to the interests of the Cooperative. These actions also led to a loss of confidence in Mr Ovens by the Arla Foods amba Board of Directors, which supports the UKAF decision.

 

The decision means that Mr Ovens can no longer remain part of Arla Foods UK or a board member of Arla Foods amba and therefore leaves open a UKAF board position and that of a UK representative on the Arla Foods amba Board of Directors.

 

The UKAF board, governed by its byelaws, will discuss what steps are required to fill the open positions and will communicate to its members when the process has been decided.”

 

If any Arla members have any points, comments or questions they would like to receive answers to please email ianpotter@ipaquotas.co.uk

 

Jonathan Ovens Arla-farmergeddon Q and A

As you’d expect the office has had numerous questions in from farmers regarding the Ovens dismissal. In the absence of any further information from Arla or UKAF here are some of them, with Ian’s gut feel answers (some of the answers may be incorrect on the basis of a lack of provided evidence or facts, with the answers likely to be amended as and when new information comes in). Note, Ian yesterday had a brief email exchange with chairman of UKAF/EDL Johnnie Russell in the hope he would be able to give his answers to the questions.  Johnnie has stated that he will make no further statements until he stands before the elected representatives in early January (11th).

 

Q. Is Ovens “dodgy”?

A. That depends entirely on the definition of dodgy. It’s difficult to judge without the evidence. Obviously he is too dodgy for Arla / UKAF else they wouldn’t have sacked him for serious failings in corporate governance which are prejudicial to the interests of the Co-operative. Thus he has been declared dodgy enough by them not to be a fit and proper person to run their businesses (and, by implication, other businesses.)

 

What is known is that he has been at the heart of Arla for 20 years plus and Arla and the farmers have known what he has been like for years. He has been the key farmer representative who has contributed to Arla’s rapid progress in GB. A blind eye has been turned to him (until now) because of one simple reason - he gets results for the farmers which is more money in their milk cheques. And he gets results for Arla.

 

Like a dirty player in a football or rugby team that bends the rules they’ve kept him on side because they’ve needed him to win games. Manchester United and others will also have the highest standards of ethics and governance, for example. But on the front line they still pick divers, chancers, cheats, fighters and foulers. Blind eyes are turned, transgressions forgiven, just so long as the results come in. As one Arla farmer commented to Ian “I am not an Ovens fan but he is a street fighter who has fought hard for us. I can’t imagine who could be a suitable substitute to replace him and who could be as effective in negotiating as he is.”

There is no question Ovens walks a fine line and crosses over it, and all of that is known about, but it’s hard to know when and by how much he has done so recently given the lack of evidence supplied by Arla or UKAF to justify what is clearly an unfit and proper person termination.

 

Q. Why has he been axed so quickly?

A. Don’t know. But it is abundantly clear both Ake Hantoft and Johnny Russell hate Ovens with a passion and wanted him gone sooner rather than later, certainly before Arla’s representative farmers had any opportunity to have a say in the matter. That's why it looks like a kangaroo court and a witch-hunt.

 

Q. Why has he been axed now?

A. Don’t know.

 

Q. Why wasn’t Arla’s democratic process used to give Ovens right to defend himself before a verdict was given. Innocent until proven guilty and all that?

A. The view is that Russell, Hantoft and UKAF were nervous of the farmer forum members being given a vote and failing to boot Ovens off.

According to Ovens, to date, no evidence against Ovens has been supplied to D. Mortimer and sons (the holder of Ovens’ Arla milk membership) or to Ovens. Hence the proceedings looking like that kangaroo court. He has been deemed to be guilty even before he has seen a charge sheet let alone having a hearing. This is a major issue for Arla and UKAF because everyone from war criminals charged with genocide down to people sacked at work all have the right to a fair hearing. But Ovens hasn’t been given one before his guilt has been communicated, and continues to be communicated on forums and through meetings.

In other words, Ovens has been judged to be guilty of serious failings in corporate governance through a process that also has serious failings in corporate governance. You couldn’t make it up!

The bottom line is if one Arla member can be tried and executed without a trial surely any of the other 11,000 Arla members can receive similar treatment.

 

 

Q. Why haven’t other former directors of EDL also been axed since they were part of the EDL decision making?

A. Don’t know. Another two directors of EDL are in the firing line, but the fact that Ovens has been singled out so far adds weight to the view that this is, at its core, a personal vendetta.

 

Q. What are the positives for Arla farmers of this move?

A. None that are obvious except for those who hate Ovens.

 

Q. Will this move make Arla farmers worse off?

A. Undoubtedly. That’s because Ovens has been at the epicentre of everything Arla has done with retailers and customers for years, and has been pivotal in negotiating the milk price. If farmers want someone experienced and canny to negotiate their prices then there aren’t too many battle hardened people out there that know the ropes like he does. Whatever you think about Ovens he is a canny scrapper and will battle for farmers in the big ugly corporate world which is stacked against farmers and which is so brutal and unfair that there needs to be a Grocery Code Adjudicator to try and ensure fair play. Which there still isn’t. Corporate governance takes a back seat here too, at times, and blind eyes are turned left right and centre. Don’t believe me? Then let’s start by taking a look at supermarkets asking suppliers like Arla for hundreds of thousands of pounds of backhanders in order to keep business and their products listed.

In the long-term, in my opinion, the Arla milk price is almost certainly going to be lower without Ovens at the helm.

 

 

Q. What exactly is he guilty of?

A. Don’t know. Arla / UKAF haven’t said specifically, other than there being serious failings in corporate governance.

One corporate governance failing admitted by Ovens is the large self-awarded bonus for EDL directors that has been known about by Arla and its farmers for years, and which was discussed (again) in early 2016 by the farmers who didn’t take up Ovens’ offer of holding a new review committee into the matter. Ovens and his pals were also cleared by the remuneration committee in 2015, much to Ake Hantoft’s and Johnny Russell’s abject fury.

The story here though is not WHAT Ovens was paid but WHY he was paid it. Which was basically to pooper-scoop a colossal corporate cock-up caused by Arla amba and Arla UK, quietly, out of the public eye, with minimal reputational damage to Arla within HSBC, The City of London, several Magic Circle law firms (i.e the biggest and the best in the country), and without using expensive lawyers or refinancing a sizeable debt at huge cost. It is an incredible, astonishing story and if there is one person in the land who would recognise the seriousness of all this, and its reputational impact, its former corporate banker Russell. The story is also no secret from Arla’s representative farmers.

There is also the HMRC tax investigation over the remuneration which Ovens says he has been cleared of, plus, apparently, an outstanding HMRC issue over expenses, including, it is believed, corporate hospitality (see self-declaration statement below) which Arla as a business and ALL businesses do, and have done for years. Thousands of companies every week host corporate hospitality events and it is bizarre again that Russell et al didn’t wait for the outcome of the HMRC’s investigation before sacking him if this is indeed the reason he went.

A figure of £70,000 has been cited in the press for rugby matches which is a tiny sum in the great scheme of things. It’s miniscule when multi-million pound deals are up for grabs or potentially lost and if the retailers ask for £hundreds of thousands in backhanders to keep listings (a practice now banned under the GCA).

Which again all points to something we don’t know about that damns and hangs him. In the absence of any hard evidence the speed of his execution again makes it look like a personal vendetta by Hantoft and Russell.

 

Q. Who has interpreted the severity, or not, of the word “serious” in the “serious failings” charge, as “serious” to one person isn’t necessarily serious to another.

Good question. The judge, jury and executioners, aka Russell and five of the EDL Board, have obviously decided the severity of the word “serious” themselves, as there is no scale or benchmark.

Except of course there IS a benchmark. Sort of. That’s because last year the farmers were offered the chance to review Ovens’ and the EDL Board’s £350,000 remuneration package (again – see above) and the farmers chose NOT to do so. In other words, that package, in their eyes, was not serious ENOUGH to warrant another investigation. Thus, whatever Ovens has done (which we aren’t being told about) MUST be more serious than that! And if it is, then it begs the question, again, as to why EDL/UKAF or Arla isn’t telling people what it is.

And there is another way to judge the severity of any crime. And that is for the farmers to decide whether the extent of any serious failings in corporate governance are more or less serious than the long-term impact on their milk prices that will arise from Arla farmers not having Ovens fighting their corner. If the corporate government failings are minor in relation to future milk incomes then that would be VERY serious.

And please nobody tell me that all of this has happened because Ovens hasn’t kept good records and it’s all about paperwork.

 

Q Is all of this farmer politics and infighting about expenses and salaries the real reason or is this a convenient smoke screen camouflaging other issues. Surely for us farmers it’s about the milk price and what Ovens has or hasn’t achieved?

A. There is no doubt Johnnie Russell and his mates were extremely unhappy that Ovens negotiated a fast track full membership for AFMP farmers especially when the retail premium was used to pay the joining fee debt in the first two years. This paid for AFMP members to join Arla.

The other highly likely scenario is that with Ovens gone so too, conveniently, has the knowledge he has built-up over 20 years. Ovens knows the full story from start to finish and remembers E-V-E-R-Y-T-H-I-N-G.

He has been at the centre of every deal, and once he has gone it would be a white sheet of paper, and other less seasoned and battle-hardened individuals will undoubtedly have good intentions but will be like lambs led to the slaughter. Being a Director of EDL or Arla amba is certainly not one step up from being a former YFC chairman.

Who will Arla roll out in future to deal with issues with retailers and customers? Ovens isn’t indispensable but his track record of fighting for farmers and pulling rabbits (i.e money) out of a hat is second to none. 

 

Q. Will this have a lasting effect on Arla?

A. Maybe, but not necessarily if the Arla execs and senior management step in soon, make the right decisions, and get the crisis sorted, properly, fairly and within the law, as opposed to aside from it.

At the moment, remember, this balls up has all been caused by inept farmers who stupidly told the management to stay out and away, and they would do it their way.

But if Ovens has a fair hearing and the evidence is damning and he is found guilty, then fine. No problem. Out he goes. But if the evidence IS damning, then why isn't Arla or UKAF saying what it is! And if it was then why did it compromise its own democratic principles and terminate Ovens is a way that makes it look like a kangaroo court? If Russell and the UKAF board were so sure of the case against him then why on earth didn’t they present it to the representative farmers of Arla first?

But if there’s not much or enough sound evidence against him and it looks like a Hantoft-Russell-UKAF board witch-hunt and vendetta, and they have put that above the interests of the members and their co-op, then the Arla representative farmers will have to decide what they do about that. But it will probably be fatal for Russell and the UKAF Board. They’ll likely get their marching orders I would expect.

 

Q. How long could it have an impact on Arla for?

A. Days or years, depending on the evidence and what Ovens decides to do.

Days if the case is damning and provided Arla is sensible in following the right and proper course of action to determine Ovens’ guilt.

But months if it doesn't and Ovens sues for wrongful termination of his contract, or for defamation, and years if he sets up a Producer Organisation for disaffected former AFMP farmers or others, and effectively goes full circle by reforming AFMP. Just without the “A” (for Arla) bit. He has been asked already!

The issue has also opened up the old battleground of Milk Link versus AFMP as former AFMP farmers will view former Milk Link director Russell as executing their talisman, who they will forgive for everything if they get a higher milk price. And especially without following the democratic rules of the society and before he had right to reply.

 

Q. Do you think he will set up a PO?

A. Maybe over time, but not yet. Ovens fights fire with fire and he has led farmers for decades. He’s addicted to it, and good at it. And many will follow him. Enough would anyway, but this is a long way off.

 

Q. How can this matter be settled?

There is a solution. It depends on the legals and if Arla’s senior management team play the right cards, carefully and cleverly. Clearly, six of the UKAF Board don’t know enough about cards to play snap or happy families.

 

Statement

 

In the interest of transparency Ian declares that over the last 20+ years he has been a guest at two rugby matches with Ovens and his fellow directors of AFMP / EDL. One was pre the Arla–Milk Link merger during AFMP days and one was as a last-minute stand-in with other industry influencers and leaders at a rugby world cup match after previous guests cancelled.

Ian has also been a guest of Arla Foods and other dairy companies and at various meals and functions as is the norm in the business world.

 

Assassins creed. The deed is done.    (13th December 2017)

The plot to execute Jonathan Ovens succeeded on Tuesday morning following a UKAF Board conference call.

 

With immediate effect the dairy farming business of D Mortimer & Sons, of which Jonathan Ovens is a partner, had its Arla membership terminated, which automatically triggered his ineligibility to serve as an Arla AMBA board member.  That’s basically how 6 board members, and one in particular, Russell, succeeded in their quest to remove him as both a member and as a board member.

 

Ovens has confirmed that he is taking legal advice on a number of fronts including personally against those directors involved in his execution on a little known defamation technicality, but as of now the D Mortimer business has not received notification of the grounds or charges and Ovens claims neither does he have any right of appeal. He says he was given two choices to either resign from the UKAF board in return for retaining his Arla membership or, if not, the resolution would be put to the vote.

 

He refused the ultimatum which was put to him at different times by both Ake Hantoft and Johnnie Russell because he doesn't think he has done anything wrong. So on Tuesday the resolution went to the vote and the 6 who had been working on this for some considerable time ensured the axe fell.

 

In the 24 hours following the shock decision, email, telephone calls and text have rained in to Ian from Arla members, some of whom love Ovens, some who clearly don’t love him but most acknowledge what he has achieved on their behalf financially. And this is from both AFMP members and some former Milk Link members. They know that their businesses and their families WILL be worse off long-term without Ovens battling their corner. Most don't give a monkeys about corporate governance and some can't even pronounce it. But they do understand the milk cheque and they know Ovens is a battler in a big bad world where every trick in the book and more are being used to screw down their price. Corporate governance or a higher milk price? It's a no brainer for the farmers to put those in order of priority. And at 17ppl the farmers wouldn't care if the devil or Ronnie Biggs negotiated their price if they got a higher one. 

 

It’s incredible that six farmers sitting as prosecution, judge, executor and undertaker have allowed a personal vendetta between Hantoft and Russell against Ovens to come over and above the best interests of the co-op, and to side-line Arla staff and management in this extraordinary chain of events. They've made it look as if the whole business is being run by a bunch of squabbling amateur farmers fighting over the top job just 11 days after it became vacant. It is scandalous and the best example in history of why farmers should not be involved in running the business. 

 

Whilst the gang of 6, dubbed by one farmer as the Klu Klux Klan, may have received legal advice they certainly don’t appear to have thought through the PR explosion this has triggered. The fallout from this will take some controlling now unless the evidence against Ovens is damning indeed. And if it is then why doesn't Arla publish it. It has certainly re-opened the Milk Link v AFMP battle front line and over the coming months many column inches will be devoted to this because it won’t be a storm in a tea cup. This looks like being nuclear and will be if or when Ovens sets up his Producer Group. 

 

Good luck Arla farmers because your co-op looks as if it has been dumped in the middle of the Mother of All Shit streets.  

Below is a joint statement from the Board of Directors of Arla Foods AMBA, which was allegedly prepared prior to Tuesday’s events and which we previously agreed to publicise. Before that and on a lighter note here are a couple of quips in from farmers.

 

1) Thank goodness the co-operative spirit is alive and well in Arla! They say that if you want to get three farmers to co-operate you have to shoot two of them. Well Hantoft is going so he doesn't count and Ovens has been shot, so that leaves Russell. Only another 11,999 Arla members to get through!

 

2) (One farmer to his mate) Apparently the management in Arla House in Leeds was very quiet yesterday. (Mate replies) Yes, six farmers and a bloke from Denmark dug them an effing big hole and dumped them in it without any ropes. But its OK now. The farmers have gone back home to do the milking.

 

“Statement from the Board of Directors of Arla Foods amba

 

Today the Board of Directors of Arla Foods amba has received notification from the UKAF board (the farmer governing body of Arla Foods UK cooperative) that it has taken the decision to terminate the membership of Mr Jonathan Ovens.

 

On behalf of the Board of Directors of Arla Foods amba, chairman Åke Hantoft states:

 

“As a consequence of the decision taken by the UKAF Board to terminate the membership of Mr Jonathan Ovens, which the Arla Foods amba Board agrees with, Mr Ovens is no longer eligible to serve as a board member of Arla Foods amba and therefore leaves open a position as UK representative on the Arla Foods amba Board of Directors.

 

The due process to elect the replacement to the Arla Foods amba Board of Directors will now commence and the UKAF board, governed by its byelaws, will discuss what steps are required to fill the open position.

 

Arla Foods amba will communicate to its members when a replacement is confirmed.”

 

Statement from UKAF Chairman Johnnie Russell

Regarding the decision made by the UKAF board today, UKAF chairman Johnnie Russell issued the following statement earlier today:

 

“Today, the UKAF board (the farmer governing body of Arla Foods UK cooperative) has taken the decision to terminate the membership of Mr Jonathan Ovens, trading as D Mortimer & Sons. This regrettable step has had to be taken as a last measure in a protracted process to resolve issues of corporate governance within Emerald Debtco Limited and takes place with immediate effect. Mr Ovens has been offered a direct contract by UKAF for the supply of milk.

 

As part of the wider Arla Foods amba Cooperative owned by over 11,000 farmers the UKAF Board must act in the best interests of both its UK farmers and all Arla Food’s farmer owners across Europe and in accordance with the Arla Foods Corporate Social Responsibility guidelines. It has been determined that serious failings in corporate governance by Mr Ovens in his role as Chairman of Emerald Debtco Limited are prejudicial to the interests of the Cooperative. These actions also led to a loss of confidence in Mr Ovens by the Arla Foods amba Board of Directors, which supports the UKAF decision.

 

The decision means that Mr Ovens can no longer remain part of Arla Foods UK or a board member of Arla Foods amba and therefore leaves open a UKAF board position and that of a UK representative on the Arla Foods amba Board of Directors.

 

The UKAF board, governed by its byelaws, will discuss what steps are required to fill the open positions and will communicate to its members when the process has been decided.”

 

If any Arla members have any points, comments or questions they would like to receive answers to please email ianpotter@ipaquotas.co.uk

Jonathan Ovens is No. 1 target for the Arla assassins   (11th December 2017)

Over the weekend rumours of a plot to execute current UKAF Chairman Jonathan Ovens have gathered pace and it certainly appears he is the number 1 target for what looks at the moment to be a kangaroo court with fellow UKAF board member Johnny Russell as chief prosecutor, judge, executor and undertaker all in one.

Speculation is rife with what appears to resemble a bloodful coup (AKA assassination) with suggestions that six of the ten current UKAF board members have had numerous secret meetings plotting to oust Ovens both as Chairman and as a supplying member of milk to Arla with at least two others potentially on the radar for similar treatment.

It is a fact, Ake Hantoft announced his intention to retire as Chairman of Arla Foods AMBA from May 2019 only a few days ago and this looks on the surface to have accelerated moves to oust Ovens to ensure he is completely out of the picture in terms of any succession planning to follow Hantoft.

It’s certainly explosive politics for the Arla co-op to be involved with and it’s not looking like this is going to end well for anyone in the battle for the position of top dog at Arla.

For sure this story is sure to run and run and run. We will post statements in response from the individuals concerned and or Arla as soon as they are received. 

1.5ppl milk price reduction for Glanbia Cheese suppliers – from 1st January   (8th January 2017)

This is to date the only milk for cheese January milk price reduction and reduces producers standard manufacturing litre price to 29.5ppl and based on a standard liquid litre the price is only 28.5ppl.

 

This price reduction has caused a stir with two Glanbia farmers contacting Ian declaring they are quitting and not prepared to sweat out another painful drop.

 

1.25ppl milk price reduction for Meadow Foods suppliers – from 1st January   (8th January 2017)

This takes producers standard liquid litre price down to 29.75ppl (www.milkprices.com)   

 

0.11ppl milk reduction for Sainsbury’s contracted farmers   (8th January 2017)

Farmer members of the SDDG will see a small 0.11ppl reduction from 1st January based on its cost tracker.

 

The 1st January standard liquid litre price will reduce to 28.1ppl (Muller) and 27.98ppl (Arla)  (www.milkprices.com)

 

Dairy Crest to hold its January price   (8th January 2017)

In line with the vast majority of cheese processors Dairy Crest has announced it will hold its farmgate price until February at 32ppl based on a standard manufacturing litre and 30.92ppl for a standard liquid litre (www.milkprices.com)

 

DEFRA Average Farmgate milk price stood at 32.34ppl for October    (8th January 2017)

According to DEFRA the average farm gate milk price for October stands at 32.34ppl which is bit of a surprise for an average.

 

GDT auction index up 0.4%   (8th January 2017)

The 16% reduction in the volume offered at this weeks Auction (29,514 tonnes) helped stabilise prices but they are still at an 8 month low.

 

Notable movers were:

SMP                                                    +4.7%   to average US$1774 tonne

WMP                                                   +1.7%   to average US$2830 tonne

Cheddar                                               -3.9%    to average US$3696 tonne

Butter                                                   -11.1%   to average US$4575 tonne

 

Arla farmers can earn around £1040 for only 20 minutes work before next Friday 15th    (8th January 2017)

Ian was asked to help an Arla farmer submit his data online in order to participate in Arla garden plus and it took us just under 20 minutes to complete.

 

Given the average Arla farmer produces at least 1.3 million litres annually the extra 1 euro cent per kg (0.8ppl) incentive for submitting this data comes to £1040 per farmer for 20 minutes work.

 

Whilst Arla would not confirm to Ian exactly how much milk the average Arla farmer delivers they did say it was at least 1.3 million litres and then said that a week today 15th December is the deadline for farmers to submit their details in order to get paid the extra in January to March period.  For those who haven’t done it yet Ian suggests they get a wiggle on because it’s easy money.

 

1.5ppl milk price drop for Muller Direct suppliers from January 1st   (1st December 2017)

This is the first confirmed milk price drop, which will affect around 700 Muller Direct farmers taking their standard liquid litre price down from 30.5p to 29ppl from January 1st (www.milkprices.com).  The fact Muller abide by the Voluntary Code is the reason for this early notification.  The price reduction represents a 5% fall.

 

NFU Scotland have lambasted the Muller announcement claiming it will open the floodgates.  The harsh reality is there are a few liquid processors who have been praying for Muller to make this announcement and they will certainly follow and quickly.  The party is over and some didn’t even arrive in time to get a slice of the cake!

 

1ppl milk price reduction for Arla directs – from 1st January   (1st December 2017)

This reduction will take producers standard liquid litre price to 28ppl (www.milkprices.com)

 

Freshways give advance warning of an anticipated January milk price reduction   (1st December 2017)

Freshways gave 30 days notice to its farmers on the 27th November of an anticipated 1st January price reduction in the region of 1 to 2ppl based on their basket of five competitor milk prices.

 

In addition, they have given 60 days notice to suppliers of a reduction in volume bonuses ranging from 0.2ppl to 0.8ppl dependent on annual volumes supplied.  The reductions take effect from February 2018.

 

South Caernarfon Creameries confirm no change to their January 2018 supplier milk price   (1st December 2017)

We wouldn’t normally mention price holds but with the current yo-yo milk pricing Ian feels any price hold announcements for January 2018 warrant a mention.

 

This first stand on price Ian received from SCC on Wednesday.

 

The January 1st manufacturing standard litre price for the SCC co-op’s members remains at 31.03ppl (www.milkprices.com)

 

Barbers Cheesemakers confirm no change to their January 2018 producer milk price    (1st December 2017)

This maintains producers’ standard manufacturing litre at 31.19ppl and the standard liquid litre at 30.08ppl.

 

Friesland Campina December price reduction still pays out circa 36ppl    (1st December 2017)

Even after a 0.24ppl December decrease the equivalent December liquid standard litre milk price for Friesland Campina farmers equates to a healthy 36.076ppl according to www.milkprices.com

 

The corresponding organic liquid standard litre price will be as near as damn it 45ppl.

 

AMPE and MCVE continue to pull back   (1st December 2017)

The November AMPE stands at 29.2ppl down 3.5ppl (from 32.7ppl October) in one month and now below the November 2016 AMPE value of 31.5ppl.  MCVE is faring a bit better at 34.9ppl down 1.7ppl from the 36.6p value for October.

 

Morrison liquid milk price move has snowballed    (1st December 2017)

Two weeks ago Morrisons increased its retail price of liquid milk from £1 for 4 pints to £1.10.  Within days Tesco, Sainsburys, ASDA, Aldi and Waitrose have tracked Morrisons and lifted their prices.

 

OMSCO and Wyke Farms join forces    (1st December 2017)

OMSCO and Somerset farm house cheesemakers, Wyke Farms, have announced the joint formation of “The British Organic Dairy Company” producing organic dairy products and growing market share with sales and marketing initiatives.

 

Fonterra fined circa £92million (NZ $183million)    (1st December 2017)

The arbitration tribunal responsible for the dispute resolution between Fonterra and Danone concerning a Fonterra product recall in 2013 has determined that Fonterra pays an eye-watering £92million equivalent in compensation.

 

As a result Fonterra has immediately downgraded its forecast earnings per share by an estimated 10 cents per share equivalent to around a 20% reduction with a statement that the fine will not impact on farm gate milk prices.  Howvever, when you are one of 10,500 co-op members it’s like a bulk bin if it comes out of the bottom quickly the bin soon empties and someone goes hungry.  The average cost if spread across 10,500 members and their families is equivalent to around £9,000 each.

 

Arla stand on milk price for a second consecutive month   (24th November 2017)

It will come as no surprise that Arla are holding its member milk price for both conventional and organic for a second consecutive month.  Both Muller and Arla have held prices for December and as suggested in this bulletin on November 10th it’s almost inevitable Dairy Crest will stand alone as the only major buyer to increase its farmer milk price on December 1st (+0.5ppl).  Arlas liquid standard litre price remain at 31.05ppl and manufacturing 32.3ppl.  Its organic standard liquid litre is 41.79ppl and its manufacturing 43.47ppl.

 

In the current climate dairy farmers would be wise to wish (and pray) that Christmas and the New Year bring with them further cheer and stability with a stand on for January and dare we even suggest February!  It won’t be possible for all to hold prices this long, especially some of those exposed in the middle ground.  Prices in 2018 are set to pull back, the only question is which month and by how much?

 

Details of local slaughterhouses wanted   (24th November 2017)

We have been approached to track down local abattoirs to deal with TB animals, which need to be removed from farm quickly, mainly on welfare grounds and not be subject to unnecessary long journeys.

 

The slaughter rate is not to be sniffed at so if you know a good local slaughterhouse of any size who should be considered please email the name and location to joanne@ipaquotas.co.uk  Even better if you know a contact at the abattoir.

 

200th GDT auction is no reason to celebrate   (21st November 2017)

Today’s 200th GDT auction saw the average index drop a further 3.4% to average under US$3,000 to $2,970.

 

Notable movers were:

 

SMP                 down 6.5% to average US$1,701 tonne (under £1,290/tonne)

Butter               down 5.9% to average US$5,144 tonne

Cheddar            down 4.2% to average US$3,831 tonne

WMP                down 2.7% to average US$2,778 tonne

 

GDT auctions started 9 years ago in 2008 and now has buyers from 80 counties.

 

Meanwhile, www.milkprices.com and their fcstonemilkprices.com UK Milk Futures equivalent is reporting its forward curve delivering a nett 24.25ppl to producers reducing to 22.25ppl when trading costs, margins and risk are factored in which is pretty grim but not so grim for those who hedged a few months ago, particularly those who hedged part of their milk and took a 2 year deal.

 

Similarly the latest AMPE farm gate return is coming in at around 24ppl.  The New Year is going to be buckle up time.

 

0.5ppl milk price increase for Dairy Crest Davidstow suppliers – from 1st December could be the UK’s only December producer milk price increase  (10th November 2017)

This increase to date is the only December milk price increase and could remain very lonely!

 

The increase takes producers standard liquid litre milk price to 30.92ppl and the manufacturing standard litre to 32ppl (www.milkprices.com)

 

0.75ppl milk price increase for suppliers to Wensleydale Creamery from 1st November PRODUCER NOTIFIED    (10th November 2017)

This increase takes producers standard liquid litre milk price to 30.25ppl and the manufacturing standard litre to 31.2ppl (www.milkprices.com)

                                                          

Stand on Milk Price for suppliers to the European Giant Friesland Campina     (10th November 2017)

Friesland Campina have held their producer milk price pay out for October at the August rate which in UK terms converts to a liquid standard litre price of 35.8ppl and for an organic standard litre is equivalent to 43.6ppl (www.milkprices.com)

 

GDT auction results fell a further 3.5% to average $3105    (10th November 2017)

The latest 3.5% average auction price drop saw the price for WMP fall by 5.5% to US $2852 tonne. This the first time in seven months it has fallen below the accepted New Zealand break even price of $3,000 tonne putting further pressure on farm gate prices.

 

Key Price changes were:

 

WMP down 5.5% to average US $2852 tonne

Butter down 3.6% to average US $5516 tonne

Cheddar down 2.8% to average US $4001 tonne

SMP up 1.2% to average US $1818 tonne

 

94% of Northern Ireland’s 2017 SFP paid out in October   (10th November 2017)

Northern Ireland is still the only part of the UK which has once again helped its farmer’s cash flow by gaining authorisation from the Commission to make early payments of up to 70% of farmers SFP.

 

A total of £183 million was paid to 22,493 farmers by the 31st October with the balancing 30% plus any remaining monies for those farmers who failed to receive an advance payment to be made on or after December 1st.

 

UK milk production continues to rocket up

Latest figures from AHDB indicate that September’s milk was up 5.2%, taking the year to date figure up by 2.4% (175 million litres) equivalent to almost an extra 5 days of production clocked up in the first 6 months and seemingly increasing.

 

No Halloween Treats for Milk Producers – The Party is over!!    (31st October 2017)

It’s Trick or Treat today and with no new 1st November milk price increase announcements there are no more treats and as one seasoned and respected dairy industry guru commented to Ian “The party is over for those who managed to get to it.”

 

The milk production statistics look a shade bleaker as each week passes with Germany producing around 4% more milk than the same time last year and France up 2.8% with the Normandy region +9%.  Admittedly both were well behind in terms of comparable milk production for the first half of 2017.  Also Europe’s 3rd largest producer, the UK are rapidly heading towards a 2% increase in total milk production in the first 6 months of this milk year starting April 1st.

 

According to AHDB Dairy EU milk production is up an average 3.3% across 28 member states compared to 12 months ago.  Equivalent to an extra 102 million litres.

 

When the EU milk production giants Germany and France ramp up milk production closely followed by the UK, the end result almost appears inevitable.  Buckle up lads.

 

Spot milk has plummeted to almost 33ppl and cream prices continue to crash back from a high of £2.95 now trading at £2, a difference worth 9.5ppl to a liquid processor.  However, it’s still a relatively strong price.  AMPE has dropped by an eye-watering 7.2ppl (18%) in just one month from 39.9ppl to 32.7ppl.  This is really significant, particularly for the likes of Barbours’ producers, who receive a market related milk price for extra litres above their base volume (+8%) of AMPE less 2ppl.  For September that price paid to its farmers was 37.9ppl for October it’s down to 30.7ppl.

 

To pile on the pressure the suggestion is that when Intervention buying re-opens in March 2018 it is via a tender process with the fixed price for Intervention SMP and volume targets removed from day 1.  Futures prices instantly and significantly reacted to this news heading south because if this policy is confirmed there will be no floor in the market. It would appear that only Mother Nature can intervene and she could either cut production or add to it further come the spring.  Remember there is still close to 400,000 tonnes of SMP in EU Intervention stores, which will have to be sold.

 

Dairy UK’s UK Dairy Industry White Paper is an interesting read    (31st October 2017)

Rarely does the mention of a White Paper flick any lights on with Ian, however, the timing and content of the one published last Thursday by Dairy UK prompted Ian to study it.

 

It covers a range of topics including Brexit, dairy farming, consumers and marketing as well as world dairy trade and future prospects.

 

With a turnover of £28 billion per annum and 70,000 people relying on the industry for employment there is a lot at stake and the elephant in the room is Brexit.

 

The report quotes average herd size for 13,227 farms at 143 cows and comments “UK dairy farmers are professional, dedicated and efficient.  UK dairy farming is internationally competitive with a considerable latent capacity for growth”

 

To view the paper click on http://dairyuk.org/media-area/resources/item/the-white-paper-2017

 

Correction   (31st October 2017)

Mike Gallagher, in his Army career, was actually involved with bomb disposal.  Bomb disposal proved to be an extremely useful attribute for his mammoth task at First Milk where he successfully defused the bomb and averted the collapse of the co-op.

 

Scottish dairy farmers urged to sign up asap   (31st October 2017)

For Scottish dairy farmers the membership fee for Dairy Pro (the professional development register for the dairy industry) is free  for 2017/2018 courtesy of  Scottish Government and AHDB.

 

AHDB and the Scottish Government are aiming to have all Scottish dairy farmers signed up to Dairy Pro by December 31st

Dairy Pro  enables farmers to  view and register for training and events. In addition there is a  range of activities  including entrepreneurship classes, dairy discussion groups, workshops and meetings on topics from soil management to animal health, nutrition to business and people management, as well as on-line modules, quizzes and videos.

 

Farmers can register at  www.dairypro.co.uk.

 

This bulletin comes to you free – in return please …….    (20th October 2017)

 …….. complete this simple foreign labour questionnaire if you are a dairy farmer.  Either click on this link and complete it online or email us for a copy ……. https://www.surveymonkey.co.uk/r/RABDF

 

Farmer recipients of this bulletin who do not complete the survey will be telephoned by us for details.

 

Many thanks for your co-operation and for hopefully completing this very important survey.

 

0.5ppl milk price increase for Paynes suppliers -  From November 1st    (20th October 2017)

This takes producers standard liquid price to 30.5ppl (www.milkprices.com) and in this market environment a further 0.5ppl increase is an achievement as well as a bit of a surprise.

 

0.5ppl milk price increase for First Milk members – From 1st November    (20th October 2017)

The increase results in the following standard litre prices:

 

                                                Manufacturing                            Liquid

Haverfordwest                            30.57ppl                                    29.56ppl

Lake District                              30.45ppl                                    29.44ppl

Midlands & East Wales                                                              29.40ppl

Scotland                                                                                   29.09ppl

 

Arla stand on member milk price for November   (20th October 2017)

Arla’s decision to roll over the existing member milk price at 31.05ppl (32.3ppl based on a manufacturing standard litre) has surprised many and it’s almost inevitable member milk prices are at the top of curve in terms of returns from the market place, excluding increases from currency smoothing and other potential contributors.

 

GDT prices ease again    (20th October 2017)

Tuesday’s GDT Auction results saw average prices continue to ease this time by 1% to average US$3204

 

SMP down        5.6%

Butter down       2.5%

WMP down       0.5%

 

In General   (20th October 2017)

Spot milk is off the boil with limited quantities trading around 37p and prices trending south.

 

The recent cream highs of £2.95/£3.00 have dropped like a stone to £2.25/£2.30 equivalent to a reduction of 7ppl in a matter of weeks.  European cheese prices are also falling.

 

With production up in most of the EU member states (20 of them) there are concerns as to how much milk will be sloshing around next spring if a big flush comes.  Major increases include Ireland +11%, Poland +5% and UK +2%.

 

First Milk’s Annual Results include former CEO’s pay-out   (20th October 2017)

Included in a much improved set of results from First Milk for the year ending 31st March 2017 are details of former CEO Mike Gallacher’s remuneration.

 

For sure Gallacher inherited a co-op, which was walking a tightrope in terms how close it was to closing its doors potentially leaving 700 or so dairy farmers experiencing even more financial pain.  He fixed it and quicker than anyone imagined. 

 

Mike’s total 2017 remuneration was £1.155 million including a final contractual payment of £553,000.  In 2016 he received £539,000. 

 

Some will say the former army bomb disposal man works on the premise of “Who Dares Wins” but when he took the turnaround job on most in the industry gave him Bob Hope and No Hope but he succeeded for which he is entitled to be remunerated properly.

 

Key details from First Milk’s financials   (20th October 2017)

Turnover down 30% to £206.5 million (£294.2 million 2016)

 

Operating profit up 95% to £11.7 million (£6.0 million 2016)

 

Net Bank Borrowing up 17% to £37.6 million (£32.1 million 2016)

 

Pension Debit Liability up 75% £11.2 million (£6.4 million in 2016)

 

Nett Profit up 17% £6 million (£5.1 million loss in 2016)

 

First Milk are certainly a shadow of their former size in terms of milk volume and member numbers and have now slipped from 3rd into, at best, 5th place in terms of UK dairy processor size having been comfortably overtaken by both Meadow and Dale Farm.

 

1ppl milk price increase for Pensworth Dairy suppliers – from 1st November   (9th October 2017)

This takes producers’ standard liquid litre price to 30ppl (www.milkprices.com)

 

1ppl milk price increase for OMSCO 270 producers – from 1st October   (9th October 2017)

In addition, OMSCO have announced a 0.25ppl cell count bonus.

 

0.98ppl milk price increase for CTRG (Co-op) suppliers – from 1st November    (9th October 2017)

This takes producers’ standard liquid litre price to 29.39ppl (www.milkprices.com)

 

0.8ppl milk price increase for Waitrose suppliers – from 14th September

This takes producers’ standard liquid litre price to 30.92ppl (www.milkprices.com)   (9th October 2017)

 

0.75ppl milk price increase for Belton Farm suppliers – from 1st November  (9th October 2017)

This takes producers’ standard manufacturing litre price to 30.75ppl and the standard liquid litre price to 30ppl (www.milkprices.com)

 

0.5ppl milk price increase for South Caernarfon Creameries suppliers – from 1st November   (9th October 2017)

This increase is in the form of a 1st November to 28th February 2018 winter premium payment.

 

0.5ppl milk price increase for Dairy Crest Davidstow suppliers – from 1st November   (9th October 2017)

This takes producers’ standard manufacturing litre price to 31.5ppl and on a standard liquid litre price to 30.42ppl (www.milkprices.com)

 

0.36ppl milk price increase for Marks & Spencers suppliers – from 1st October    (9th October 2017)

This takes producers’ standard liquid litre price to 30.44ppl (www.milkprices.com)

 

Friesland Campina 35.73ppl October milk price    (9th October 2017)

The latest 1.25 Euro per kg milk price increase announcement for Friesland Campina suppliers according to current exchange rates results in standard liquid litre price of 35.73ppl (www.milkprices.com)

 

GDT prices down 2.4%  (9th October 2017)

GDT auction prices reflect current national and international market sentiment recording a fall in most key commodity prices with only cheddar prices recording a positive move.  Note, the volume of product on offer was up 11% on that offered last month.

 

Key movers:

 

Butter               -3.6% to average US$5837

WMP                -2.7% to average US$3037

SMP                 -1.4% to average US$1895

Cheddar            +1.9% to average US$4109

 

RABDF Conference    (9th October 2017)

There's little doubt the RABDF has pulled its trousers up after the loss of its flagship show last year, and is upping its work on key areas like labour in order to fulfil its brief of  "delivering more depth to members and the wider industry".  We'll be helping them get more facts on this crucial issue over the next few weeks to try and prove the seriousness of the issue to the Government, so please help us to help the RABDF to help you. More details will follow.

 

Next on the RABDF's agenda is a relaunch of its once successful Business and Policy Conference, which takes place on Wednesday 18 October in London. 

 

A high profile line up of speakers will talk about the potential effects Brexit could have on the UK dairy industry, and will focus on key topics including the organisation's recently published report into European labour, AMR strategies, industry trends and the findings of Mike Houghton’s Trehane Fellowship report. More details and tickets from www.rabdf.co.uk/business-policy-conference with preferential rates for RABDF members and farmers.

 

Foreign labour on UK dairy farms is critical   (9th October 2017)

The RABDF has delivered a report to DEFRA detailing how critical the maintenance of the open pipeline of foreign labour is to UK dairy farmers.  The report states:

 

“Current reliance on EU labour would mean an almost catastrophic failure within the sector should short term access to overseas labour not be maintained” and

 

“measures to secure continued access to semi-skilled and skilled European labour must be in place to avoid disadvantaging UK dairy farmers and impacting on the economic viability of the sector ….” 

 

In her industry comments at last week’s South West Dairy Show, NFU Deputy President Minette Batters referred to a dairy labour crisis pointing to 43 adverts for dairy herdsmen in Farmers Weekly and a backlog of vacancies to fill with numerous dairy labour agencies.  Minette suggested that dairy farmers were quitting because they simply cannot find the staff.

 

Ian plans to do some survey work with farmer recipients of this bulletin on this very important Brexit issue.

 

Polish dairy to join the ever expanding GDT auction family    (9th October 2017)

Polish Dairy is the latest dairy product seller to join GDT auctions and will offer product from next month when it will initially offer key products including WMP, SMP and butter to over 500 worldwide registered buyers.

 

1ppl milk price increase for Meadow Food suppliers – from 1st November   (29th September 2017)

This takes producers’ standard liquid litre price to 31ppl and based on the standard manufacturing litre the price is 31.25ppl (Cumbria) and 31.38ppl (Cheshire).  (www.milkprices.com)

 

Meadow are one of the few milk purchasers who offer a B price, which for August deliveries was 35ppl and for September is budgeted to be at a similar level sitting somewhere between 33 to 36ppl.

 

1ppl milk price increase for Arla Directs – from 1st October  (29th September 2017)

This takes producers’ standard liquid litre price to 29ppl and based on the standard manufacturing litre the price is 30.16ppl.  (www.milkprices.com)

 

1ppl milk price increase for Crediton Dairy suppliers – from 1st November   (29th September 2017)

This takes producers’ standard liquid litre price to 31ppl.  (www.milkprices.com)

 

0.5ppl milk price increase for Muller Direct suppliers – from 1st November    (29th September 2017)

This takes producers’ standard liquid litre price to 30.5ppl.  (www.milkprices.com)

 

1 to 1.1ppl milk price increases for First Milk members – from 1st October     (29th September 2017)

The increase and resulting 1st October standard litre prices (www.milkprices.com) are as follows:

 

Pool                                         1st October                   1st October standard litre price

                                                increase                       Manufacturing             Liquid

Midland & East Wales                1.1ppl                                                               28.90ppl

Scotland                                   1.1ppl                                                               28.59ppl

Haverfordwest                            1.0ppl                           30.05ppl                        29.06ppl

Lake District                              1.0ppl                           29.93ppl                        28.97ppl

 

0.5ppl milk price increase for Wyke Farms suppliers – from 1st November (PRODUCER NOTIFIED)   (29th September 2017)

This takes producers’ standard liquid litre price to 30.15ppl and based on the standard manufacturing litre price 31.22ppl (www.milkprices.com)

 

0.13ppl milk price reduction for Tesco (TSDG) aligned producers – from 1st November    (29th September 2017)

This takes producers’ standard liquid litre price to:

 

Muller Tesco                  29.45ppl

Arla Tesco                     32.46ppl (based on the Arla member price for 1st October 31.04ppl)

 

The 0.13ppl reduction is based on feed, fuel and fertilizer prices supplied by Anglia Farmers and crunched by Promar.

 

Milk Prices as at October 1st (based on www.milkprices.com standard liquid litre)    (29th September 2017)

 

Tesco Arla                                             32.59ppl

Arla Foods Non-Aligned                          31.04ppl

Crediton Dairy                                        30.00ppl

Freshways                                            30.00ppl

Meadow Foods                                      30.00ppl

Muller Direct                                          30.00ppl

Paynes                                                 30.00ppl

Glanbia                                                 29.96ppl

Davidstow                                              29.92ppl

Grahams Scotland                                 29.75ppl

Wyke Farms                                         29.65ppl

Tesco Muller                                          29.58ppl

Pattermores                                          29.50ppl

Arla Directs                                           29.00ppl

Pensworth                                             29.00ppl

First Milk Midlands                                 28.90ppl

Lactalis/Caledonian                                28.50ppl

Sainsburys SDDG                                  28.09ppl

 

1.55ppl milk price increase for suppliers to Payne's Dairies - from 1st October    (25th September 2017)

This takes producers’ standard liquid litre milk price to 30ppl www.milkprices.com

 

1.5ppl/1.43ppl total increase for Arla members - from October 1st     (25th September 2017)
Arla have increased members’ October milk price by 1.5ppl split into 0.84ppl based on a 1 Euro Cent price increase plus 0.66ppl for currency smoothing taking producers’ manufacturing standard litre to 32.30ppl.

The total increase amounts to 1.43ppl for liquid suppliers and for the 1st October the liquid standard litre price will be 31.04ppl.

The organic standard manufacturing litre price increases to 43.47ppl as a result of a currency smoothing increase of 0.66ppl and the organic liquid standard litre price increases by 0.63ppl to 41.79ppl www.milkprices.com

1ppl milk price increase for Grahams Dairies suppliers - from 1st October    (25th September 2017)
This takes producers’ standard liquid litre price to 29.75ppl wwwmilkprices.com

1ppl milk price increase for Yew Tree Dairies liquid contracted suppliers - from 15th October     (25th September 2017)
This takes producers’ standard liquid litre price to 30ppl www.milkprices.com

0.24ppl COP milk price increase for SDDG (Sainsbury's) - from October 1st    (25th September 2017)
This takes producers’ standard liquid litre price to 28.21ppl for Muller contracted producers and 28.09ppl for Arla contracted producers www.milkprices.com

30 jobs to go at First Milk Creameries at Lake District (20) and Haverfordwest (10)     (25th September 2017)

The reductions are as a result of capital investments at both sites and First Milk are aware that these investments need to translate into cost savings, which urgently need to be converted into improved payments in milk prices to members.

 

1ppl milk price increase for Freshways suppliers – from 1st October (PRODUCER NOTIFIED)   (15th September 2017)

This takes producers’ standard liquid litre price to 30ppl (www.milkprices.com)

 

36ppl for Friesland Campina producers – from 1st September   (15th September 2017)

Following the announcement of yet another price rise taking the total increase year on year to 14.6ppl www.milkprices.com calculate that the current September Friesland Campina milk price based on milkprices.com UK  standard liquid litre converts to 35.969ppl, with its corresponding organic price converting to 43.517ppl.  The actual September price increase amounts to 2.56ppl.

 

There was a time when the Arla milk price tracked the FC price but not this time as the gap continues to widen

 

UK Dairy Day gets the thumbs up   (15th September 2017)

By special invitation Ian made his first visit to UK Dairy Day at Telford on Wednesday and it appeared to be a huge success.

 

Understandably given the current long awaited upward trend in milk prices farmers and exhibitors were all optimistic for the future (some perhaps cautiously optimistic) and the show had a real buzz and attendance was rumoured to be a record 9000 plus for this, its fourth annual event.

 

Full marks to the organisers because for Ian the event was well organised from the parking through to the exit procedure.  The lay out of the event was good and there was certainly plenty for anyone involved in dairying to fill their day up.

 

Congratulations to Holstein UK for making sure the post show media headlines were positive with no one stepping out of line or attempting to cast a cloud over the organisational efforts, which led to the events success.  Ian even managed to walk the cattle lines amidst smiles and welcomes, although he half expected one or two exhibitors might want to lasso him and dig their spurs in his shins, if not throw their prized stolen tomahawks in his back. But fortunately there seemed to be enough alert Sherrifs to keep any cowboys at bay.

Indeed the only grumbles which were made to Ian came after the show and related to issues involving two well known dairy exhibitors with one of them having a winning animal supposed to be exhibitor bred but allegedly was of Swiss origin with a Swiss tag. Both appeared to be fairly minor issues compared to what both exhibitors could have achieved if they had wanted to attract negative attention to the event.

 

It’s certainly one for Ian’s diary for 2018.

 

Paul Vernon CEO of Glanbia Cheese is Dairy UK’s new chairman   (15th September 2017)

Paul Vernon has taken over from David Dobbin as Chairman of Dairy UK whose term of office ended at this week’s AGM.  In addition, Andrew McInnes, MD of Muller and Thomas Pietrangeli, MD Arla Foods, are both vice chairs.

 

David Dobbin will be a very tough act to follow and stepping into his shoes will not be easy for Paul, especially when UK dairy faces so may big challenges.  We look forward to Paul making his mark as chairman of the organisation.

 

1ppl milk price increase for suppliers to Meadow Foods – from 1st October   (8th September 2017)

This takes producers’ standard liquid litre price to 30ppl (www.milkprices.com)

 

1ppl milk price increase fro suppliers to Pattemores Dairy, Somerset – from 1st October    (8th September 2017)

This takes producers’ standard liquid litre price to 29.50ppl (www.milkprices.com)

 

GDT up 0.3%    (8th September 2017)

Butter prices continued to head north at this week’s auction.  The key movements were:

 

Butter               +3.8% to average US$5954/tonne

Cheddar            +2.5% to average US$4118/tonne

SMP                 -1.2% to average US$1944/tonne

WMP                -1.6% to average US$3100/tonne

 

Spot butter, if there is any to trade, is reported to be changing hands trading for up to £6400/tonne (€7,000).

 

Barbers pay 38.1ppl on August deliveries above the Base Volume   (8th September 2017)

Barbers decision to pay a transparent AMPE minus 2ppl related price for deliveries above the 8% threshold is certainly paying off for its farmers who are able to produce more milk with a nett August payout of 38.1ppl on those extra litres up 3.4ppl on the 34.7ppl paid in July.

 

New dairy auction partnership in Europe   (8th September 2017)

GDT and EEX (Europe Energy Exchange) have signed a letter of intent with a view to working in partnership to launch an auction mechanism for European dairy products.

 

The muscle and expertise GDT brings to the table having run almost 200 twice monthly dairy auctions and now involving 520 buyers from 80 countries probably indicates the European auction will happen.  Once launched it will provide more relevant local price discovery and trends for UK farmers to monitor.

 

Medina Dairy Commercial letter could have done better    (8th September 2017)

In a letter dated 11th August 2017 from Medina’s Commercial Director to its liquid customers its clear the author did not do his research and by default didn’t really state the truth behind the 4ppl August milk price increase, which Medina have pushed through.

 

The letter states, “As you may be aware from recent communications and news articles, milk production in the UK has been slipping backwards compared to this time last year.”

 

Sorry Medina but UK milk production       in June was up 24 million litres or 1.9% and

in July was up 21 million litres or 1.8%

 

What perhaps should have been stated is that demand, particularly for fat, has rocketed worldwide and not that the reason for prices increasing is based on lack of supply/UK production slipping back.

 

The author then mischievously went on to state “Milk availability from farms is very tight and we find ourselves having to pay inflated prices to secure milk required to satisfy customer orders.”

 

The use of the word inflated was the main reason eyes were raised by one reader who received the letter.  On the flip side the letter does recognise that Medina farmers have to be paid more money to cover increased costs, which is bang on the money and Medina are clearly increasing prices to customers in recognition that higher farm gate prices are likely to continue for at least the medium term.

 

AMPE breaks 40ppl and MCVE reaches a new record   (4th September 2017)

AMPE has reached a new high for August at 40.1ppl as has MCVE which stands at 38.7ppl.  The all time low points were only 16 months ago in April 2016 with AMPE at 15.5ppl and MCVE 15.7ppl. 

 

The two market indicators started in January 2010 and both give a useful estimate of market returns and current price trends.  For more details log on to https://dairy.ahdb.org.uk/market-information/milk-prices-contracts/market-indicators/ampe-mcve/#.Wa1hkNLrvoC

 

Cream income worth 16.66ppl to a liquid processor but whose having that cream?   (4th September 2017)

According to AHDB Dairy 12 months ago cream income was worth 8.6ppl to a liquid processor and is now almost double at 16.66ppl and another record high.  Problem is whilst its worth 16.66ppl in a number of aligned cases it’s the retailer who has pocketed most, if not all, of the extra cream income.

 

30p plus is a clear target    (4th September 2017)

Below are 15 more milk price increases and based on a liquid standard litre it’s clear any milk purchaser who does not pay at least 30ppl by October 1st at the latest is under the spotlight and any suppliers should be asking for an explanation why they are the poor relations holding out their begging bowl again!

 

1ppl milk price increase for Muller Direct (non aligned) suppliers – from 1st October   (4th September 2017)

This increase takes producers’ standard liquid litre price to 30ppl above the Tesco aligned price, especially when scale back is factored in (www.milkprices.com)

 

1ppl milk price increase for Muller Organic suppliers – from 1st October   (4th September 2017)

This increase takes producers’ organic standard liquid litre price to 41.5pl  (www.milkprices.com)

 

1ppl milk price increase for Arla Directs – from 1st September    (4th September 2017)

This increase takes producers’ standard liquid litre price to 28ppl and the corresponding manufacturing standard litre price to 29.12ppl.  (www.milkprices.com)

 

1ppl milk price increase for suppliers to South Caernarfon Creameries – from 1st October     (4th September 2017)

This increase takes producers’ standard manufacturing litre price to 31.03ppl and the corresponding liquid standard litre price to 30.01ppl (www.milkprices.com)

 

1ppl milk price increase for suppliers to Glanbia (Cheese) – from 1st October    (4th September 2017)

This increase takes producers’ standard manufacturing litre to 31ppl and the corresponding liquid standard litre price to 29.96ppl.  (www.milkprices.com)

                                                                                                                                   

1ppl milk price increase for suppliers to Pensworth – from 1st October    (4th September 2017)

This increase takes producers’ standard liquid litre price to 29ppl (www.milkprices.com)

 

1ppl milk price increase for Wyke Farms (Cheese) suppliers  – from 1st October    (4th September 2017)

This increase takes producers’ standard manufacturing litre price to 30.07ppl and the corresponding liquid standard litre price to 29.65pl (www.milkprices.com)

                                                                                                                                                                            

1ppl milk price increase for Wensleydale Hawes suppliers  – from 1st September -  PRODUCER NOTIFIED   (4th September 2017)

This increase takes producers’ standard manufacturing litre price to 30.45ppl and the corresponding liquid standard litre price to 29.5ppl (www.milkprices.com)

 

1.5ppl milk price increases for Lactalis suppliers  – split over two months  - PRODUCER NOTIFIED    (4th September 2017)

The increases are 1ppl on October 1st and 0.5ppl on December 1st.  Note, Lactalis gave its producers a guaranteed minimum price of 27.5ppl for all of 2017 back in 2016.

 

The 1ppl October increase takes producers’ standard manufacturing litre price to 29.51ppl and the corresponding liquid standard litre to 28.5ppl (www.milkprices.com)

 

Between 1ppl to 1.1ppl milk price rises for First Milk members – from 1st September    (4th September 2017)

The co-op’s increases are as follows:

 

                                                1st September standard litre price

                                                Liquid                Manufacturing

           

Midlands           +1.1ppl             27.8ppl             

Scotland           +1.1ppl             27.49ppl           

Lake District      +1ppl                27.98ppl            28.93ppl

Havefordwest     +1ppl                28.10ppl            29.05ppl

Haverfordwest

Tesco Group      +1ppl                29.60ppl            30.55ppl

 

0.7ppl milk price increase for suppliers to Joseph Heler Cheese – from 1st October   (4th September 2017)

 

Fixed price contract offering for Crediton Dairy suppliers    (4th September 2017)

Crediton Dairy are offering its farmers the opportunity to fix either 10% or 20% of their milk output for 2 years at 28ppl starting next month.  The initial litreage on offer is 10 million litres with all farmers guaranteed 10% and if the 20% option is over subscribed scale back will be applied but only to those seeking to fix 20% of their 2 year output.

 

1.5ppl milk price increase for suppliers to Crediton Dairy – from 1st October    (25th August 2017)

This takes producers’ standard liquid litre price to 30ppl (www.milkprices.com) 

 

The increase is broken down in to two parts.  A base price increase of 1.3ppl plus an additional 0.2ppl, which has been added where bactoscans are below 30,000ml.  Note, Crediton’s average bactoscan count is within the 20,000 to 25,000 range.

 

1ppl milk price increase for suppliers to Belton Farm (Cheesemakers) – from 1st October   (25th August 2017)

This takes producers’ standard manufacturing litre price to 30ppl.

 

0.79ppl (1 Euro Cent) increase for Arla Foods members – from 1st September    (25th August 2017)

The Arla conventional price for a standard liquid litre increases by 0.79ppl to give a new standard litre price of 29.61ppl.  Based on a manufacturing standard litre the September 1st price increase is by 0.81ppl resulting in a September manufacturing standard litre of 30.79ppl.

 

The UK organic liquid standard litre remains unchanged at 41.16ppl and its manufacturing equivalent at 42.81ppl.  Note, the organic milk price in Germany, Denmark & Sweden does increase from September 1st by 0.79ppl (liquid) and 0.81ppl (manufacturing).  (www.milkprices.com)

 

Milk production update    (25th August 2017)

According to AHDB Dairy GB milk deliveries are up 0.8% higher than the same week a year ago, which equates to 200,000 litres/day.

 

Deliveries for July are estimated to be up 1.4% on the year at 989 million litres.

 

June EU milk production across all 28 member states was up a tasty 2.7% compared to June 2016.

 

2ppl milk price increase for Dairy Crest’s Davidstow suppliers – from 1st October (21st August 2017)

This takes producers standard manufacturing litre price to 31ppl and the standard liquid litre price to 29.92ppl (www.milkprices.com)

 

1ppl milk price increase for Wensleydale Hawes suppliers – from 1st August (21st August 2017)

This take producers standard manufacturing litre price to 29.45ppl and the standard liquid litre price to 28.5ppl (www.milkprices.com)

 

1ppl milk price increase for Grahams Dairies suppliers – from 1st September  (21st August 2017)

This take producers standard liquid litre price to 28.75ppl (www.milkprices.com)

 

1.19ppl cost compensation payment to 300 Arla Farmers from Morrisons (21st August 2017)

Morrisons have announced several changes to its Milk for farmers range which involves 300 invited Arla farmers.

 

Of the 300 involved 50 are the dedicated pool supplying upto 60 million litres of segregated milk processed at Arla’s Aylesbury facility.

 

These 50 farms supply milk to Morrisons to higher welfare standards and requirements which are above those set by Arlagarden as well as ensuring their cows are out grazing for a minimum of 120 days each year. The cost compensation they will receive is 1.19ppl split 0.96ppl to compensate for milk recording mobility scoring etc plus 0.23ppl as a grazing payment. These payments will be made by Morrisons from the 1st of this month/August.

 

The remaining 250 Morrisons farmers, who are nominated as apposed to dedicated, receive the 0.96ppl compensation but do not have to meet the 120 day minimum grazing requirement and consequently do not receive the additional 0.23ppl. These farmers have to fulfil the additional higher welfare requirements by 1st September (2017) with some dispensation for special circumstances for example farmers who haven’t previously milk recorded and need to install the kit.

 

The 300 farmers have all been invited by Arla & Morrisons based on logistics only a couple have rejected the opportunity whilst others have been very keen to join the substitutes list.

Morrisons continue to sell the milk for farmers range at a premium with the extra 10ppl consumers pay going to supporting British Farmers and their extra efforts.

 

Note Arla will be sole suppliers to Morrisons from spring 2018.

 

Spelling correction on story regarding Fayrefields Liquids (21st August 2017)

In the story regarding Meadow Foods buying Fayrefields Liquids division we stated:

We have been in dispute with Muller regarding the supplement, but unfortunately it has now been resolved, causing our milk business model to be dysfunctional and lose substantial sums of money.

 

There was a spelling error and the word now should have been not and the line should have read as follows …..

We have been in dispute with Muller regarding the supplement, but unfortunately it has NOT been resolved, causing our milk business model to be dysfunctional and lose substantial sums of money.

 

Muller’s take on Fayrefields comments (21st August 2017)

For Muller there is no case to answer regarding the retailer supplement.  Muller commented “The allocation of supplementary payments from certain retailers to Muller dairy farmer suppliers during a period when the market for farm gate was depressed, was handled transparently by Muller and aligned with customers in advance.”

 

Basically Muller have numerous third party supply contracts which are based entirely on volume, price and are for a period of time and as was the case with Fayrefield do not relate to Muller’s non-aligned farm gate price.  In fact, the Fayrefield contract should be better described as a premium price Muller paid and the percentage Fayrefield distributed to its supplying farmers is entirely down to Fayrefield.

 

Muller also commented:  “Third party companies from whom we buy milk receive a price per litre which is negotiated and agreed.  How they then choose to use that income is entirely a matter for them.”

 

The litmus test will be whether Meadow continue to pursue a similar dispute with Muller now they own the business.            

 

1.25ppl milk price increase for suppliers to Barbers Farmhouse Cheese   (9th August 2017)

Split over two months as follows:

 

0.75ppl from October 1st takes producers standard liquid litre price to 29.586ppl and the standard manufacturing litre to 30.681ppl  (www.milkprices.com)

 

0.50ppl from November 1st takes producers standard liquid litre price to 30.074ppl and the standard manufacturing litre to 31.193ppl  (www.milkprices.com)

 

In addition farmers who increase production by 8% or more receive AMPE minus 2ppl, which on today’s numbers, with AMPE at 36.7ppl, equates to 34.7ppl on July additional deliveries.

 

1ppl milk price increase for suppliers to Glanbia Cheese – from 1st September    (9th August 2017)

This takes producers manufacturing standard litre to 30ppl and the standard liquid litre to 29ppl (www.milkprices.com)

 

1ppl milk price increase for suppliers to Pattemores – from 1st September    (9th August 2017)

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

 

0.75ppl milk price increase for suppliers to South Caernarfon Creameries Limited – from 1st September   (9th August 2017)

This takes producers standard manufacturing litre to 30.03ppl and the standard liquid litre to 29.01ppl.

 

SCC are selectively recruiting new suppliers in mid and North Wales.

 

0.75ppl milk price increase for suppliers to Joseph Heler Cheese - from 1st September    (9th August 2017)

 

GDT volume up and average down 1.6%    (9th August 2017)

Last Tuesday’s GDT auction produced an average index down 1.6%; however, note the volume on offer increased by 23%.

 

Notable movers were:

Butter down 4.9%

Cheddar down 4.8%

SMP down 3.0%

WMP up 1.3%

 

Don’t get excited and go mad   (9th August 2017)

September price increases push most competitive farm gate milk prices to the 28 to 30p bracket by September on a standard liquid litre.  However, most analysts, backed up by forward price expectations, anticipate production will increase in 2018, especially from June onwards where forward price expectations are now cooling.

 

0.356ppl retail supplement confirmed by Muller for July deliveries   (9th August 2017)

This will be paid to Muller Direct (non aligned) farmers.

 

Meadow Foods acquires Fayrefields Liquids division    (9th August 2017)

It was inevitable that the intervention and investment in Meadow Foods by Paine & Partners almost 12 months ago would result in expansion and acquisition and this is the first move with Meadow acquiring Fayrefield Foods liquid business, which sits within their existing milk field areas so it’s a logical move and fit.

 

Meadow are presently meeting existing Fayrefield farmer suppliers to explore integration of contractual terms to bring all suppliers onto one Meadow contract.  Those who choose to sign up and commit to Meadow this month will see a 1.15ppl increase on their standard liquid litre milk price backdated to August 1st.

 

In a letter announcing the sale to its suppliers Fayrefield clearly point the finger towards an almost forced sale as a result of the dispute between Fayrefield and Muller and Muller’s refusal to pass on any of the retailer supplement payments.  The letter states:

 

“Our decision to exit the liquid milk business was taken reluctantly.  The main reason is the ‘retail supplement’ which has significantly compromised the milk returns to our farmers.  The way the supplement has been distributed has caused Fayrefield to lose significant money on liquid milk since the supplement started.

 

Fayrefield Foods procure significant quantities of dairy product from Muller, and Fayrefield supply Muller with significant volumes of quality British milk.  The supermarkets pay Muller a ‘retail supplement’ on liquid milk to help struggling British farmers, but Muller has refused to pass on any of the supplementary payments to Fayrefield to give to our farmers.

 

We have been in dispute with Muller regarding the supplement, but unfortunately it has not been resolved, causing our milk business model to be dysfunctional and lose substantial sums of money.

 

We don’t believe the retailers, who initiated the supplement, intended to discriminate against so many UK farmers in this way.”

 

To be fair the distribution of the retail supplements has certainly been discriminatory and cost a number of farmers collectively into the millions of £ and seems to have passed without any real comment or challenge.  Fayrefield have clearly been pushed into a corner and faced with two options in either continuing to fulfil current contracts and either losing money or paying farmer suppliers an off the pace uncompetitive milk price or selling the business.  From a supplying farmers selfish point of view the decision taken by Fayrefield to sell its liquids division is likely to have been the least painful one to its farmers.

 

Muller unveils its non-aligned Muller Direct Futures facility     (9th August 2017)

After several months of preparation Muller has unveiled its new futures hedging contract allowing producers to fix their farm gate milk price on up to 25% of their anticipated milk supply for 12 months.

 

The facility is available to the 700 or so Muller non-aligned farmers who going forward will be known as Muller Direct.

 

At first sight it sounds complicated but in reality it’s fairly straightforward.

 

On the third Wednesday of each month Muller Direct suppliers will be able to log in and view a paid price to them for each of 12 months based on a www.milkprices.com standard litre.

 

This window of opportunity will be open for 24 hours following which once closed Muller have up to a further 48 hours to execute the trades with FC Stone.  Pilot work and dummy runs suggest the backing of trades within this 48 hour window is achievable.  Note, if the execution price varies by +2% there will be no commitment for the farmer to trade and if trade is below the quoted figure Muller will not execute a trade which eliminates any downside to the farmer from a downward price movement.

 

A farmer will trade over 12 months so if say he wants to trade 10,000 litres month he will trade the minimum lot size of 120,000 litres and trade at 12 individually monthly prices  x 10,000 litres which he presumably will average out over the 12 month period.

 

A farmer doesn’t have to trade all 12 months at one go and could in the example above trade 5 months x 10,000 and trade the remaining 7 months at a later date.  In the unlikely event he signs up to trade and fails to place trades for part of his allocation he will simply receive an AMPE related milk price.

 

The planned allocations are as follows:

 

35 million litres in August 2017

35 million litres in January 2018

30 million litres in April 2018

100 million litres

 

Note, these are allocations and do not have to all be traded in these months.

 

So for any 30 million litre allocation it would require 250 of the 700 Muller Direct farmers to take one minimum allocation of 120,000 litres for it to be fully subscribed following which scale back will be triggered. For a 35 million litre allocation it equates to 291 farmers on minimum allocations prior to scale back

 

Muller’s aim is to be fair and ensure any scale back gives an equal opportunity for producers of all herd sizes to trade.

 

Transparency will be maintained and policed by Steven Bradley (www.milkprices.com) whose job it will be to convert the current EEX price to a ppl price then deduct a declared processor margin, 0.55ppl trading fee to provide a nett milk price paid to the farmer for publication on the website.

 

It’s a big move by Muller and farmers are likely to fall into one of 3 categories:

 

(a)    Don’t intend to use the hedging mechanism for a number of reasons

(b)    Will monitor what happens, aim to understand how it works and might give it a trial

(c)    Instantly grasp the concept and logging in to the 24 hour window will be a must do and will trade when they can hedge and secure a margin over their COP.

 

More commentary on hedging and smoothing mechanisms will appear in Ian’s next Dairy Farmer article.

 

The real work must now fall to the newly formed group of Muller farmer representatives whose job it must be to meet farmers and explain how it works and why it’s a useful tool.  It’s perhaps a unique opportunity for those of the 21 who are on retailer aligned contracts to demonstrate that they do represent all Muller producers interests in their patch.

 

Muller launch Muller Farm Insight    (9th August 2017)

Muller have certainly been busy pulling together new ideas for its non-aligned farmers (Muller Direct) and launching them this month.

 

Ready at the end of this month is 12 month pilot named Farm Insight, which is up to 1 days free and optional on farm consultancy together with a report to cover a range of issues prepared by AB Sustain (part of the AB Agri Group).

 

Areas to be covered include likely implications of Brexit and comparative farm data with the hope it will help producers be more competitive in the future, especially in a post Brexit and SFP world.

 

Most of the dairy retailer aligned farmers have seen positive cash advantages as a result of on farm improvements which have both reduced cost of production and/or increased output.  Farm Insight is entirely voluntary for the 700 farmers but given its funded by Muller it must surely worth taking advantage of. 

 

However, it’s fine taking advantage of the opportunity but for some farmers change does not come willingly or easily and if you don’t intend to implement change there seems little point going through the exercise.

 

Note, when Ian asked Muller about their access to the comparative data Muller stated that the agreement they have signed will give them access to the combined group comparative data but no individual farm data which would highlight to Muller the lowest and highest cost of production farms.

 

0.75ppl milk price increase for suppliers to Pensworth Milk – from 1st September  (4th August 2017)

This 0.75ppl increase for September follows another 0.75ppl increase from 1st August

 

1.31ppl milk price increase for suppliers to Muller Direct - from 1st September    (1st August 2017)

This takes producers standard liquid litre price to 29ppl (www.milkprices.com)

 

1ppl milk price increase for suppliers to Arla Direct -  from 1st August   (1st August 2017)

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

 

0.85ppl milk price increase for suppliers to Meadow Foods - from 1st September   (1st August 2017)

This takes producers standard liquid litre price to 29ppl (www.milkprices.com).  Meadow Foods B price for July will be between 30ppl to 33ppl.

 

First Milk’s August 1st milk price increases    (1st August 2017)

0.9ppl Scotland resulting in a standard liquid litre price of 26.39ppl

0.9ppl Midlands & East Wales resulting in a standard liquid litre price of 26.7ppl

0.5ppl Lake District resulting in a standard liquid litre price of 26.98ppl

0.5ppl Haverfordwest resulting in a standard liquid litre price of 27.77ppl, please note this price includes the 0.67ppl Tesco cheese supplement

 

First Milk’s B prices for August deliveries is 25ppl.

 

1.5ppl milk price increase for suppliers Yew tree Dairy (AKA Woodcocks) - from August 14th   (21st July 2017)

This takes producers standard liquid litre price to 29ppl (www.milkprices.com)

 

1.0ppl milk price increase for suppliers Paynes Dairies - from August 1st    (21st July 2017)

This takes producers standard liquid litre price to 28.45ppl (www.milkprices.com)

 

0.81ppl milk price increase for Arla members - from August 1st   (21st July 2017)

This is actually a 1 Euro Cent per kg increase, which equates to 0.81ppl and results in a standard liquid litre price of 28.82ppl and a standard manufacturing litre price of 29.98ppl.  Arla’s organic price is a stand on at 42.83ppl.

 

1ppl milk price increase for suppliers to Dairy Crest Davidstow - from September 1st    (21st July 2017)

This 1ppl increase will be a big disappointment to 360 producers who are now firmly well off the pace.  The reality is that Dairy Crest and the producer group DCD reached an agreement in April 2017 for 2 further price drops in June and July and then having assessed the market decided to agree to a price hold until 1st October.

 

Dairy Crest could have held firm until 1st October and refused any price increase but the lesson for DCD to learn is the difference between a price hold and a price floor.  Had DCD agreed that the July reduction would have been the last reduction then further increases would have undoubtedly have flowed because a flaw would not prevent price increases.

 

The situation leaves DCD and Dairy Crest with much head scratching when it comes to negotiating the 1st October price at the end of August.  The increase for 1st October will have to be significant and if it isn’t agreed our understanding is that deadlock would mean that Dairy Crest producers could leave on 3 months notice and that would be a situation that Mark Allen and his team will not want to take a chance on. 

 

In the latest addition of Dairy Industry Newsletter, Barry Wilson has described Dairy Crest and its price movements as “shameful”, especially given the profits in the cheese business are up 18% to almost £43million for the year to March 2017.  Wilson says that operating margins at this level are both the highest in the UK cheese sector and probably in Dairy Crest’s history.  For August it seems that Dairy Crest will be at the bottom of the milk price league tables and Wilson goes on to highlight that Mark Allen’s salary for 2016-17 at £1.344million with share options worth £5.2million.  Wilson then closes his article with a very hard hitting statement that if he was a Davidstow supplier he would be looking elsewhere if this is how he was being treated.

 

It remains to be seen how tough DCD are in the next round of negotiations but for sure if Dairy Crest don’t play their cards right they could be in for a bruising.

 

Arla unanimously vote to move to 12 months notice period   (21st July 2017)

At a meeting this week 94% of Arla representatives voted for UK members to be given a 12 month notice period option with only 6% voting against the resolution.

 

First Milk price contract changes   (21st July 2017)

First Milk have decided to abandon A and B pricing following the lead of several other milk purchasers.  This decision is one of several  outcomes of a pricing review, which started in March. 

 

While some farmers will understandably criticise the move on the basis that B pricing now should be very high, it has to be balanced by the fact that First Milk’s B price for July is only  25ppl and off the pace.  The reason for this appears to be that First Milk don’t have any  surplus milk with all their member’s milk required for their core business contracts.  In fact when questioned First Milk claim that they are now buying milk from third parties for short term opportunities  far more often then they are selling surplus. 

 

The co-op believes that the one price offering will be welcomed by the majority of members, especially now that it is accompanied by a simple 0.5ppl production bonus paid on all litres if the amount produced in one month is equal or greater to the corresponding month 12 months earlier.  This is simply a statement by First Milk that they want to encourage members to deliver more milk.

 

Another change is that the individual transport/haulage charges have been removed from 1st September.

 

First Milk have also stated that during the course of next week the expectation is that they will be announcing another  price rise.

 

3 new board members at Muller    (21st July 2017)

At Tuesday’s farmer forum meeting there were 8 farmers put forward for 3 positions on the Muller farmer board.   Roddy Catto, as chairman and board member, lost his position as did Chris Willis.  Grant Hartman was the only one of the 3 candidates to retain his position and he is now joined by John Hocknell and Stephen Foster.

 

4 other places taking it to a total of 7 are up for election next year.   At the next meeting in August the farmer forum will need to elect a chairman, vice chairman and finance officer and the odds on favourite to take the position of chairman must surely be David Herdman who is the current vice chairman of the group and former chairman of DCD

 

32ppl equivalent milk price for July deliveries paid by Friesland Campina   (14th July 2017)

Having announced a July farm gate price increase of 0.5 Euro Cents per 1kg, www.milkprices.com have calculated that at current exchange rates of 1 Euro = 88.2ppl and converted to our standard liquid litre results in a price paid of 31.858ppl.  This represents an increase of 12.1ppl compared to 12 months ago.

 

Using the same numbers the Friesland Campina organic standard liquid litre price equates to a farm gate price of 42.976ppl.

 

Arla members are encouraged to discuss the proposal to move to a 12 months notice period    (14th July 2017)

Arla members have been given the minimum required 10 working days notice to consider and express any views on the proposed resolution for the immediate removal of the 3 month notice to leave period to be replaced by a 12 month period as proposed and promoted by the UKAF Board. 

 

Several Arla members have contacted Ian during the week questioning the move with some suggesting that an immediate jump from 3 months to 12 months should have been staged with a 6 month interim notice period.  It was the UKAF Board who made the decision to go in one jump.

 

The main bone of contention appears to be the minimum short 10 working day notice period, which for some, is leading to speculation and suspicion which clearly will be a disappointment to Arla.  This is especially the case given the fact that if this is voted through next Thursday (20th July) the 12 month notice period will take effect immediately.

 

Some farmers believe the option for a farmer to leave a milk purchaser in 3 months keeps that purchaser sharp and focussed on the real market place.  As it stands today all of the main GB milk purchasers who do not comply with the Voluntary Code are on a 12 month notice period as are some of the Code compliant purchasers.  Only Muller, Dairy Crest and Parkham Farms currently operate a 3 month notice period on a price change.

 

Notices for Arla farmers in Denmark and Sweden vary from 4 months to 16 months depending on when the farmer submits his notice.  Note, Arla’s plan is to standardise notice periods across all countries during the next 2 years.

 

One thing is clear, in the event a number of Arla farmers were to leave having given only 3 months notice it potentially results in the remaining members having to plug any hole with the business often having to acquire expensive spot milk, which ultimately reflects on the milk price paid to the remaining members.

 

Arla farmers are urged to raise any concerns and discuss the implications of the resolution with their local area representative at the earliest opportunity and ahead of Thursday’s vote.

 

1ppl milk price increase for suppliers to Belton Farm (Cheese) - from 1st August    (7th July 2017)

This takes producers’ standard manufacturing litre to 29ppl and the liquid standard litre to 28.25ppl (www.milkprices.com)

 

1ppl milk price increase for suppliers to Helers Cheese - from 1st August    (7th July 2017)

 

 

1ppl milk price increase for suppliers to Meadow Foods - from 1st August (PRODUCER NOTIFIED)    (7th July 2017)

This takes producers’ standard liquid litre to 28.15ppl (www.milkprices.com)

 

0.328ppl Muller retail price supplement to be paid on June deliveries    (7th July 2017)

 

NFU accuse Arla CEO of scaremongering   (7th July 2017)

Peder Tuborgh, CEO of Arla has hit the news today with his comments that "butter and cream will be very short at Christmas time" and "Buy your butter now".

 

Tuborgh was interviewed live by BBC Business Live and Radio 5 Live where he pointed to a reduction in milk production coupled with the move from spreads back to real butter following confirmation from scientists that eating butter is not responsible for clogging up arteries. Suddenly butter is popular.

 

Only last week in this bulletin Ian commented "retail butter prices have not responded to hit consumers pockets yet".

 

One year ago a 250 gram pack of butter cost £1.35 now it's £1.49 but it must surely be set to head towards £2 or more soon.

 

A powerful, but perhaps realistic, warning from the head of one of the world’s dairy giants.

 

The big surprise was the revelation that one or more of the interviewers was told by the NFU that Arla were scaremongering in relation to suggestions that butter and cream will be short.

 

According to current wholesale market prices butter and cream are ALREADY short and very soon retailers will have to pass on increases to consumers.

 

For the NFU to comment like this smacks of an industry where its left hand doesn’t know what its right hand is doing, achieved nothing and looks to be a case of negatively counteracting Arla's message just for the sake of it.

 

The division comes at a critical time when the industry needs to be joined in its thinking, especially with the Brexit negotiations.

 

1.5ppl milk price increase for suppliers to Grahams Dairies (Scotland) – from 1st August   (6th July 2017)

This takes producers standard liquid litre price to 27.75ppl (www.milkprices.com)

 

1.5ppl milk price increase for Muller suppliers – from August 1st    (30th June 2017)

The resulting liquid standard litre price is 27.69ppl. 

 

Note, the current 0.3ppl June and July forecast retailer supplement will reduce and could potentially disappear which will mean a reduction in Muller’s farm gate milk price.

 

1ppl milk price increase for Arla directs – from 1st July    (30th June 2017)

This takes the liquid standard litre milk price up to 26.0ppl and the manufacturing standard litre price to 27.04ppl (www.milkprices.com)

 

1ppl milk price increase for suppliers to Glanbia Cheese – from August 1st    (30th June 2017)

This results in a standard manufacturing litre milk price of 29ppl and a 0.96ppl liquid equivalent price rise resulting in a standard liquid litre milk price of 28.03ppl (www.milkprices.com)

 

0.75ppl unconfirmed price increase for suppliers to South Caernarfon Creameries Limited – from August 1st    (30th June 2017)

The price increase is strongly rumoured but no one from SCC was available to confirm it as correct.  If it is confirmed it will result in a 29.28ppl standard manufacturing litre milk price.

 

0.21ppl milk price increase for Tesco (TSDG) Muller and Arla suppliers – from August 1st    (30th June 2017)

This results in a standard liquid litre price of 29.58ppl.  The increase follows a quarterly review of the cost tracker.

 

As markets are the liquid standard litre milk prices for both Arla and Muller non aligned should comfortably overtake the TSDG price during this quarter.

 

First Milk B price +1ppl but stand on for July A price     (30th June 2017)

First Milk’s member B price will increase by 1ppl to 25ppl from July 1st whereas the A price will be stand on until 1st August.

 

29.5ppl net milk price for March to June 2018!     (30th June 2017)

www.milkprices.com UK Milk Futures Equivalent (UKMFE) forward curve is indicating what they describe as “the opportunity” to lock into a net farm gate milk price of around 29.5ppl for the March to June 2018 period.  This must surely mean much head-scratching by farmers as to whether they commit a percentage of their milk at these prices to hedge their bets.

 

In a similar tone the current average UKMFE net price to producers stands at at 29.34ppl allowing for costs, margin and level of risk. (www.milkprices.com)

 

But who’s pickpocketing the money?    (30th June 2017)

NFU Scotland have issued a news release titled “Dairy Farmer Patience Wearing Thin” pointing to the fact market indicators are meteoric yet farm gate prices have failed to respond and that “the arithmetic does not add up”. 

 

As one industry analyst commented to Ian this morning some liquid milk purchasers need to up their game if they want to retain their milk pool and at current July and August 1st farm gate prices its’ likely some farmers will vote with their feet and tender resignations.

 

AHDB Dairy butter prices are at record levels averaging £5,100 tonne (June) and hitting £5400 to £5500 tonne.  In addition, AMPE at 36.4ppl and MCVE standing at 36.9ppl are both close to doubling in value in only 12 months.

 

Questions are being asked as to whether current butter prices are sustainable and the answer appears to be it’s doubtful, especially given the fact retail butter prices have not responded to hit consumers pockets yet. 

 

The AMPE price of 36.4ppl for June should have Barbers suppliers smiling because the Barbers above base milk volume price is set at AMPE minus 2ppl = 34.4ppl, with their standard milk price remaining the top milk for cheese price in the UK (www.milkprices.com)Let’s play Top Trumps and see who can beat that?

 

A big thank you to all who sponsored Ian & Carole in their classic Mini Cooper S trip to Holland in March     (30th June 2017)

Thanks to the generous sponsorship of readers of this bulletin Ian and Carole raised £3630 in aid of Orchid (fighting male cancer) and Against Breast Cancer.

 

In fact, they also collected the prize for raising the most money so a big thank you to all of you who generously supported the tow charities.

 

The total raised by the Regis Ladies Classic Group in their 20 years of annual tours is a staggering £565,000

 

1.65ppl (2 Euro Cents) milk price increase for Arla members – from 1st July    (23rd June 2017)

The increase was inevitable given the seismic movements in the fat markets, which are now driving prices north with spot prices having hit 36ppl.  Other milk processors are expected to follow with “useful and meaningful” price increases next week from July 1st and those announced for August 1st will need to be greater if they intend to be fair to farmer suppliers.

 

The nett Arla price increase is actually 1.44ppl allowing for the currency smoothing and re-balancing of Arla’s cash flow following the milk price support given in May and June when the UK Arla farmers board agreed to fast forward future currency smoothing benefits due from 1st July.

 

The resulting liquid standard litre price is 28.03ppl with manufacturing 29.17ppl and the organic manufacturing standard litre price increases to 42.83ppl and the organic liquid standard litre price to 39.78ppl.  (www.milkprices.com)

 

GDT down 0.8%     (23rd June 2017)

It’s the first auction decrease for three months with the average price recorded $3434.

 

Notable movers:

 

Cheddar            down     3.8% to average US$4121 tonne

WMP                down     3.3% to average US$3022 tonne

SMP                 up         1.4% to average US$2218 tonne

Butter               up         2.9% to average US$5768 tonne

 

Dairy UK Beyond Brexit Seminar and comments from EU Commissioner, Phil Hogan     (23rd June 2017)

Wednesday’s gathering of the great and the good of the UK dairy industry certainly confirmed that Dairy UK is pulling all the stops out to ensure the UK dairy industry, at both processor and farmer level, is recognised as a key priority in the Brexit negotiations.

 

Commissioner Phil Hogan spoke in the evening and gave very positive signs that he wanted to work with the UK dairy industry to ensure a soft Brexit.  Yes, the cynical will likely comment that Hogan will want a soft landing given his Irish roots but he had the perfect opportunity to deliver a hard hitting warning to the UK dairy industry and he chose to deliver the opposite message of wanting to work together.

 

Chairman of Dairy UK, David Dobbin, was very clear that trading with the EU without tariffs and barriers must continue and that now is the time for the industry to “hammer home the significance of dairy”.

 

Dobbin went on to highlight that the UK food and drink industry is bigger than the car and aerospace industry combined with 73,000 UK families depending on the 14 billion litres of milk output from dairy farmers.

 

The thinking and the messages from Dairy UK were very clear, let’s hope their efforts yield results and we don’t end up on the cliff edge in the spring of 2019.  At least we now know we have a dairy organisation fighting our corner.

 

Yew Tree concludes its first 2 year fixed price contract    (16th June 2017)

This is certainly the UK’s first 2 year forward contracted farm gate milk price which, like Yew Tree’s other volatility smoothing initiatives, has had a good update.  It has been taken up by a number of Yew Tree Dairies ingredients farmers and backed off with the physical delivery and contracts with customers, so zero exposure.

 

The contracts will run until July 2019, so covering two more spring flushes, and at farm level delivers is 29.028ppl less 1.7ppl haulage to nett 27.328ppl.

 

Yew Tree producers have contracted to supply between 5% and up to 60% of their output and this price certainly top trumps the average all prices figure for the last 2 years (24.67ppl) and 3 years (26.66ppl) (www.milkprices.com)

 

Production and Markets – Update   (16th June 2017)

According to Datum GB milk deliveries for week ending 3rd June 2017 were 1.5% below those in the corresponding week a year earlier. 

 

Worldwide there is no increase in milk production which is running more or less in parallel with that recorded in 2016.

 

Commodity wise all prices continue to head North with the rise in butter prices has been described as “meteoric!”  All eyes will be on next week’s GDT auction with the expectation that once again all prices will increase.  This market is simply a commodity and fat market driven.

 

Vegan groups turn sour as European Court says not to Soya Milk and others    (16th June 2017)

The European Court of Justice has declared that products advertised as milk, butter, cream, cheese and yoghurt cannot be named as such if they are purely plant based.

 

This means in order to use these words in advertising and marketing any milk/dairy product must be derived from animals.  The court’s decision follows a German case.

 

It’s a bitter blow for the European Vegetarian Union and The Vegan Society and their mates, who when asked to comment were all keen to put their own spin on the decision rather than keep their heads down and lick their wounds.

 

0.5ppl milk price increase for members of South Caernarfon Creameries (SCC) co-operative – from 1st July   (5th June 2017)

At a time when most, if not all, milk purchasers are at best holding prices with most reducing Wales oldest dairy co-operative, SCC, is bucking the trend and not following the pack with this 1st July increase.

 

Alan Wyn Jones, MD of SCC, commented to Ian:

 

Cheese by-product returns on cream and whey have continued to strengthen and the outlook on these returns remains extremely positive.  On the back of these improved returns its only right we pass this onto our farmer members

 

The SCC business has made significant investment in recent years and is one of the few milk purchasers in a position to attract and recruit new suppliers/members. 

 

The increase takes producers manufacturing standard litre upto 28.53ppl and their liquid standard litre price to 27.57ppl (www.milkprices.com)

 

0.35ppl and 0.28ppl milk price reductions for members of First Milk – from 1st June    (5th June 2017)

Details as follows (www.milkprices.com):

 

0.35ppl              Midlands & East Wales (liquid standard litre price of 25.80ppl)

 

0.35ppl              Scottish mainland (liquid standard litre price of 25.49ppl)

 

0.28ppl              Lake District (liquid standard litre 26.48ppl and manufacturing 27.43ppl)

 

0.28ppl              Haverfordwest (liquid standard litre 27.25ppl and manufacturing 28.20ppl)

 

The First Milk B price for May is 23ppl, June expected to be 24-25ppl and prediction for July 25ppl plus.

 

The reason given for these price cuts is as a consequence of other milk purchasers reducing their prices, which has adversely impacted on First Milk’s customer pricing mechanism.

 

Markets continue to head North  (5th June 2017)

Throughout May dairy markets for butter, cream and AMF have been aggressively heading up and this has continued into June and are now at their highest levels for more than 5 years.

 

Current spot milk prices are now at 30ppl and in Holland and Italy are 31.5ppl (note this is with 4.4% b/f)

 

www.milkprices.com’s UK Milk Futures Equivalent increased by an eye-watering 8ppl in May to 35.39ppl for September 2017 delivery.  (Note, approximately 3 to 4ppl needs to be deducted to give a realistic farm gate milk price equivalent.)

 

AHDB Dairy report butter starting in early May at £3750 tonne and ending at £4800.  Cream started at £1700 and reaching £2200 tonne

 

Open Farm Sunday – This week 11th June   (5th June 2017)

LEAF has 350 UK farms signed up for this week’s Open Farm Sunday in this, it’s 11th year.

 

As LEAF correctly state it’s a fantastic opportunity for young and old to discover first hand what it means to be a farmer.

 

Arla are the only UK milk processor who provide financial support and sponsor the event and more than 60 Arla member farms are opening their gates to the public this Sunday.  A great effort and well done to all who make this happen.

 

South Caernarfon Creameries (SCC) wins the 2017 Dairy Food Provider of the Year Award   (5th June 2017)

The award was voted by members of the public and a real feather in the co-op’s cap.

 

0.4ppl milk price reduction for Arla members – from 1st June     (26th May 2017)

This takes producers’ standard litre liquid milk price to 26.65ppl and 27.73pl for the standard litre manufacturing price (www.milkprices.com)

 

The price cut is obviously unwelcome, especially when it only applies to Arla’s circa 2,500 GB members, however, its GB members did avoid a cut as a result of the accelerated currency smoothing payment, which neutralised a May price cut.

 

However, the NFU (England & Wales) appear to have Arla in their sights and turning almost a blind eye to making any meaningful comment on the practices and milk price reductions of other milk purchasers, especially County Milk.  See last week’s bulletin with 1ppl retrospective producer price cut.

 

As the biggest milk purchaser Arla should expect to receive adverse press coverage when they drop the price, however, numerous people are questioning why the NFU haven’t done a press release lambasting County Milk’s 1ppl backdated price cut which effectively waves two fingers to the Dairy Industry Voluntary Code of Best Practice and firmly takes the industry back to the dark days, pre the code.

 

So whilst the NFU claim “farmers are asking what’s going on” reference the Arla 0.4ppl cut Ian can confirm others are asking what’s going on with regards to the NFU applying pressure proportionally, especially when it comes to retrospective price cuts on which it has simply made a passing remark.  The NFU could do much better unless it has been silenced!

 

MCVE & AMPE both comfortably over 30ppl   (26th May 2017)

The AMPE price for May is up 3.3p in one month to 31ppl and the corresponding MCVE price up 1.5p to 33.3ppl.

 

Fonterra price increase    (26th May 2017)

New Zealand dairy giant Fonterra has increased its 2016/2017 farm gate milk price by 15 cents to $6.15 per kg MS as a result of stronger world dairy commodity prices and is cautiously optimistic for the future.

 

EU milk out put is rising faster than budgeted    (26th May 2017)

March output is up just under 1% across the EU and the growth is predicted to increase by significantly more than the budgeted forecast increase of 0.6% for the year, especially for the second half of 2017 where anticipated growth now expected to be 2%.  This would give a total 2017 increase of around 1%.

 

Arla’s cheese isn’t made from Monster Milk    (26th May 2017)

Arla has rattled some cages in Trumpland with a racy and controversial advertisement on US TV promoting Arla’s cheese as not being made from cows which are monsters and given added hormones.

 

The advert depicts a six-eyed monster with razor sharp horns and electrified fur representing a child’s impression of the hormone BST.

 

BST manufacturer Elanco has initiated legal action against Arla demanding the advert be pulled but as of today it’s still running and gaining more publicity everyday, which must be great news for Arla’s US cheese sales.  The jury is out on whether the advert is pulled on the instruction of the authorities.

 

New look to Belton Cheese branding   (26th May 2017)

Shropshire farm house cheese buyer, Belton, has unveiled a new very distinctive identity under the name of Belton Farm with a strapline “Great British Cheesemakers”

 

1ppl back dated milk price reduction for County Milk suppliers – from May 1st     (19th May 2017)

This means County have dropped producer prices by 3ppl in recent months and this latest price drop has come as a very big surprise to producers because for those involved at the sharp end of trading, like County, spot prices are now 26 to 27ppl having risen from around 20ppl in less than 3 weeks. 

 

Despite all the efforts of the NFU’s and others to introduce a code of conduct it’s hardly fair to hear back dated price cuts are still considered fair.

 

Farmers should certainly be questioning any price drops beyond early May and for those announced for June and even July, for example Dairy Crest’s two stage price reduction, there must be grounds for farmers to insist these to be immediately rescinded to demonstrate fairness and transparency.  The alternative is some purchasers risk being tagged as opportunist Robin Hoods, especially for July and/or back dated cuts.

 

It’s a certainty some milk purchasers have made the wrong call with recent milk price drops and should be challenged.

 

Cream income is stratospheric and according to AHDB Dairy is worth 10.15ppl compared to only 4.62ppl 1 year ago an increase of 120% and cheese prices are rocketing north this week.  Come on don’t push through price cuts just because you can.

 

0.5ppl milk price drop for Grahams Dairies supplies – from June 1st      (19th May 2017)

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

 

GDT auction results   (19th May 2017)

This weeks’ GDT auction produced a 3.2% all products average index increase, which is the 5th consecutive increase.  Out of the 8 commodities on offer 7 out of 8 recorded price increases and the average index is now the highest it’s been for 3 years.

 

Key movers    (19th May 2017)

Butter               +11.2% to average US$5479

WMP                +1.3% to average US$3312

SMP                 +1.0% to average US$1998

Average +3.2% to average US$3313

 

UK product goes into Intervention     (19th May 2017)

According to AHDB dairy UK produced SMP has gone into the EU’s Intervention store for the first time in 12 months during the first week of May with 1,132 tonnes taking total EU stocks to an eye-watering 356,000 tonnes!  Do not let anyone try to tell you that SMP prices are why price cuts are needed because cream values are eclipsing that red herring.

 

The liquid milk merry-go-round kicks in as Morrisons do some shuffling    (19th May 2017)

Morrisons have moved to sole supplier for all their own brand liquid milk, estimated to be around 400 million litres to Arla from March 2018 for three years until 2021. 

 

Arla already had an estimated 260 million litres and the 140 million litres which they gain from next March is at the expense of Muller and is in effect the 140 million litres Muller acquired as part of the take over of Dairy Crest’s liquid division. 

 

Whilst Morrisons are unlikely to go to a segregated pool they are moving towards what some would call a nominated pool with specific farmers nominated with whom Morrisons will presumably want to engage in return for which additional funds will be paid to the retailer.

 

The loss of such a large quantity will be a blow to Muller as it would be to any processor.

 

More rides on the merry-go-round are still on the cards with next up the outcome of the Lidl re-shuffle followed by the big Aldi tender and in summer by the co-op group (CTRG).  Nett milk movements during the 12 months ending April 2018 will undoubtedly leave some milk buyers smiling and some crying over the spilt milk.

 

Dairy Crest’s year end results    (19th May 2017)

Dairy Crest’s results show adjusted profit was up 5% to over £60 million (57.7m in 2015/2016) with net debt up by 9% to £249.8m.

 

The dividend paid to shareholders up 2% to 16.3p.

 

Dairy Crest shares were trading at £5.80 a fall from the £6.16 briefly recorded on Wednesday.

 

Ulster Farmer’s Union retaliates against Go Vegan World’s anti-dairy campaign     (19th May 2017)

UFU President Barclay Bell has no issues with the less than 1% of the population who for whatever reason have decided to go vegan, however, their organisations anti-dairy campaign targeting dairy farming systems is “one-sided and unfair”, which the President has criticised on behalf of the 99%  plus of the population who enjoy eggs, meat and dairy products.

 

Meanwhile, in the US, an industry campaign called Undeniably Dairy has been launched to better engage with consumers with clear transparent messaging about dairy products which has and is currently twisted, distorted and misrepresented!

 

The campaign realises that consumers are being spoon fed what is predominantly conflicting inaccurate information often by anti-dairy groups.  The same could be said in the UK, especially when it comes to facts on TB in cattle and badgers.

 

Fake invoices and forgery once again in the Midlands     (19th May 2017)

It’s by no means the first time middle ground family wholesaler J N Dairies has been the subject of unlawful activities (2008) lies and propaganda (2014) and its returned to their doorstep again.

 

No fair and honest dairy competition in the Wolverhampton and Birmingham area that’s too simple and now it’s the return of doctored documents painting “an untruthful image of your honest and ethical supplier.”  When will these clowns learn this is not how the dairy industry operates in the UK?

 

Back in 2011 Johal Dairies and J N Dairies were locked in a multi-million pound expensive high court battle involving the theft of confidential information belonging to J N Dairies in 2008 and an alleged bribe of £40,000 plus.

 

The end result was that the court ordered Johal Dairies to pay J N Dairies almost £1.3 million in relation to legal costs, damages and interest on top of which they had their own costs.

 

Arla opens new Danish innovation centre     (19th May 2017)

As part of its aim to ensure a minimum of 10% of Arla UK’s net revenue is derived from new products Arla has officially opened its new innovation centre in Aarhus, Denmark.

 

The site employs 150 people some of whom will, with respect, resemble Umpa Lumpa’s working on up to 50 new ideas at any one time.

 

Arla in winning ways     (19th May 2017)

Arla have received international recognition having been listed under two ingredients categories in the 2017 Ingredient of the Year Nutra Ingredients Awards in Geneva, winning one category and runner up in another.

 

0.5ppl milk price reduction for Muller non-aligned suppliers – from 9th June   (12th May 2017)

This reduces producers’ standard liquid litre to 26.19ppl (www.milkprices.com) excluding the retailer supplement (see below)

 

0.276ppl April retailer supplement for Muller non-aligned suppliers   (12th May 2017)

This will be paid to Muller’s non-aligned suppliers in addition to the standard price.

 

The consensus is that dairy markets have turned the corner   (12th May 2017)

Virtually all analysts are convinced that the bottom of the market was reached in April and that the UK farm gate milk price outlook for the remainder of 2017 is cautiously optimistic.

 

GDT auction futures and forward contract prices having stabilised are now showing signs of steadily improving for most dairy commodities.  This is encouraging news in spring and bodes well for the rest of 2017.

 

The FC Stone/milkprices.com UK milk futures (UK MFE) price for April of 27.36ppl they believe will be the lowest for “the foreseeable future” and May has already seen the UK MFE average butter price increase by €150/tonne and SMP up a more modest €10/tonne.

 

The 350,000 plus tonnes of aged SMP Intervention stocks will one day be a problem.  If, or rather when, the Commission accept tenders to release stock it will dampen farm gate milk price recovery.  Fortunately in 2017 limited additional SMP is going into Intervention amounting to under 1,000 tonnes a week placed in store during April compared to 15,000+ tonnes/week average in April 2016.

 

In a press release NFU Scotland have called for stability in Scottish farmers farm gate milk prices.  The press release points to a realistic farm gate milk price of 27.5ppl depending on the milks end use based on the fact that AMPE is at 27.7ppl and MCVE is at 31.8ppl.  All signs are pointing north.

 

Dairy Industry Newsletter 20th Annual Conference – Next Wednesday   (12th May 2017)

The Conference theme is “Riding the Dairy Market Roller Coaster Trump, Brexit and many now uncertainties”.  Ian will be attendance to hear first hand what an impressive line up of speakers has to say.

2ppl milk price cut for Dairy Crest Davidstow suppliers    (5th May 2017)

Split over two months with a 1ppl reduction from 1st June and another 1ppl from 1st July.  Accompanying the announcement was a pledge to hold the new July price for August and September.

 

First Milk May 1st price reductions    (5th May 2017)

Details are as follows:

 

0.1ppl               Midlands & East Wales (liquid standard litre price of 26.15ppl)

0.25ppl              Scottish mainland (liquid standard litre price of 25.84ppl)

0.35ppl              Lake District (liquid standard litre 26.76ppl and manufacturing 27.72ppl)

0.35ppl              Haverfordwest

 

The 0.35ppl Haverfordwest liquid standard litre price will be 25.88ppl excluding the additional Tesco cheese payment, which is expected to result in a standard litre price of 27.53ppl and a manufacturing standard litre price of 28.5ppl.

 

Muller sign up all 1900 suppliers bar 6!    (5th May 2017)

In what can only be described as a remarkable 2nd round PR result Muller have confirmed to Ian that only 6 farmers have not signed the new Muller contract.  Out of these only 2 are what Ian describes as “The Awkward Squad” with the other four either retiring or moving away from the Muller family.

 

So following on from Ian’s current Dairy Farmer article the two Awkward Squad farmers are the ones with a big call and a potential problem unless they have decided their future is in not supplying Muller and they already have alternative options.

 

Consequently there is unlikely to be any need for differential pricing for just two farmers on the old contract and www.milkprices.com will presumably ignore and no longer refer to either of the old Muller contracts.  So far as Muller is concerned it’s a housekeeping job completed.

 

Dairy Tech has 100 plus exhibitors already   (5th May 2017)

RABDF’s new flagship Dairy Tech event on 7th February 2018 at Stoneleigh Park already has over 100 committed exhibitors – www.rabdf.co.uk

 

Scottish NFU’s Vice President calls for naming and shaming of BVD farmers who fail to take action  (5th May 2017)

It’s a bold and brave move but Gary Mitchell who is a dairy farmer and NFU Scotland Vice President has put forward the suggestion that farmers who fail to eliminate cattle persistently infected with BVD should be publically named and shamed.

 

According to Gary and NFU Scotland there are 382 known BVD PI animals on Scottish farms and 140 farms have two or more PI’s and one even has a staggering 24 PI animals on farm!

 

Gary is suggesting that if these farmers are unwilling to remove all infected animals their details should be published and Ian would support this with publication in this bulletin on a weekly basis if data protection permits it.  See below for very competitive BVD tags from Potters.

 

No reduction in EU SMP stocks in 8th tender    (28th April 2017)

Once again no SMP sold in the recent tender and stocks are indeed steadily rising and currently stand at 353,680 tonnes. Current market prices for SMP are precariously close to intervention levels.

 

Friesland Campina stand on for 3rd time    (28th April 2017)

Arla’s biggest European competitor, Friesland Campina, has held its producer milk price for the 3rd consecutive month at an equivalent 29.24ppl based on the milkprices.com standard liquid litre price (4% butterfat & 3.3% protein). Note, the rise in the value of sterling has wiped 1ppl of this price which would have been 30.25ppl were it not for currency movement.

 

1 Euro Cent (0.76ppl) milk price reduction for Arla members is neutralized for Arla GB members     (25th April 2017)

From next Monday May 1st Arla has announced a further 1 Euro Cent milk price reduction but this has been neutralised in cash flow terms due to a decision by the UK Arla farmers board to bring forward future currency smoothing benefits due to members July onwards.  The nett effect is to cancel out the price cut at a time when cash flow is already tight due to peak seasonality deductions and is a welcome move by the UK farmer representatives and fingers crossed for the next Arla price move to be stand on or up.

 

2 Euro Cent (1.52ppl) milk price reduction for Arla Organic members is halved    (25th April 2017)

The accelerated benefit of July currency smoothing has also been applied to the organic price reduction of 2 Euro Cents, which means the net cash flow reduction will be 1 euro cent (0.76ppl) instead of 1.52ppl for a standard liquid litre and on a standard manufacturing litre the 1 euro cent reduction converts to 0.79ppl as instead of 1.58ppl both apply from May 1st.

 

In a statement Arla commented that whilst the organic dairy market is reasonably stable this adjustment has been necessary in order to reflect current market returns.

 

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

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

 

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

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

 

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

 

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

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

 

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

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

 

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

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

 

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

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