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Note, all standard
litre prices are those quoted by www.milkprices.com
and are based on the following:
The liquid standard
litre 4% bf, 3.3% protein, 30,000/ml Bactoscans, 200,000/ml SCC, 1 million
litres a year on EODC but before seasonality, monthly profile payments,
balancing, B price additions, capital retentions or annual incentive schemes.
The manufacturing
standard litre is to exactly the same specification with the exception of
4.2%bf and 3.4% protein.
0.5ppl 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 Dairy – from 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 Dairy – from 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
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)
0.75ppl
milk price cut for Pensworth suppliers
(7th April 2017)
This takes producers standard liquid litre price to
26.5ppl. (www.milkprices.com)
0.4ppl
milk price cut for Meadow Foods suppliers – From 1st
May (7th April 2017)
The reduction results in a standard liquid litre
price of 27.15ppl and a standard manufacturing (cheese) litre price of
27.53ppl.
Freshways
milk price cut is unknown but will be capped at a maximum 0.39ppl for May suppliers (7th
April 2017)
Freshways wrote to its producers on the 31st
March informing them of a May price cut claiming that all 5 companies which
make up the Freshways current basket have reduced their price.
Ian has requested Freshways clarify which Companies
have reduced the basket price because as at the date of the letters Ian
believes a maximum of 2 out 5 have reduced their farmgate milk price (Arla and
Paynes). Indeed the attachment with the
letter appears to confirm this. The
price cut will not exceed 0.396ppl.
GDT
Auction average up 1.6% (7th
April 2017)
Noteable movers were:
WMP up
2.4% to average US $2924 tonne
SMP down
0.8% to average US $1913 tonne
Butter down
1.8% to average US$4751 tonne
Cheddar down 4.4% to average $3288
More
SMP goes into Intervention (7th
April 2017)
It’s not encouraging news to hear that 472 tonnes of
SMP from Poland has already gone into intervention stores.
Southern
Irelands February milk production was down 7.8% (7th April 2017)
Southern Irelands February production was down 22.3
million litres (-7.8%).
Award for the most money raised for UK Cancer Charities (7th April 2017)
Ian & Carole scooped
the award for being the team (English Bulldogs on Tour) which raised the most
money for the two Cancer charities in last weekend’s final Regis Classic car
Tour to Holland.
So a huge Thankyou
to the 62 readers who donated. Note a very significant proportion of the money
Ian and Carole raised was directed by readers to fighting Male Cancer.
Below is a
photograph of Ian & Carole receiving their Awards with organiser Ali Green
who has been key to the annual event for 20 years. Please note Ali isn’t as
squashed and sandwiched between Ian and Carole as the picture perhaps
indicates! Also attached is a great
photograph of the duo in action in their 1963 Mini Cooper S running along the
canal between traditional Dutch windmills.
Ian will confirm
how much they raised when the giving page closes but as at todays date it
amounts to £2,575 plus £314 Gift Aid. Total £2,889 with more money received by
cheque than on line.
Ian & Carole’s
giving page will remain open for any last minute bulletin reader donations.
If you haven’t
sponsored then please give a little now by donating on line by clicking
on: http://uk.virginmoneygiving.com/fundraiser-web/fundraiser/showFundraiserProfilePage.action?userUrl=EnglishMiniBulldogsOnTour&isTeam=true
OR
Send
a cheque(s), made payable to either:
“Orchid”
(Fighting male cancer)
Or
“Against
Breast Cancer”
Please
sponsor Ian & Carole where you can, and don't forget you can increase the
amount you donate with Gift Aid (individuals only, not companies).
Also a big thankyou to EDP Photo News UK and Steve
Carpenter for taking the photographs and allowing us to reproduce them.
0.62ppl
milk price increase for Tesco (TSDG) suppliers – from May 1st (31st March 2017)
This increase will apply for the next quarter
May to July inclusive. The resulting
liquid standard litre price is provisionally expected to be 29.37ppl.
0.33ppl
milk price increase for Sainsburys (SDDG) suppliers from 1st April (31st
March 2017)
This increase will apply for the next quarter
of April to June inclusive and takes producers standard liquid litre milk price
to 27.67ppl (Muller supplier) and 27.55ppl (Arla supplier) (www.milkprices.com)
1ppl
milk price increase for Mullers Organic suppliers – from 1st
May (31st March 2017)
This takes the organic suppliers standard
liquid litre milk price to 40.5ppl (www.milkprices.com)
Muller
stand on for April & May (31st March 2017)
Muller’s non-aligned milk price is unchanged
through the 2017 flush until at least 1st June at 26.69ppl plus an
estimated retail supplement of 0.3ppl will give an estimated paid out milk
price of 27ppl.
Dairy Crest stand on for April &
May (31st
March 2017)
Dairy Crest’s farm gate milk price is
unchanged through the 2017 flush until at least 1st June at 28.92ppl
on the liquid standard litre price and 30ppl on the manufacturing/cheese
standard litre price (www.milkprices.com)
Friesland
Campina stand on for April (31st March 2017)
Arla’s biggest European competitor, Friesland
Campina, has announced a stand on milk price for April. When this is adjusted to a www.milkprices.com standard liquid litre
this converts to 30.251ppl with its comparable standard litre organic price at
40.334ppl.
0.35ppl
milk price cut for Paynes suppliers – from 1st April (31st March 2017)
This takes producers standard liquid litre
milk price down 27.45ppl (www.milkprices.com)
This bulletin comes from Holland due
to the fact Ian & Carole are now in Rotterdam raising money for Breast
Cancer and Male Cancer.
If you value this
bulletin and you haven’t sponsored then please give a little now by donating on
line by clicking on: http://uk.virginmoneygiving.com/fundraiser-web/fundraiser/showFundraiserProfilePage.action?userUrl=EnglishMiniBulldogsOnTour&isTeam=true
OR
Send
a cheque(s), made payable to either:
“Orchid”
(Fighting male cancer)
Or
“Against
Breast Cancer”
Background - Back
in 2015 Ian & Carole travelled to New Zealand and joined the Pork Pie
Charity Run (www.porkpie.co.nz) in a
classic Mini and raised £6,600 for charity. This weekend the intrepid duo
have taken to the wheel again and have driven Ian’s 1963 Mini Cooper S to
Rotterdam for a weekend to raise money in the 20th and final
Regis Ladies Classic Car Tour.
100%
of your donations will go to the two charities named below, as Ian & Carole
are self funding all their own expenses, entry fees and accommodation.
This
final 20th Regis Classic Tour is supported by a host of companies
and individuals who have donated money, prizes, auction items and services to
help this group of ladies finish their 20th annual tour with a
bang. During the past 19 years the tour has raised a staggering
£524,000.
Ian,
more than anyone, fully appreciates how difficult the past two years in UK
dairy farming have been. If you can dig deep and find a few spare pounds
it will all be very much appreciated. It’s not a competition who can give
the most but if you do value this regular bulletin and Ian’s monthly Dairy
Farmer article (now 26 years and still going) then please give a little to show
your appreciation.
The
event is not a charity challenge, but more of a non-competitive social weekend
with like minded classic car enthusiasts aiming to have a spring tour at the
same time as raising money for two great charities. I doubt there is
anyone who is reading this bulletin who has not had at least one friend or
family member affected by cancer.
So
please sponsor Ian & Carole where you can, and don't forget you can
increase the amount you donate with Gift Aid (individuals only, not companies).
Please donate on line
by clicking on: http://uk.virginmoneygiving.com/fundraiser-web/fundraiser/showFundraiserProfilePage.action?userUrl=EnglishMiniBulldogsOnTour&isTeam=true
OR
Send
a cheque(s), made payable to either:
“Orchid”
(Fighting male cancer)
Or
“Against
Breast Cancer”
Ian’s
target was to raise £1000 but already readers generosity has exceeded £2000 by
cheque or by online donations.
Thank
you all in advance.
1ppl milk price drop for County Milk
Products Limited suppliers – from April 1st (PRODUCER
NOTIFIED) (24th March 2017)
This is the second
consecutive 1ppl price drop by County according to its farmer suppliers. However, according to one source County are
exposed to the ingredients market via Yew Tree Dairy, which has certainly crashed
back, especially given the fact the SMP price is now close to Intervention
level. The likelihood of spring milk
going into intervention stores to add to the existing 350,000 tonnes of old
stock is now almost inevitable for April.
County were unavailable
to confirm what their 1st April standard liquid litre price would be
following the 2ppl reduction, which we will endeavour to report next week.
0.79ppl (1 Euro Cent) milk price drop
bombshell from Arla – 1st April (24th March 2017)
Around 2,700 Arla members/ owners have
been notified that from April 1st their milk price will reduce by 1
Euro Cent equal to 0.79ppl. The reduction will not apply to Arla’s UK
organic suppliers although Arla’s mainland Europe organic suppliers will feel
the full force of the reduction.
Of some comfort is the fact the currency
smoothing mechanism will provide a 0.37ppl increase resulting in a net
reduction of 0.42ppl. The reduction reduces the 1st April
standard liquid litre price, including the currency smoothing adjustment, to
27.03ppl and for the standard manufacturing litre to 28.13ppl.
It’s a big blow to Arla members and
regrettably if Arla sneeze others will catch a cold. Pretty much everyone
in the industry had expected (or prayed) for a stand on price for April and
May, which with the filtering through of the currency smoothing would have seen
farm gate milk price increases. This cut will hurt.
There are strong rumours that a similar
reduction is already in the pipeline for May 1st coupled with the belief
that Arla have overpaid producers for milk, especially the recent 13th
payment. If another cut happens on May 1st
Arla will struggle to deal with their farmer communications to justify a second
cut.
The Arla cut could easily kick start a trend
which others seize if it does it will be the final straw for a number of dairy
farmers who haven’t even begun to recover from the last slump in prices.
Meanwhile, the Arla brands have been named as
recording the largest growth out of the top 100 UK grocery brands achieving
growth of £37m in 2016.
Arla members are already questioning whether
achieving such headline grabbing brand growth is actually delivering a better
milk price to the farmer owners given that in cheese some of its competitors
are now paying 30ppl for milk, which is going into branded cheese.
GDT
average up 1.7% (24th
March 2017)
The most notable price was the dramatic drop
in SMP of 10.1%, which followed a 15.5% drop only 2 weeks ago.
The GDT average price for SMP has crashed by
an eye watering 24% in just one month.
Key movers were:
WMP +2.9%
to average US$1948/tonne
Cheddar +1%
to average US$3406/tonne
SMP -10.1%
to average US$1948/tonne
0.79ppl (1 Euro Cent) milk price drop
bombshell from Arla – 1st April (23rd March
2017)
Around 2,700 Arla members/ owners have
been notified that from April 1st their milk price will reduce by 1
Euro Cent equal to 0.79ppl. The reduction will not apply to Arla’s UK
organic suppliers although Arla’s mainland Europe organic suppliers will feel
the full force of the reduction.
Of some comfort is the fact the currency
smoothing mechanism will provide a 0.37ppl increase resulting in a net
reduction of 0.42ppl. The reduction reduces the 1st April
standard liquid litre price, including the currency smoothing adjustment, to
27.03ppl and for the standard manufacturing litre to 28.13ppl.
It’s a big blow to Arla members and
regrettably if Arla sneeze others will catch a cold. Pretty much everyone
in the industry had expected (or prayed) for a stand on price for April and
May, which with the filtering through of the currency smoothing would have seen
farm gate milk price increases. This cut will hurt.
There are strong rumours that a similar
reduction is already in the pipeline for May 1st coupled with the
belief that Arla have overpaid producers for milk, especially the recent 13th
payment. If another cut happens on May 1st
Arla will struggle to deal with their farmer communications to justify a second
cut.
The Arla cut could easily kick start a trend
which others seize if it does it will be the final straw for a number of dairy
farmers who haven’t even begun to recover from the last slump in prices.
Meanwhile, the Arla brands have been named as
recording the largest growth out of the top 100 UK grocery brands achieving
growth of £37m in 2016.
Arla members are already questioning whether
achieving such headline grabbing brand growth is actually delivering a better
milk price to the farmer owners given that in cheese some of its competitors
are now paying 30ppl for milk, which is going into branded cheese.
SMP Intervention tenders halved as
interest plummets (17th
March 2017)
The latest EU
Commission SMP intervention stock tender resulted in just two bids for only 136
tonnes compared to bids for almost 20,000 tonnes in December.
The current two
tender windows each month will be reduced to one and there seems minimal
prospect of any product coming out of store unless the EU Commission
significantly reduce their minimum price.
First Milk add to their trophy cabinet (17th March 2017)
Last night First
Milk won Nestle UK’s Supplier of the Year Award as well as a Nestle Quality
Award, both collected by Mike Gallacher.
Both are viewed as further ringing endorsements that the co-op and its
members are on the right track with its major customer.
50 Muller suppliers to battle it out
for 21 forum places (17th
March 2017)
Healthy competition
is the order of the day in some of the Muller farmer forum regions with 50
candidates competing for 21 places.
Ballot packs will be sent to members next week with the elected board to
be insitu next month when their task will be to represent 1900 Muller suppliers. Let’s hope the 21 selected have ability to
represent their area and it’s not noisy ones with confidence but little
ability.
TWO DAIRY CEO’s STEP DOWN WITHIN DAYS
OF EACH OTHER (15th March 2017)
1. Mike Gallacher steps
down as First Milk’s CEO – Turnaround Job Done (15th March 2017)
Mike Gallacher is to step down as First
Milk’s CEO and turnaround guru in April and into his shoes will step Shelagh
Hancock.
It’s a near as damn it 2 years to the day
since Gallacher was parachuted into First Milk and at the time the co-op was on
life support and at best only weeks away from the life support machine being
turned off. It wasn’t quite as bad as DFOB but it was looking like a sick
dog which needed putting out of its misery. The dairy industry’s vultures
were circling all eager to pick over the carcase but none wanted to be first to
swoop in. It was a badly run business and the one thing the First Milk
board did get right was to re-shape, re-group and give Gallacher a free hand.
As Gallacher leaves, he hands over a very
different business and whilst it will still have to operate profitably in a
challenging environment it’s a fact today there are other UK dairy businesses
in worse shape than First Milk.
It’s unusual to see dairy CEO’s involved in a
smooth planned succession but this is one such case. Normally it’s a
sacking dressed up with lots of spin.
Gallacher’s successor, Shelagh Hancock, has
25 years of experience having been involved with the First Milk business for
almost 12 months. She has previously worked for Glanbia, been a key
figure in Milk Link until the Arla takeover and latterly Medina Dairies.
Shelagh is essentially a co-op person and
will steer First Milk on the same course Gallacher has set with little, if any,
need for a change in direction. There is already at least one new
opportunity on her desk for her to explore and plenty of stuff to keep her
occupied.
It’s almost 2 years to the day since
Gallacher took charge and he certainly can claim to have turned around the First
Milk business much to the relief of its members who have seen their co-op go
from life support to being discharged and sent home in less than 2 years.
Next week the two commence on a GB member
meeting tour to inform members of the turnaround results, direction of the
business, current milk field issues (especially the Tesco field connected to
the Haverfordwest factory), farm contract developments/ideas and the
opportunity to meet their new CEO.
2. Ronald
Kerrs to leave Muller (15th March 2017)
The departure of Ronald Kerrs as CEO of
Muller and the arrival of Uwe Sommer doesn’t appear to have been on the cards
for months and part of a smooth succession plan.
Kerrs came to Muller in 2012 initially as
Head of Muller UK before taking the position of group CEO in 2015. He has
certainly made his mark so far as the UK dairy industry is concerned having
been involved in the Dairy Crest liquid business takeover as well as building a
new butter plant at Market Drayton. On May 1st Sommer steps
into one of the most important dairy roles in Europe having left his role as
Head of International Marketing at Lindt Chocolate.
GDT auction price crashes back 6.3% (13th March 2017)
Tuesday’s GDT auction
results were very sobering with an average all products drop of 6.3% (to
average $3512 tonne) on top of the 3.2% fall only two weeks ago so heading
towards a 10% fall in two weeks.
Key prices were
(all in US$ not NZ$)
SMP down 15.5% to average $2118 tonne
WMP down 12.4% to average $2782 tonne
Cheddar down 4.2%
to average $3435 tonne
Traders anticipated
a further weakening of prices, particularly for WMP and SMP but the double
digit drop came as a shock. The auction
prices were the lowest recorded for over 5 months and for many New Zealand
dairy farmers the price for WMP is now at or below their breakeven COP if the
auction price is a good barometer.
Total tonnage
traded was up 9% to 22,328 tonnes, which undoubtedly contributed to the dramatic
drop, especially given the fact the quantity on offer at the same auction in
previous years has declined.
0.74ppl February retail supplement for
Muller non-aligned farmers
(13th March 2017)
£3.5m investment
programme by Medina (13th
March 2017)
The
£3.5m investment programme has already commenced at Medina’s Watsons liquid
dairy facility in Hampshire, where 96 farmers supply milk to a factory
employing 95 staff plus an additional 25 or so new jobs to be created during
the coming 6 months as a result of the upgrade.
First Milk extend its
Nestle supply contract (13th
March 2017)
First
Milk has confirmed it has concluded an extension of its exclusive Nestle liquid
milk contract.
The
contract has been in the custody of First Milk for more than 14 years (2003)
and not doubt there were numerous resident cuckoos keen to kick First Milk out
given half a chance, because they appear to be raiding other nests with
feathers flying as Ian writes this piece!
Arla confirm the 13th
payment @ £9000 per GB farmer member
(7th March 2017)
Arla have confirmed that its 2500 GB members
will receive a 13th payment averaging £9000 into their bank accounts
this Friday.
Unfortunately, the Arla press release
referred to the £31 million distribution as a “windfall” and a “cash bonus”
which has certainly prompted an instant response from several Arla
members. As one said, “this choice of words (windfall & cash bonus)
suggest that this is money for nothing”.
The payment is actually a return on farmers’
investment in the co-op and the straight forward facts appear to be as follows:
Average fully paid up Arla member producing 1
million litres has 7.5ppl invested £75000.00
His average 13th payment paid this
Friday £
7300.00
Return almost
10%
Conclusion – This part of the Arla model
works in terms of return on the money invested and a benefit of being a
member. That’s the simplified message and let’s hopes that.
We sincerely hope that DEFRA and AHDB ensure
last year’s fiasco is not repeated. Last year in early April Ian described the
joint effort involving AHDB and DEFRA as irresponsible and misleading when the
February average farm gate milk price was published as rocketing up by 2.48ppl.
This was achieved because DEFRA allocated the
entire £22million 13th payment to Arla members to February’s
milk price rather than spreading it over the 12 months as Arla do. It was a
move which was lambasted by both Ian and the TFA.
0.25ppl milk price increase for Arla
directs – from March 1st (6th March 2017)
This takes
producers’ standard liquid litre price to 25ppl (www.milkprices.com)
0.2ppl milk price increase for First
Milk’s Midlands & East Wales producers – from March 1st (6th
March 2017)
This takes
producers’ standard liquid litre price to 26.25ppl (www.milkprices.com)
Average January producer price 27.1ppl – According to AHDB (6th March 2017)
New cheese plant on the cards for
North Wales (6th March 2017)
Ronald Akkerman (AKA The Flying Dutchman) is
back on the UK dairy industries radar this time to design, build and operate a
40 million litre a year capacity state of the art cheese factory in North Wales
on behalf of a group of around 20 spring grazing farmers who intend to form a
co-operative
The initial plant is expected to be up and
running by spring 2018 (?) with plans to expand towards 100 million litres.
The output from the plant will be focussed on
domestic consumption rather than exports with all sales through Bradburys
who have an unrivalled 130 years experience in selling cheese.
Further details are anticipated in the near future.
Muller to offer futures contracts (6th March 2017)
A Muller Ingredients Contract is to be
launched to suppliers this summer to its 800 or so non-aligned farmers.
The contract will give farmers the
opportunity to lock into a margin on up to a quarter (25%) of their milk
production by fixing their milk price based on the ww.milkprices.com/FC Stone
published prices/UK Milk Futures Equivalent (UKMFE).
Volumes available will be limited to the
physical quantities Muller can secure back to back contracts with its
ingredients customers. In other words, all Muller’s farmer’s contracts
will be backed off with reciprocal contracts with customers.
ASDA launches a free range
milk/Pasture Promise branded milk (6th
March 2017)
ASDA is the first
of the UK’s big retail giants to launch a branded free range milk with the
promise that the milk comes from herds which spend at least 180 days and nights
grazing.
ASDA has launched
with an initial 70,000 litres week going into more than 100 ASDA stores priced
at £1.50 for 2 litres.
RABDF outlines its future focus and
industry event (6th March 2017)
Following the
disappointing decision in October last year by Holstein UK when it rejected
working with RABDF with a view to holding one national dairy event, RABDF has
reviewed and re-grouped and today announced its plans for the future.
There will be no
Livestock Event at the NEC on September 6th 2017. Instead there will
be a smaller annual Dairy Technical Event at Stoneleigh Park in February.
There is no
disputing that technology is transforming our lives and changing all businesses
worldwide, including dairy farming. The
RABDF event will focus on new technology with technology themed seminars and
speakers from across the world. The event
will examine the potential of new technologies and how dairy farmers might take
advantage, benefit and profit from the latest developments and
innovations. RABDF’s focus is to
transfer the latest technological ideas to grass roots dairy farmers with an
event in central England.
In addition, RABDF
will continue its influencing and lobbying role utilising its links to
politicians, policy makers and the trade as well as focussing on encouraging
youth into the industry. To this end a
youth board will be formed and RABDF’s work with Women in Dairy initiativeand
its conference will continue. There is
even a rumbling that the once sold out and popular RABDF Farmer Conference
might emerge from the ashes in middle England, where there is currently nothing
similar available in England or Wales.
Medina declares improved financials
for year ending 30th April 2016 (6th March 2017)
Revenue £160.9m
(£156.8m 2015)
Profit £1.15m
(£890,000 loss in 2015)
In addition, Medina
will be utilising around 50% of its 100 million litre toll processing facility
with Muller once its additional litreage to Iceland starts at the end of this
month.
This world isn’t big enough for the
both of us – there’s only milk that’s going to win! (6th March 2017)
The Australian
dairy industry has declared war on non-dairy alternatives to milk such as soy,
almond, coconut and rice stating they should not be called milk because they do
not have anything close to the nutritional health protein or vitamin benefits
of animal milks.
They claim its mis-labelling
and that these alternatives should be labelled and branded to ensure consumers
know exactly what they are putting in their shopping baskets or what’s going
into their “almond plant liquid lattes”.
It’s time there was
a crack down. Come to think of it what’s
all the nonsense about vegetarian sausages, vegetarian burgers and vegetarian
rashers of bacon!
Studies show soy milk can destroy your
thyroid (6th March 2017)
Soy milk is
recognised as coming almost exclusively from GMO which are high in pesticides
and an alarming list of properties leading to claims that you simply should STOP
consuming it.
In a recent study
it’s claimed “soy milk causes severe health problems, including colon cancer,
ulceration, gastrointestinal inflammation etc.”
0.38ppl
milk price increase for Arla members – from 1st March (24th
February 2017)
This takes producers standard liquid litre
milk price to 27.45ppl and their standard manufacturing/cheese litre milk price
to 28.55ppl. The standard liquid litre
price for Arla Tesco farmers is 28.87ppl with the Arla organic standard liquid
litre holding at 41.1ppl. (www.milkprices.com)
No
joy in GDT auction results (24th February 2017)
The average all price index at Tuesday’s GDT
auction recorded a 3.2% drop compared to the result achieved only two weeks
earlier.
Notable movers were:
Cheddar down 5.3% to average US$3590 tonne
SMP down 3.8% to average US$2574 tonne
WMP down 3.7% to average US$3189 tonne
Muller
unveils its single supplier milk contract
(24th February 2017)
Around 1900 Muller will soon receive the
final version 2 of the processors supply contract and it’s clear that Muller
have taken on board producer feedback from last November’s farmer meetings and revised
the offering.
There is no doubt one single contract for all
its suppliers is the way forward and whilst the new offering will see some
farmers win and some lose it is claimed the overall package is cost neutral to
the business.
The forecast accuracy tolerance has been
increased from 5% to 7.5% prior to any penalty.
That relaxation should be welcome news; however, Muller’s intention is
for the few farmers who fall outside of the 7.5% threshold to have one to one
support from Muller’s Agriculture team to help ensure all 1900 farmers are
under the penalty threshold. Surprise
milk volumes are certainly not an issue confirmed to Muller.
The butterfat penalty has been reduced from
0.035ppl in version 1 of the contract to 0.025ppl for every 0.01% less than 4%
and identical payment of 0.025ppl for every 0.01% above 4%.
The contract notice period is only 3 months
following a price change or contract variation compared to the old Dairy Crest
12 month notice period.
If a farmer wants to expand by more than 10%
he simply needs to have prior (that means prior to spending any £) early
engagement with Muller so both parties know when the extra milk will
materialise.
Milk payments into the bank will be around
the 18th of each month and this is a midway point between the
current Muller and ex-Dairy Crest payment dates.
Finally, individual farmers can utilise the
online modelling software to check how the contract affects their individual
production.
The new contract starts on May 1st
with the target sign up date of April 21st.
Overall Ian has failed to find any trip wires
or traps and the likelihood is most producers will sign the new contract if
they feel it is fair and they want to join Muller on its ambitious UK journey
and are inspired by Muller’s vision. If
any Muller farmers believe Ian has overlooked any key points please email him.
Arla
hunting for milk but Arla’s CEO claims rising milk supply keeps prices in check (24th
February 2017)
Arla has written to its UK members stating it
requires more milk, initially from existing members. The letter has produced a very mixed response
from Arla members who have contacted Ian today.
In summary, most state they have not even started on the road to
recovery following almost 2 years of low milk prices at below COP and have
minimal appetite to ramp up production in case prices ease again.
Its
certainly a confusing message from Arla with its CEO Pedar Tuborgh stating
"Milk prices are currently at a level
that is sustainable for the whole business, including our farmers," he
said.
And according to one report he has also stated
“a rising supply of milk on world markets
is likely to rein in further gains in prices that have increased nearly 50
percent since a slump last year.”
Its certainly a mixed and confusing message
from Arla HQ and Arla UK which members are trying to sieve through.
That’s an individual decision but from Arla’s
point of view if they do require extra milk existing members must be offered
the chance to fill the gap. Failing that
Arla will presumably move to Stage 2 and open the door to new recruits to see
what the appetite is.
Arla
UK sales and revenue down (24th February 2017)
Arla’s largest market, the UK, has seen its 2016
calendar year results weigh in with a 12% drop in revenue to £1.86billion
(€2.2billion) down from the 2015 numbers of £2.2billion (€2.5billion).
Within the numbers Arla’s UK branded products
saw sales volumes rise by an encouraging 7.6% with branded liquid milk growing
by 12%.
Morrison’s Milk for Farmers accounted for 15%
of sales within its competitors on the shelf and Arla’s yoghurt sales were up
116% more than double but from a standing start in 2015.
Arla Foods as a European co-op saw net profit
grow by a healthy 20.7% to €356m.
NFU launches a new contract checking
facility (24th
February 2017)
The NFU, in
conjunction with its panel of legal firms, has launched a contract checking
service for members in the hope they use the facility prior to signing a new
contract.
The service comes
in three stages:
·
A
free initial discussion with the NFU’s CallFirst Specialist Advisers’ team,
available to all NFU farmer members