Dairy Industry news and features

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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

 

 

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

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

Notable price movements were:

SMP + 6.7% to average $2924

WMP + 3.6% to average $3254

 

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

 

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

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

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

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

 

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

 

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

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

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

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

 

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

 

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

AHDB issued a Scottish milk surplus update last Tuesday confirming that

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

Compare this to the Muller press release where Muller stated

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

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

 

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

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

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

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

The forecasts are contracted and submitted quarterly.

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

 

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

 

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

 

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

 

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

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

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

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

 

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

 

 

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

 

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

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

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

 

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

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

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

 

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

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

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

 

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

 

 

 

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

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

 

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

 

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

 

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

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

 

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

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

 

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

 

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

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

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

 

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

 

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

 

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

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

 

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

.

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

 

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

 

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

 

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

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

 

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

 

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

 

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

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

 

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

 

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

 

Tomlinson’s Liquid Dairy of Wrexham goes into Administration

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

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

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

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

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

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

 

The Background to Tomlinson’s & Sainsbury’s

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

Medina

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

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

 

 

 

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

This results in the following standard liquid litre prices

Muller SDDG  30.94ppl

Arla    SDDG 30.82ppl

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

 

 

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

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

 

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

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

 

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

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

 

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

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

 

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

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

 

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

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

 

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

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

 

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

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

 

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

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

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

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

 

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

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

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

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

 

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

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

 

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

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

 

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

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

 

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

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

 

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

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

 

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

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

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

 

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

 

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

 

Market Indicators -  (11th October)

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

 

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

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

 

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

 

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

 

Another liquid Processor to close -  (11th October)

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

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

 

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

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

 

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

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

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

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

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

 

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

 

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

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

 

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

 

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

 

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

 

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

  

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

 

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

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

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

 

 

Milk Prices

Purchaser (Non Aligned)

October 2019

November 2019

Conventional Milk Recruitment Status

 

 

Liquid

Manuf.

Liquid

Manuf.

 

Arla Foods Non-Aligned

29.02

30.19

tbc

tbc

Closed/not recruiting

Davidstow/Saputo (AKA Dairy Crest)

28.82

29.90

28.82

29.90

Selective limited recruiting

Crediton Dairy

28.50

 

28.50

 

Recruiting within a 30 mile radius

First Milk

27.45

28.37

27.00

27.90

Recruitment doors opening shortly

Wensleydale Creamery

27.40

28.35

27.40

28.35

Temporarily closed

Barbers

27.34

28.56

26.80

27.79

Closed/not recruiting

Pattemores

27.15

28.02

26.25

27.12

Closed/not recruiting

SouthCaernarfon Creameries (Cheese)

27.09

28.03

26.34

27.28

Closed/not recruiting

Yew Tree Dairy

25.50

 

25.50

 

Closed not recruiting

Lactalis/Caledonian/Fresh Milk

26.50

27.61

26.50

27.61

Closed/not recruiting

Belton (Cheese)

26.25

27.00

26.25

27.00

Closed/not recruiting

Glanbia

26.10

27.00

tbc

tbc

Recruiting

Wyke Farms

26.00

26.91

tbc

tbc

Selective limited recruitment

Grahams Scotland (Liquid)

26.00

 

26.00

 

Closed not recruiting

Paynes

25.75

 

25.75

 

Recruiting

Muller Wiseman; standard

25.75

 

25.75

 

Closed/not recruiting

Wells Farm (Liquid)

25.3

 

25.30

 

Closed/not recruiting

Freshways

25.00

 

25.00

 

Selective limited recruitment

Meadow Foods

25.00

 

25.00

 

Closed/not recruiting

Pensworth

24.00

 

24.00

 

Closed/not recruiting

Buckleys (Medina)

24.00

 

tbc

 

 

                                                                       

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

 

New Run Cattle Tag Prices

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

 

Cattle Tags - New Run Combinations

Retail Price

(excl vat)

Large & Large

£1.37

Large & Button

£1.09

Large & Medium

£1.35

Large & Metal

£1.09

Medium & Medium

£1.35

Medium & Button

£1.05

Medium & Metal

£1.05

Large & EID Secondary

£2.30

 

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

 

 

 

 

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

 

 

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

 

 

 

 

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

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

 

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

This takes producers standard liquid litre price to 25.75ppl.

 

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

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

 

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

 

 

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

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

 

The Outlook     (19th October 2019)

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

 

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

 

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

 

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

 

Interesting change at Freshways      (19th October 2019)

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

 

 

Cheese / Manufacturing Price Movements

 

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

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

 

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

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

 

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

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

 

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

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

 

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

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

 

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

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

 

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

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

 

Liquid Price Movements

 

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

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

 

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

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

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

 

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

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

 

 

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

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

 

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

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

 

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

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

 

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

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

 

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

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

 

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

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

Paynes Dairies expected to announce when Charlie decides

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

Freshways – Any information to Ian will be gratefully received.

 

 

 

New Run Tag Prices

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

 

New Run Combinations

Retail Price

(excl vat)

Large & Large

£1.37

Large & Button

£1.09

Large & Medium

£1.35

Large & Metal

£1.09

Medium & Medium

£1.35

Medium & Button

£1.05

Medium & Metal

£1.05

Large & EID Secondary

£2.30

 

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

 

 

 

 

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

 

 

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

 

 

 

 

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

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

 

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

 

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

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

 

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

 

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

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

 

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

 

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

 

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

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

 

Wells Farm Dairy Correction       (29th August 2019)

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

 

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

 

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

 

PRICE DROPS

 

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

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

 

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

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

 

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

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

 

PRICE HOLDS

 

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

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

 

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

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

 

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

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

 

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

 

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

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

 

 

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

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

 

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

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

 

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

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

 

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

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

 

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

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

 

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

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

 

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

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

 

OTHER NEWS

 

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

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

 

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

 

All product prices declined and notable movements were

 

Butter down       5.5% to average $4165 tonne.

Cheddar down   2.0% to average $3838 tonne.

WMP down       1.7% to average $3039 tonne.

SMP down        1.6% to average $2482 tonne.

 

Domestic Milk Production                    (9th August 2019)

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

 

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

 

 

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

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

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

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

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

 

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

 

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

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

 

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

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

 

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

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

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

 

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

 

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

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

 

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

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

 

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

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

 

First Milks results look solid (2nd August 2019)

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

 

Turnover + 7.8% to £272.3m

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

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

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

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

All in all a good solid set of financials.

 

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

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

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

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

 

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

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

Notable prices were:

SMP     up        + 3.2%              to average $2430 tonne

WMP                No Change        to average $2969 tonne

Cheddar down   - 1.5%               to average $3756 tonne

Butter   down    - 4.8%               to average $4339 tonne

 

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

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

 

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

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

 

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

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

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

 

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

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

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

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

 

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

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

 

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

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

 

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

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

 

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

 

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

 

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

 

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

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

 

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

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

 

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

 

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

 

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

 

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

 

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

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

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

 

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

 

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

 

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

 

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

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

 

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

 

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

 

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

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

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

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

This looks like a smart move by DC.

 

 

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

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

 

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

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

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

Notable movements were:

Butter                           down 5.7% to average US $4553 tonne

Cheddar                        down 4.3% to average US $3781 tonne

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

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

 

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

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

 

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

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

 

 

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

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

 

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

 

 

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

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

 

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

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

 

 

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

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

 

 

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

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

 

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

 

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

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

 

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

 

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

 

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

 

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

 

 

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

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

 

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

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

 

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

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

 

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

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

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

 

 

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

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

 

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

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

 

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

 

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

 

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

 

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

 

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

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

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

 

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

 

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

 

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

 

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

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

 

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

 

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

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

 

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

 

 

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

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

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

 

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

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

 

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

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

 

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

This reduces producers standard liquid litre milk price to 28.2ppl

 

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

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

 

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

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

 

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

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

 

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

 

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

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

 

 

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

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

 

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

 

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

 

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

 

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

 

 

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

 

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

           

 

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

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

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

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

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

 

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

 

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

 

 

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

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

 

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

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

 

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

 

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

 

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

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

 

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

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

NO ESSENTIAL ISSUES

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

 

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

 

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

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

 

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

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

 

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

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

 

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

 

Notable prices-(24th April)

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

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

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

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

 

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

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

 

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

 

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

 

 

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

This results is a manufacturing standard litre price of 28.03ppl

 

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

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

 

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

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

 

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

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

 

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

 

 

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

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

 

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

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

 

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

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

 

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

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

 

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

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

 

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

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

 

Milk Deliveries update   (5th April)

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

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

 

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

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

 

 

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

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

 

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

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

 

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

 

                                                         Conventional       Organic

Manufacturing standard Litre             30.23ppl                 41.98ppl

 

Liquid Standard litre                         29.06ppl                 40.34ppl

 

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

 

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

 

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

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

 

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

 

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

 

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

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

 

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

 

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

 

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

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

 

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

 

Purchaser

Mar-19

Arla Foods

29.07

Davidstow

28.82

Barbers

28.09

Glanbia

28.07

Crediton Dairy

28

Pattemores 1 Million

28

Wyke Farms

28

Belton

28

First Milk

27.5

Lactalis/Caledonian

27.5

Meadow Foods

27.5

Grahams Dairies

26.75

Muller Wiseman; standard

26.75

Paynes

26.7

 

 

 

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

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

 

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

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

 

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

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

 

0.75ppl milk price reduction for suppliers to Joseph Heler Cheese – from 1st April – PRODUCER NOTIFIED    (15th March 2019)

Its top secret what the Heler standard litre price will be so much so that even the supplying farmers don’t know and can’t compare. Apologies.

 

0.75ppl milk price reduction for suppliers to Yew Tree Dairy – from 1st April    (15th March 2019)

This results in a standard liquid litre milk price of 26.75ppl

 

Belton Farm (Cheesemakers) to hold prices for March    (15th March 2019)

This retains producers’ standard manufacturing litre milk price at 28.75ppl and based on a standard liquid litre at 28ppl.

 

Barbers (Cheese) to hold suppliers milk price for a Third consecutive month          (15th March 2019)

This retains producers’ standard manufacturing litre milk price at 29.13ppl and based on a standard liquid litre at 28.09ppl.

 

First Milk to hold its Member Milk price for April     (15th March 2019)

This means for February, March and April First Milk members manufacturing Standard Litre milk price has remained unchanged at 28.43ppl and based on a standard liquid litre 27.5ppl.

 

0.54ppl milk price increase for Marks & Spencers Suppliers from – 1st April   (15th March 2019)

This results in a standard liquid litre milk price of 33.36ppl.

 

0.25ppl 13th Payment/Member Premium to be paid to First Milk members in 2020   (15th March 2019)

This is a new additional 13th payment which is calculated monthly based on capital invested and paid as a lump sum in April next year.

To receive the full 0.25ppl a member must have reached their capital contribution target. The maximum capital a First Milk member can achieve is 200% which would result in a 0.5ppl payment.

Taking into account the 0.25ppl payment this increases the First Milk manufacturing standard litre milk price to 28.68ppl and on a liquid standard litre to 27.75ppl.

 

GDT Auction jumps up + 3.3%  (15th March 2019)

Last weeks GDT Auction saw the average all products index increase by 3.3% to average $3309 tonne the highest seen for 9 months. The only casualty was SMP where prices dipped by 4.3% since the previous action only two weeks ago. This is the 7th consecutive average price rise since December 4th 2018 and New Zealand analysts say that with the current strong ex farm milk output the increased prices are demand driven mainly from China. 

Notable price movements were:

 

Cheddar          up 6%              to average US $3888 tonne

WMP               up 6%              to average US $3186 tonne

Butter              up 3.7%           to average US $4657 tonne

SMP                down 4.3%      to average US $2462 tonne

 

Milk Price Outlook is heading for further price reductions   (15th March 2019)

UK milk output is simply a pipeline heading rapidly towards full bore and pressure.

It’s a fact that other than the dramatic and sudden intervention of Mother Nature with a second Beast from any direction the only signal likely to rein in production will be further processor price drops.

 

Spot milk is heading South and is under 20p with trades today reported at 18ppl and showing no signs of levelling with some fearing a return of single digit prices.

 

Cream has dropped by 25p from £1.65 and hovering around £1.40 in only 4 weeks a reduction equivalent to around 2.5ppl to a liquid processor or retailer depending on contract terms.

 

The forward market signals offer no encouragement and are sliding South.

 

Arla and most of the cheese processors are indeed performing extremely well in holding farmgate milk prices at current levels for the moment. If they can ride through spring holding current prices it will be a cracking result.

 

One positive is that only 1,400 tonnes of SMP remain in EU Intervention stores compared to 380,000 tonnes in 16 months ago in November 2017.

 

Not sure how much foreign cheese is in our stores in the run up to Brexit but its a fact there has been significant forward buying of dairy products in the run up to Brexit which is likely to cool down from this point forward as buyers sit back. That’s unless we end up with a delay and they opt to keep topping their dairy stocks up as an insurance.

 

According to the predictions of industry analyst Chris Walkland the UK has only ever produced 45 million litres a day on two previous days and this year we could touch 46 million litres/day.

Unless things change very soon he predicts spring 2019 will see that 45 million litre day smashed for 30 consecutive days.

That leaves one big question. Do we have the capacity to process all the milk or will we see distress milk? 

 

It won’t matter a jot what Ian Potter  says because what will be will be and it now seems inevitable that further price cuts are on the cards especially from some liquid processors, unless something sensational happens to cut UK milk output and quickly.

 

Back in October Ian stated by spring 2019 there would be a price correction to somewhere between 26 to 27ppl for liquid processors and not a price crash. That assumed it was a “normal” year. Its by no means a normal year in terms of milk volumes in terms of the political uncertainty the industry faces so those predictions could be history within weeks.

 

Overall the Outlook is not looking good with the likelihood of more pain before any gain. Don’t shoot the messenger who has a pretty good track record of calling this market.  Nervous times are certainly here.

 

Arla to be Carbon neutral/net Zero by 2050      (15th March 2019)

Arla has set a target from the cow to the consumer to be carbon zero by 2050 with any unavoidable emissions entirely offset by actions elsewhere in the supply chain. In addition Arla will balance Nitrogen and phosphorus cycles to support clean water and equally important to be more closely aligned with Nature to further increase bio diversity across the British countryside.

Its an impressive target for which detailed plans specific to the UK will be published shortly and will involve all at Arla from the dairy farmer to the consumer.

It’s the sort if plan which gets you noticed with retailers and food service buyers.

Arlas UK MD Ash Amirahmadi comments “One of the greatest challenges facing us all is providing natural, nutritious food for a growing population whilst reducing our collective impact on the world around us. Arla has already shown this is possible and the new ambitions announced today will ensure Arla’s farmers”.

 

2nd year of Dairy Promotion hits Cinema screens in London     (15th March 2019)

The joint AHDB/Dairy UK funded Department of Dairy Related Scrumptious Affairs consumer advertising is now in its second year and from this Monday (11th March) includes Cinema advertising.

The £1.2 million campaign will run across the nation for 10 weeks and is targeted at yound parents and uses powerful messages reminding young parents of the nutritional value in dairy products.

 

 

0.8ppl milk price reduction for suppliers to Paynes Dairies – from 1st March           (1st March 2019)

This results in a standard liquid litre price of 26.7ppl

 

Arla maintain their leading position by holding producer prices for a 2nd consecutive month       (1st March 2019)

Arla will maintain its conventional member milk price at 30.24ppl based on a manufacturing standard litre and 29.07ppl based on a standard liquid litre.

 

Muller to stand on for April will be a huge relief to its suppliers (PRODUCER NOTIFIED)      (1st March 2019)

Following last months 1.25ppl shock March milk price reduction Muller farmers will be pleased with the news that their will be no milk price reduction for April deliveries. The Muller liquid standard litre price for March & April is 26.75ppl including the 0.5ppl premium paid in arrears and without that premium its 26.25ppl.

The equivalent March price for Arla members (see above) is 29.07ppl a gap of 2.32ppl if you include the Muller 0.5ppl premium.  Without the premium the gap is an eye watering 2.82ppl.

 

Dairy Crest to stand on for April milk payments       (1st March 2019)

The standard manufacturing litre price will remain at 29.9ppl and based on a standard liquid litre 28.82ppl.

 

Meadow Foods to stand on for March milk payments   (1st March 2019)

This means Meadow have held their producer price for February and March at 27.5ppl for a standard liquid litre.

 

Barbers cheese to stand on for a third consecutive month (1st March 2019)

For a third month Barbers standard manufacturing litre price will remain at 29.13ppl and based on a standard liquid litre 28.09ppl.i

 

Pattermores to stand on for April milk payments (1st March 2019)

The standard liquid litres will remain at 28ppl and based on standard manufacturing litre 28.93ppl  

 

0.9ppl Arla Organic member milk price reduction- from 1st March.      (1st March 2019)

This reduction still leaves Arla winning at Top Trumps and results in an organic standard manufacturing litre price of 43.55ppl and based on a liquid standard liquid litre 41.85ppl.

In the last bulletin we confirmed that Omsco had reduced its March producer milk price by 1ppl. Based on a standard liquid litre this result in a 41ppl price.

 

Arla will pay its former members its entire 2018 net profit of 290 million Euros/£257 million.    (1st March 2019)

This will amount to an additional 2.3 euro cents per kg/milk or 2.07ppl for its 11,200 European members on all milk delivered.

UK wise Arlas revenue from retail and Food service was up 3.3% to break the £2 billion barrier (2017 £1.9 4 billion).

Without doubt when you sift through all of the numbers it's Arlas huge basket of branded products on offer to the UK consumers which are driving these results. Arla branded product sales grew 8.6% and have an average annual growth for the last 5 years of 8.8%.

The total member pay out is £245 million of which 2,500 UK members will receive £64 million this month.

 

Production update  (1st March 2019)

Whilst milk production in the key mainland Europe Nations of France, Germany and Holland are lower than they were in 2018 that certainly is not the case in GB with milk flowing at such a rate it's heading for the rocks with the real possibility we simply won't have sufficient processing capacity at peak production.

 

According to AHDB Dairy GB milk deliveries are running at 800,000 litres a day up (+2.2%) or + 5.6 million a week.

 

Saputo from Canada to buy Dairy Crest for close to 1 billion.     (1st March 2019)

Once Dairy Crest succeeded in offloading its liquid business to Muller it was inevitable the more profitable and attractive.  Davidstow Cheese facility would be sold and it's heading for ownership by Saputo who are in the top 10 largest in the world.

Canadian owned world dairy giant Saputo have made a cash offer of £6.20 per share totalling £964 million and Dairy Crest board approval is set to be unanimous.

Dairy Crest is certainly a solid, branded profitable operation which for the last financial year delivered a profit after tax of 150 million.

It's good news for Dairy Crest share holders, great news CEO Mark Allen (who will be off with the Loot into the Sun set) and appears to be good news for the Dairy Crest farmer suppliers.

Saputo have no operations in Europe which means a very limited if not negligible threat from Saputo importing cheese to the UK.
It's a near certainty Saputo will change very little and will certainly value their inherited supplying farmers who should view this as a great result and will simply see business as usual.

Another advantage is that Saputo will be in a strong position to fund and accelerate growth and expansion at the Davidstow processing facility.

 

Trade for First Milk shares is a buyers market   (1st March 2019)

Yesterday saw the second asset match monthly sale of First Milk C preference shares close where only 186,000 shares changed hands at 11p per share down almost 40% on last months sale average which saw 152,000 shares trade for 18p out of a total issue of 68.5 million shares..

 

Not good news for former First Milk suppliers seeking to cash in their investment.

 

George Eustice quits as Environment Minister    (1st March 2019)

George Eustice, who was a big supporter of Brexit, has resigned over The Prime Ministers promise to allow MP’s to vote on a Brexit delay if her deal  is rejected on the 12th March.

 

He is basically against the government going to the EU only 17 days before 29th March begging for an extension.

 

Snow storm takes 1800 cows    (1st March 2019)

A combination of serious snowfall and extreme temperatures in Southern Washington (USA) has seen 1800 cows perish bringing with it a bill of over £3 million excluding lost milk which was dumped.

 

1.25ppl milk price reduction for suppliers to Pensworth (liquid) – from 1st March  (15th February 2019)

This result in a standard liquid litre price of 26.35ppl.

 

1ppl milk price reduction for suppliers to OMSCO – from 1st March    (15th February 2019)

The price change will affect 250 OMSCO supplying farmers and is a direct reflection on the challenging uncertainties OMSCO face as a no deal Brexit looms closer to reality.

In addition members have been notified it is unlikely there will be and 13th payment for the 2018/19 milk year.

At the same time the Co-op is also introducing an A & B milk pricing mechanism in a bid to limit the impact of the additional litres they have to handle both in terms of increasing production and in the event OMSCO’s successful dairy product exports come to a sudden halt on 27th March.

 

0.75ppl milk price reduction for suppliers to Wensleydale Creamery – from 1st February       (15th February 2019)

This is highly likely to be the final February 1st price change which was notified to producers at the end of January,

The result s a standard manufacturing litre milk price of 28.7ppl and based on a standard liquid litre 27.75ppl.

 

 

 

0.75ppl milk price reduction for suppliers to Grahams Dairy Scotland from - 1st March     (15th February 2019)

Producers supplying Grahams received letters this morning notifying them of the 0.75ppl reduction which results in a standard liquid litre milk price of 26.75ppl.

 

First Milk to hold its Members Milk Price for March        (15th February 2019)

This means First Milks members manufacturing standard litre price remains at 28.43ppl and based on a liquid standard litre 27.5ppl.

 

Belton Farm to hold its producer milk price for March      (15th February 2019)

This means until 1st April the Belton standard manufacturing litre milk price will be 28.75ppl and based on a standard liquid litre 28ppl.

 

 

Grahams Dairies renew its supply contract with Aldi     (15th February 2019)

Grahams Dairies of Scotland have agreed a 5 year extension to its contract with Aldi to supply 85 Scottish Aldi stores with a range of products made from Scottish milk including milk, butter, yoghurt, creams etc.

The deal is worth North of £55 million and continues a partnership between the two businesses which started in 2010. The contract is the largest Grahams have agreed.

 

 

Muller to fix its lack of profitability   (15th February 2019)

Muller are embarking on a £100m cost saving exercise called project Darwin which on the face of it will come from activities beyond the farmgate which milk supplying farmers will be pleased to hear.

 

The project is expected to be completed with 2 years of starting and is already in train.

It’s a big project and will cover logistics, back office, administration, processing and some of Muller’s customers could find they are axed if their business to Muller is loss making.

 

Clearly Muller is simply making no money in its GB business and this is a major review to make the business profitable and sustainable because current losses cannot continue. 

 

Muller supply over 50% of all GB liquid milk and if liquid milk consumption declines by 1% per annum that’s 70 million litres a year which has to find a new home.  So after 3 years of 1% declines a 210 million litre liquid processing factory should be closed for the industry to standstill/tread water.  That’s not happening hence today we have over capacity in the liquid sector with everyone chasing volume on wafer thin or non existent margins.

 

Arla 10,000 plus members in 7 countries – one contract     (15th February 2019)

Arla are starting to sign over 10,000 members to one common milk supply contract which will apply to its Co-op members in GB, Germany, Holland, Belgium, Sweden, Denmark and Luxemburg.

The new contract will mean equal rights, terms, rules and obligations for all.

 

Signing the new contract will be compulsory for any member who wishes to supply Arla and the deadline for signing is 30th April 2019.  Any farmers who do not sign the contract will be able to supply Arla until 30th April 2020 on which date their membership will terminate.  Signing will be done electronically via DocuSign for those who are IT enabled and capable.

 

England & Wales Dairy Farmer decline warning   (15th February 2019)

AHDB dairy are suggesting the Food Standards Agency claim that 222 dairy farmers representing 2.4% have exited the industry in the past four mouths should be “treated with caution”.

 

Evidently the FSA often rely on Red Tractor data to identify farmers who have ceased production and that is not as timely as it perhaps should be and tends to be an accumulation over many months.

 

In addition Ian is aware that a number of farmers have either changed their business type from Dairy or ceased trading on Google Maps and with the FSA in order to avoid their details appearing on anti dairy interactive maps.  These adjustments will certainly disrupt the figures and indicate a greater decline in dairy farmer numbers that the reality on the ground but at least it offers some protection from the activists.   

 

 

1.25ppl shock price drop for Muller Direct producers from 1st March (31st January 2019)

Muller have shocked the majority of the Dairy Industry with a 1st March price drop amounting to 1.25ppl.

Muller say one of the key reasons for the drop is a surge of unplanned milk smashing all forecasts and expectations.

 

Muller have indicated they were irresponsibly scare mongered by various organisations that on farm winter production would be hit hard following last summers drought. The reality is the opposite has occurred with a significant production surge.

Muller, and others, are having to handle the biggest GB milk output for more than 25 years and say they simply cannot absorb the extra milk and associated cost especially in the ridiculously cut throat and marginless liquid packing business.

 

This 1.25ppl drop reduces the February standard litre price for 700 Muller Direct Farmers from 28ppl to 26.75ppl a price which includes the 0.5ppl Muller premium which an estimated 80% of Muller Direct producers achieve and is paid annually in arrears to those who quality who are not under notice to leave. Some refer to it as a loyalty bonus!

Without that 0.5ppl premium the standard litre price is 26.25ppl.

 

Mullers spin Doctor has certainly been taking steroids and is keen to remind everyone that around one third of the 700 Muller Direct producers will continue to receive 28ppl for the portion of their milk output they committed under the fixed price contact option.

 

There can be no doubt Muller have broad shoulders and “big balls” especially given they are one of the few remaining voluntary code complaint milk buyers and offer a short 3 month farmer notice period.

 

All eyes will now be on Arla when they declare their 1st March milk price. If Arla do manage to announce a no price change it will leave a whopping 2.81ppl standard liquid litre price gap between them and Muller (or 2.31ppl if the Muller Premium is included). If that happens the big question will be how and why this gap can happen.

 

In addition its looking very much like Muller could be one of the lowest March prices however it’s a fact a bunch of middle ground liquid processors will be breathing a huge sigh of relief as they really battle to breakeven. Watch out for the introduction of A + B pricing by some as a solution.

 

What message does Ian think Muller are sending to the Industry (31st January 2019)

Muller were unavailable for coment today but Ian thinks their message is very simple.

 

“We can’t make money in the UK liquid market having invested a shed load of money. The NFU’s are insisting farmers share the risks and rewards with milk processors. Consequently we have cut the farmer milk price to share the risks and lack of rewards with our farmer suppliers just as the NFU’s are insisting.”

 

So Muller could now be fully on board with the NFU’s and their contract reform demands.

 

Unfortunate Market Intelligence comment from AHDB (31st January 2019)

Within minutes of the Muller price drop announcement came an AHDB Dairy Market weekly update with a headline:

“Boost to market value of milk may halt drops in farmgate prices.”

The news item pointed to a reversal of “the direction of market trends “ which could put an end to downward pressure on market farmgate prices. Very unfortunate timing by AHDB Dairy Market Intelligence.

 

Dairy Crest Direct (Davidstow) to hold its milk price for March (31st January 2019)

This means that for March deliveries the Dairy Crest standard Manufacturing litre milk price remains at 29.9ppl and based on a standard liquid litre is at 28.82ppl

 

UK Milk Futures Equivalent (UK MFE) prices take a battering (31st January 2019)

The FC store milkprices.com UKMFE forward trades took a battering last week with weaker prices for butter, and SMP plus a further strengthening of sterling against the euro.

www.milkprices.com calculate that in the past 4 weeks these combined price movements equate to 1.48ppl drop in milk values and takes the net UK MFE milk price to 27.10ppl

 

Wyke Farms to double its capacity (31st January 2019)

Farmhouse cheese makers Wyke have secured planning permission which when complete will almost treble its output from the current 18,000 tonnes to around 50,000 tonnes. The new facility will be named Ivys Dairy after the familys famous grandmother and will be built in stages over 8 years.

 

Crediton Dairy unveil its £12m Expansion (31st January 2019)

Starting next month Crediton will invest £12 million in its flavoured milk processing facility boosting its processing capacity. Completion is planned for August 2019.

 

Since the Management buyout less than 6 years ago this will take the total Crediton investment will amount to £26 million.

 

EU Aged SMP is sold (31st January 2019)

At last the European Union has almost cleared the last of close to 400,000 tonnes of Intervention SMP. This is good news and eliminates a big black cloud which has hung over Europe and the world dairy industry for almost 4 years.

The tonnage started to accumulate in the summer of 2015. Its sale will certainly help the current price of fresh SMP.

                                                                       

 

Save the date

DIN CONFERENCE MAY 9-10, 2019 (31st January 2019)

This year’s Dairy Industry Newsletter annual dairy conference will be May 9-10 in London, at the Tara Copthorne Hotel as usual. The theme is ‘Will Dairy Supply Continue to Outstrip Demand?’ As the world’s dairy markets become more and more interlinked and world commodity dairy prices become more globalised, supply and demand also becomes more globalised, with events on one side of the world having an impact on the other. Recent studies suggest that world demand for dairy products will exceed supply in the medium to long term. Is there any evidence of this yet? 

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

 

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

 

 

 

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

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

 

The Arla standard litre member prices for January and February are

                    Liquid            Manufacturing

Conventional  29.06ppl         30.24ppl

Organic         42.72ppl          44.45ppl

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

 

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

 

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

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

 

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

 

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

 

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

 

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

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

 

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

 

 

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

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

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

 

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

This results in a standard liquid litre of 27.5ppl

 

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

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

 

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

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

 

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

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

 

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

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

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

Key movers were

SMP                 + 10.3% to average $2405 tonne

Butter               + 4.6% to average $4262 tonne

Cheddar            + 4.2% to average $3504 tonne

WMP                + 3.0% to average $2777 tonne

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

 

 

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

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

 

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

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

 

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

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

 

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

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

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

 

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

The Pensworth standard liquid litre price remains at 27.6ppl.

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

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

 

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

The Grahams standard liquid litre price remains at 27.5ppl.

 

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

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

 

Meadow Foods   (3rd January 2019)

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

 

 

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

 

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

  

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

 

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

 

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

 

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

 

Key Movers were:

 

SMP       + 7.9% to average US $2201 tonne.

Butter      + 3.9% to average US $4076 tonne.

Cheddar  + 3.2% to average US $3371 tonne.

WMP       + 1.2% to average US $2705 tonne.

 

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

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

 

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

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

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

 

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

 

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

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

 

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

 

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

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

 

 

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

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

 

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

 

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

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

 

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

 

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

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

 

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

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

 

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

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

 

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

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

 

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

 

Notable prices were:

 

Butter up 4.9% to average US$3928 tonne

SMP up 3.4% to average US$2042 tonne

Cheddar up 2.2% to average US3263 tonne

WMP up 0.3% to average US$2674 tonne

 

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

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

 

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

 

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

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

 

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

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

 

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

 

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

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

 

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

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

 

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

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

 

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

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

 

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

 

All prices increased with the exception of cheddar:

 

Butter up 2.7% to average US$3745 tonne

WMP up 2.5% to average US$2667 tonne

SMP up 0.3% to average US$1970 tonne

Cheddar down 2.2% to average US$3184 tonne

 

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

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

 

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

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

 

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

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

 

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

 

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

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

 

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

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

 

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

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

 

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

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

 

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

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

   

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

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

 

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

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

 

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

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

 

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

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

 

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

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

 

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

 

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

 

Meanwhile, cheddar prices continue to trend south.

 

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

 

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

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

 

Venue:  Wembley

Time:    19:45 hours

Date:    Friday 22nd March 2019

 

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

 

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

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

 

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

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

 

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

 

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

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Notable movers were:

 

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

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

SMP down 1.6% to average $1965

Cheddar up 0.2% to average $3252

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

 

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

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

 

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

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

 

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

 

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

 

Freshways losses are not unique         (16th November 2018)

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

 

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

 

Cornish clotted cream to China       (16th November 2018)

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

 

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

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

 

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

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

 

Speakers

Rory Christie - Dairy Farmer

Tom Hind - Chief Strategy Officer at AHDB

Roddy McLean - Director of Agriculture, Royal Bank of Scotland

Ian Potter - Industry Commentator and PIA

 

GDT continues to fall    (6th November 2018)

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

 

Notable movers were:

 

Cheddar            down 4.6% to average US$3250 tonne

WMP                down 2.9% to average US$2655 tonne

Butter               down 1.7% to average US$4045 tonne

SMP                 up 1.2% to average US$1997 tonne

 

MILK PRICES UP

 

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

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

 

MILK PRICES DOWN

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

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

 

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

 

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

 

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

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

 

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

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

 

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

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

 

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

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

 

MILK PRICES ON HOLD

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

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

 

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

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

 

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

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

 

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

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

 

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

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

 

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

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

 

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

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

 

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

 

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

 

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

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

 

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

 

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

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

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

Dry running compressed air outfit suitable for above.

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

Stainless steel water heater.

Milk plate coolers x 2.

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

For sale due to unforeseen circumstances

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

 

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

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

 

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

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

 

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

 

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

 

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

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

 

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

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

 

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

 

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

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

 

Notable movers were:-

 

Cheddar                        down 1.8% to average   US$3404 tonne

WMP                            down 0.9% to average   US$2729 tonne

SMP                             no change                     US$1977 tonne

Butter                           + 2.4% to average         US$4114 tonne

 

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

 

Liquid              Manufacturing

                                                            Standard litre   Standard litre              

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

Crediton Dairy                                       30.00 (30.00)     -          

Freshways                                            29.80 (29.59)    

Wyke Farms                                          29.65 (29.65)     30.69 (30.69)

Barbers                                                 29.58 (29.58)     30.68 (30.68)

South Caernarfon Creameries                 29.55 (29.55)     30.52 (30.52)

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

Payne’s                                                29.50 (29.50)     -

Meadow Foods                                     29.50 (29.50)     -                      

Yew Tree Dairies                                   29.50 (29.50)     -          

Belton                                                   29.50 (29.50)     30.25 (30.25)

Muller                                                   29.50 (29.50)     -                      

Dairy Crest Davidstow                           29.32 (29.32)     30.40 (30.40)

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

Glanbia                                                 28.99 (28.99)     30.00 (30.00)

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

Arla Direct                                             28.75 (28.00)     -                      

Joseph Heler (Cheese)  

 

CORRECTION    (17th October 2018)

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

 

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

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

 

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

 

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

 

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

 

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

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

 

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

 

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

 

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

 

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

 

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

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

 

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

 

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

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

 

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

 

Collingthwaite Farm, Nottinghamshire won the Environment category.

 

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

 

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

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

 

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

 

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

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

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

Dry running compressed air outfit suitable for above.

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

Stainless steel water heater.

Milk plate coolers x 2.

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

For sale due to unforeseen circumstances

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

 

1.07ppl milk price increase for Tesco/TSDG aligned producers – from 1st November   (2nd October 2018)

This increase arises as a result of Promars review of the annual Tesco cost tracker figures as budgeted to 31st March 2019. This increases the cost of production from 30.17ppl to 31.24ppl.

Variable costs   18.15ppl

Overhead costs 11.22ppl

Depreciation     1.87ppl

                        31.24ppl          

 

0.75ppl milk price increase for Arla direct suppliers – from October 1st   (2nd October 2018)

This takes producers’ standard liquid litre milk price to 28.75ppl and based on a manufacturing standard litre 29.96ppl.

 

Muller stand on price for a second consecutive month for November  (2nd October 2018)

Mullers 29.5ppl liquid standard litre price paid on October deliveries will continue for all deliveries in November.

 

First Milk stand on price for a second consecutive month for October 1st    (2nd October 2018)

First Milk members 28.5ppl standard liquid litre price on September deliveries and based on a manufacturing standard litre 29.47ppl will continue in October. First Milk, according to our records, are the only GB processor to stand on for October deliveries.

 

Barbers stand on price for the third consecutive month   (2nd October 2018)

Barbers (Cheese) 30.68ppl standard manufacturing litre and 29.8ppl on a liquid standard litre price paid on September and October deliveries will continue for all deliveries in November to make it three months in a row.

The milk price for Barbers producers over base litres for September has reduced by 1.34ppl to 29.84ppl.

 

Dairy Crest and DCD gain top marks for milk price stability into 2019    (2nd October 2018)

Reporting that Dairy Crest’s Davidstow milk for cheese producer price for November will remain at 30.4ppl based on a manufacturing standard litre and 29.32ppl on liquid would normally be of passing interest and more or less falling into line with others.

 

However, this stand on floor price has been guaranteed until 1st February 2019, which is both a surprise and very welcome for which credit should be given to Dairy Crest and DCD for agreeing this move.

Dairy Crest increased its manufacturing standard litre milk price to 30.4ppl (liquid 29.32ppl) from 1st August then from 1st September introduced a 0.5ppl winter supplement to take the manufacturing price to 30.9ppl and liquid to 29.82ppl. This latest move results in Dairy Crest Suppliers benefitting from 6 months of price stability at the enhanced manufacturing rate of 30.9ppl.

 

GDT Auction Prices fall again for the 9th Consecutive time     (2nd October 2018)

Todays GDT Auction has fallen for the 9th Consecutive time and everyone hopes it turns the corner soon.

Total quantity sold today 41,981 tonnes to average US $2901 tonne (-1.9%)

 

Notable prices at today’s auction were:

 

Butter down      5.9% to average US $4016 tonne

WMP down       1.2% to average US $2753 tonne

Cheddar down   1.2% to average US $3468 tonne

SMP down        0.3% to average US $1982 tonne

 

The Outlook    (2nd October 2018)

Stand on prices are now mainstream particularly for November deliveries unless you supply Arla who are still increasing producer prices for October.

 

As stated last week wholesale markets are under pressure with particularly the cream and butter price in decline, which AHDB report fell by £330 (butter) and £100 (bulk cream) in September. The FCStoneMilkprices.com UKMFE forward price curve has now recorded its 6th consecutive drop with this month (October) having recorded a 5.24ppl drop in that 6 week period. Against these prices SMP nudged up £30 tonne and mild cheddar prices for September were unchanged but the direction is regrettably but firmly south.

 

It’s now a case that any holds/stand on milk prices for November onwards should be considered a favourable announcement.  That’s until someone breaks rank which almost seems inevitable will be in 2018 rather than 2019.

 

2018 SFP Exchange rate confirmed at 0.89281 (2nd October 2018)

This is a fraction lower (0.2%) than the 2017 rate of 0.89470 which means the RPA payment per entitlement is likely to be very similar to last year.

 

Volvo 8 Ton Timber Harvester For Sale in Scotland with a stroke head    (2nd October 2018)

Fully guarded, including bullet proof Marguard windscreen and built  by Caledonian Forestry Services Ltd only 3 years ago.  Reason for sale is because the family have acquired a bigger capacity machine.

If interested or you require further information or photographs please email  angus@kirkside.net  or call Angus 07794 623 975.

 

Ian and Carole need your help to raise as much money as possible for the chances for Children Charity Buttle UK (www.buttleuk.org)     (2nd October 2018)

Background  -  Back in 2015 Ian & Carole travelled to New Zealand and joined the Pork Pie Charity Run (www.porkpie.co.nz) in a classic Mini and raised £6,600 for charity.  In 2017 the intrepid duo “squeezed” behind the wheel again and drove  Ian’s 1963 Mini Cooper S to Rotterdam for a weekend to raise money in the 20th and final Regis Ladies Classic Car Tour. They scooped the Award for the team who raised the most money for two Cancer Charities raising over £3,000.

Later this month they are off again this time to Italy with The Italian Job  www.italianjob.com 

Carole & Ian are joining classic MINI enthusiasts from all over the UK, Europe and further afield for a charity fund-raising trip of a lifetime, following in the tyre tracks of Michael Caine’s 1969 film, through the Swiss Alps, across Italy and even onto the rooftop test track of the world famous Fiat factory building in Turin.

Since 1990 The Italian Job Event has already raised over £3 million for children’s charities and this year the beneficiary will be the Childrens charity Buttle UK.  Buttle UK plan to use the monies raised to give 1000 children a bed to sleep in.  The Charity estimate that over 400,000 children in the UK do not have a bed of their own which leads to children lacking sleep, affecting concentration and therefore academic achievement. 

It is a fantastic cause and Ian and Carole will be grateful for any donations.

100% of your donations will go to the Charity, as Ian & Carole are once again self funding all their own expenses, entry fees, fuel and accommodation.

If you can dig deep and find a few spare pounds it will all be very much appreciated.  It’s not a competition who can give the most but if you do value this FREE  regular Dairy bulletin and Ian’s monthly Dairy Farmer article (now 26 years and still going) then please give a little to show your appreciation.

The event is not a charity challenge, but more of a non-competitive social week with like minded classic Mini enthusiasts aiming to have a tour at the same time as raising money for a great UK Childrens charity. 

So please sponsor Ian & Carole where you can, and don't forget you can increase the amount you donate with Gift Aid (individuals only, not companies).

Please donate on line by clicking on: https://www.justgiving.com/fundraising/englishbulldogsontour

OR

Send a cheque(s), made payable to either:

Buttle UK “

Ian’s target is to raise £2,500 or more

Thank you all in advance

 

News

A matching scheme to boost fundraising efforts. An anonymous donor of Buttle UK’s has offered to match, pound for pound, the total funds raised by the 5 most successful jobbers in this year’s rally, up to a maximum of £30,000!!

 

So for example Ian & Carole raise £2,500 and were one of the top 5 fundraising totals our contribution to Buttle UK’s Chances for Children campaign would actually be worth £5000! The 5 winners will be announced at the Reunion Dinner March 2019 but for sure Ian plans to be in that top 5 with your help.

 

1.09ppl – Welcome but surprise Arla member milk price increase – from 1st October   (25th September 2018)

Arla have announced a 1.09ppl milk price increase compromising of a 0.9ppl base price increase plus 0.19ppl quarterly currency adjustment.

 

The resulting 1st October standard litre price is 31.21ppl and based on the manufacturing standard litre is 32.47ppl, which, if anyone plays milk processor Top Trumps they will struggle to beat Arla in 2018.

 

The Arla UK organic milk price remains unchanged whilst it increases in Sweden (3 Euro Cents) and Denmark (2 Euro Cents).  Arla UK organic farmers will, however, receive the 0.19ppl currency adjustment.

 

For Arla’s UK organic members the standard liquid litre price is 40.99ppl and based on the manufacturing standard litre is 42.64ppl.

 

This latest increase certainly puts the cat amongst the pigeons and comes at a time when most milk purchasers were hoping Arla would stand on possibly even or cut its price.

 

1.2ppl additional forecasted 13th payment for Arla members   (25th September 2018)

As it’s calculated a further 1.2ppl is pencilled in by Arla as a 13th payment, which whilst still to be approved by Arla’s BOR and depends on the current business performance continuing until March 2019, will be additional money to be added to an already healthy looking Arla member milk price.

 

0.9ppl milk price increase for Sainsburys aligned suppliers – from 1st October    (25th September 2018)

This takes producers’ standard liquid litre price to 29.39ppl but see below for trouble at Sainsburys!

 

0.57ppl increase for Marks & Spencer’s (Muller aligned) - from 1st October    (25th September 2018)

This takes producers’ liquid standard litre milk price to 31.41ppl

 

Milk price outlook is not good   (25th September 2018)

All eyes are now focussed on Muller this weekend and whether it confirms any price movement from November 1st.  

 

Ian’s moles suggest a Muller price cut is very much on the cards, which is not what Muller or any dairy farmers will want to hear.  Given Muller’s 1st October liquid standard litre price is 29.5ppl and Arla’s is 31.21ppl the gap is now an unexplainable 1.71ppl.  Also note in today’s announcement Arla state “The outlook for milk price for the coming months remains stable”, indicating the possibility of stand on or close to stand on prices depending on market movements in the next month.

 

Muller farmers will be praying for a November stand on but it’s looking challenging and if Muller drop the dam will burst as price cuts rain in for November and December. 

 

Anything Ian writes will not change the fundamentals, so don’t shoot the messenger. 

 

GDT prices continue to drop, futures have been falling for the past 5 consecutive weeks, UK production is up, German production +2.8% and imports of cheese from Ireland in 2018 are at eye-watering record levels.  Arla’s increase is great news but stand on prices for November should not be criticised.

 

GDT Auction prices continue to slide south for the 8th consecutive auction    (25th September 2018)

Key movers in last Tuesday’s GDT auction were:

 

Cheddar down 3.5% to average US$3503 tonne

WMP down 1.8% to average US$2768 tonne

SMP down 1.1% to average US$1980 tonne

Butter down 0.1% to average US$4270 tonne

 

Average down 1.3% to average US2934 tonne with 39,143 tonnes sold.

 

This means in the last 8 GDT auctions the average price has dropped by close to 20% to prices last seen in October 2016.

 

Sainsburys under attack from its farmer suppliers   (25th September 2018)

Sainsburys farmers in the North of England and Scotland are furious with the retailer to the point several are claiming they are immediately seeking a new milk buyer and want to exit the Sainsburys Dairy Development Group because “its heads Sainsburys win and tails its dairy farmers lose.”  On a practical note finding a new milk buyer in Scotland looks challenging!

 

Sainsburys are half way through a series of regional farmer meetings, which haven’t gone according to plan and parachuting any spin doctors and head honchos in hasn’t placated some of their loyal switched on farmers.

 

The problem is if cost savings of 2p are achieved Sainsburys intend to pocket the entire 2ppl with no sharing or benefit of the rewards to their farmers.  This means efficient farmers are victims of their own success which is unfair and unacceptable.

 

In addition, the Sainsburys farm units have, on average, expanded but the fixed amount added in for family labour at 1.44 head at the national agricultural workers pay is being constantly diluted in the ppl COP as on farm production increases.  One simple solution is to change the model to a ppl labour cost but that doesn’t suit Sainsburys because it will cost them money.

 

The way the Sainsburys COP model deals with bought in feed is also under attack, particularly from its 20 or so Scottish farmers.  The cost of feed per tonne is that charged by the Sainsburys buying groups price for all feed, however, Scottish farmers can’t buy their feed at that price and are not part of the group buying.

 

Either the Scottish farmers feed price should be factored in to the model or alternatively consideration to a Scottish regional Sainsburys COP will have to be considered.  One Sainsburys farmer claims his actual COP is 4ppl above the model.

 

The final straw has been the recognition that for years the Sainsburys COP model has costed calf milk powder and Megalac in at the feed wheat price, which Sainsburys have held their hands up and agreed to correct.

 

The difference in costings is now recognised by Sainsburys as amounting to 0.9ppl, which farmers have lost.

 

As further proof that Sainsburys don’t really care about their farmers COP they have decided that of the 0.9ppl deficit farmers will be given 0.6ppl but Sainsburys will retain 0.3ppl and, at the moment, there are no moves by Sainsburys to back-date any of the missing money to its farmers to reflect the shoddy calculations in previous years.

 

The Sainsburys farmers have had to scrutinise the costings themselves and the end result is, after 11 years of working with British farmers, Sainsburys appear to be on a suicide mission to wreck all the trust they have built up.

 

Some Sainsburys farmers no longer trust the COP model, no longer trust Sainsburys and generally feel very disappointed and let down.  All they are asking for is fair treatment from the retail giant.

 

Back in 2015, Sainsburys took out large adverts in The Times, Telegraph, Mail, Express and Star where the strapline was:

 

 “At Sainsburys we support our British fresh milk farmers, does your supermarket?”

 

followed by:

 

“We believe the farmers who produce our milk should also make a living.”

 

These were fantastic supportive statements, which some of its Scottish and North of England farmers now believe to be false in 2018.

 

Do Sainsburys still “want to work with (its dairy) farmers to offer long term relationships with stable profitable prices?”

 

The jury is out on this question but unless Sainsburys attitude towards its 250 or so remaining SDDG farmers changes they look set to lose even more dissatisfied producers.  The situation is best described as “fragile”.

 

Dairy Crest’s profits look good for the first 6 months   (25th September 2018)

Dairy Crest have announced a trading update for the last 6 month and anticipate profit for the period to be above the same period 12 months earlier as well as reporting a reduction in nett debt.  Dairy Crest’s interim results will be published on November 7th.

 

First Milk    (25th September 2018)

Have published their financial results for the year to 31st March 2018.  The key numbers are:

 

Members’ Capital Investment up £2.1m to £75.5m

Turnover up 22% to £252.7m (2017 - £206.5m)

Nett Bank Borrowings up 16% to £44.9m (2017 - £38.6m)

Nett Profit Down 47% to £3.2m (2017 - £6m)

Total Group Capital Reserves up 25% to 27.4m (2017 - £22m)

 

First Milk might still be in the bottom handful of milk purchaser’s standard litre milk price league tables but at least they have significantly narrowed the price gap and strengthened their position, in recent years.  Significant cost, especially overhead cost, has been stripped out under the captaincy of Shelagh Hancock and this reflects in the numbers.

 

First Milk’s membership milk has halved in recent years but for sure First Milk member moans are almost unheard of now and it’s an indisputable fact that with no sales and marketing team, due to the long term deal struck with Ornua, their focus is on making consistently high quality cheese with minimal downgrades and they appear to be succeeding at it.

 

Freshways wind up its Dairystix business    (25th September 2018)

Freshways have wound up their UHT Dairystix business directly affecting 17 employees.  The Dairystix brand was launched in 2007 but by 2012 was in administration before it was resurrected.  Freshways took the business on in 2014.  Further details to follow but the numbers rumoured will leave some creditors with a migraine.

 

Construction of a 30 million litre dairy farming commences     (25th September 2018)

Construction of an eye watering 30 million litre fully integrated dairy has started in Russia and will cost circa $633 million (£484 million) with funds coming from a group who are recognised as the largest Vietnamese agricultural investors.

 

This is the first of five farms in the pipeline with construction of all five to commence by 2020.

 

The farm/unit will be fully integrated from the cow to the distribution of dairy products and will house 50,000 cows at 5,800 litres/cow or 30,000 at just under 10,000 litres a cow.  Now that’s what you call big!

 

Russia’s goal is to be self sufficient in dairy, replacing all dairy imports, within the next 8 years, which translates to the necessity to increase domestic production by 25%.

 

Dairy Industry Woman of the Year Award     (25th September 2018)

Jeanette Prince was presented with the Dairy Industry Woman of the Year National Award at last week’s presentation dinner.

 

Jeanette is a Staffordshire organic farmer supplying Arla.  She is also a founder member of the Staffordshire Women’s Farming Union, Vice President of Staffordshire YFC and has devoted many days to promoting and progressing the UK dairy industry.

 

The Regional Award was presented to Ceri Cryer a farmer and cheese maker from Wiltshire who under the Brinkworth dairy brand sells her products to local markets and at London Farmers’ Markets.

 

FOR SALE- 2 Lely A4 Robots – Location Cumbria     (25th September 2018)

Installed in January 2012, regularly serviced & updated, washed out regularly since the cows were sold.  Reason for the sale is the farm has been sold.

 

They come with the facility to feed liquid as well as cake, which is automatically calculated. No weigh cells but concrete work already installed.  Sold along with computer, 130 collars, exit gates and two milk recording samplers.

 

For further details email ianpotter@ipaquotas.co.uk

 

WANTED BY IAN   (25th September 2018)

14 tonne JCB ditching bucket with circa 60mm pin fixings.

 

Note, not a 3 CX size this is for a proper JCB 814 digger not a Fisher Price digger!  If you know where there is one please email ianpotter@ipaquotas.co.uk

 

0.85ppl milk price rise for suppliers to Pensworth Dairy – from 1St October          (4th September 2018)        

This takes producers liquid standard litre price to 29.8ppl.

 

0.5ppl milk price increase for suppliers to Wensleydale Creamery – 1st September       (4th September 2018)                            

This takes members’ standard liquid litre price to 29.5ppl and standard manufacturing litre price to 30.45ppl.

 

0.5ppl milk price increase for suppliers to First Milk – from 1st September        (4th September 2018)                

This takes members’ standard liquid litre price to 28.5ppl and standard manufacturing litre price to 29.47ppl.

 

0.5ppl milk price increase for suppliers to Payne’s Dairies – from 1st September    (4th September 2018)        

This takes members’ standard liquid litre price to 29.5ppl.

 

AMPE and MCVE climb higher      (4th September 2018)        

AMPE is up +4.4% from July to 33.6ppl and MCVE + 0.6% to 33.6ppl (see above).  In addition, AHDB Dairy report that Cream income is now worth 13.09ppl to a liquid processor.

 

During August AHDB report increases in wholesale prices for cream, butter and SMP all mainly weather driven, which is making traders nervous, especially over possible declines in winter milk production which all farmers are anticipating and by the time the trade realise its happening nothing they do will reverse the decline!

 

AHDB are anticipating further small farm gate milk price increases up to and including November based on the current milk market value (a weighted average of AMPE & MCVE). That may be what the number crunching suggests but it’s certainly not what a large number of GB milk processors are budgeting for with most aiming to hold prices.

 

Arla plans to pay out its 2018 profits to its farmers        (4th September 2018)        

In a welcome, if not surprise, move Arla has confirmed it proposes to pay its entire 2018 profits to its farmers recognising many face serious financial pain as a result of the drought. The proposal will be put to the Arla Board of Representatives at its October meeting.

 

If Arla’s nett profit target of 2.8% to 3.2% of revenue is achieved the numbers indicate a potential supplementary payment of circa £20,000 for a 1 million litre producer, however, this needs to be split into a circa £9000 as a 13th payment producers are already entitled to receive so the additional money paid out will be around £11,000 per farmer.

 

The total payment will likely be approved in February 2019 when Arla’s end of year results are known.

It’s highly likely this proposal has been instigated by the Danish and Swedish Arla farmers who have both clout and face some serious financial additional costs as a result of the drought.

 

The point to ponder is  whether  Arla executives are now assuming (possibly planning) that on October 1st, November 1st and December 1st it will be a farm gate milk price hold stand on with little, if any, chance of further farm gate milk prices increases

 

Straw exiting GB and hay going into power stations       (4th September 2018)        

Ian has spoken to two people who have confirmed that significant quantities of straw have already been delivered to Iceland, Denmark and Belgium with a further enquiry to deliver to Norway and demand from all four countries is very strong. 

 

In addition, one haulier is taking hay into a power station due to the shortage of straw.  Anyone playing the straw market is unlikely to have budgeted for straw going to Iceland in curtain sided trucks on back loads.

 

36% profit slump for European giant milk processor Friesland Campina (FC)       (4th September 2018)        

Friesland Campina’s half year results show a whopping 35.6% year on year profit slump. 

 

Friesland Campina previously announced the early 2018 closure of two processing operations in France, both of which have severely influenced these latest half year figures.  The closures were announced a year ago as part of Friesland Campina’s wholesale transformation scheme.

 

Arla UK’s half years results         (4th September 2018)        

Arla’s half year UK revenue increased by 2.3% to £961million with nett profit 2.2% versus 2.1% in 2017.

 

Arla’s 2018 financial year nett profit of 2.8% to 3.2% is considered achievable.

 

UK secures £240million deal with China        (4th September 2018)        

China has agreed a five year deal to import UK dairy products worth an estimated £240 million

 

Farm Foods 40ppl offer opens up a Pandora’s Box        (4th September 2018)        

In the last bulletin we asked readers to crack the milk code for the supplier of incredibly cheap milk on sale by Farm Foods at 40ppl!

 

Numerous readers collected the Potter equivalent of a Crackerjack pencil and all identified the supplier as Payne’s Dairies.

 

What Ian wasn’t prepared for were details of allegedly how Farm Foods have played out their recent October milk supply tender.

 

The three incumbent suppliers to Farm Foods today are Payne’s, Medina and Grahams Dairies (Scotland). Allegedly once Farm Foods received new tenders from Medina and Payne’s they served notice to terminate all three supply contracts with the suggestion that one of the big two GB liquid processors was involved and had successfully tendered and taken them all by storm as sole supplier to Farm Foods with a table topping price.

 

Whether this was 100% accurate is debatable but for sure when three are given notice one or more is likely to bite back and drop their prices even lower than what is rumoured to already be an eye watering price of under 35ppl.

 

Reports indicate the outcome is that Medina retains its region and Payne’s retains its region and takes Grahams region in Scotland.  So the losers, if you can call it that, are Grahams Dairies and the winners are certainly Farm Foods.

 

This certainly appears to have been a particularly aggressive tender and one processor called it a blood bath another said it was tactical Farm Foods tendering.