Dairy Industry news and features

This page was last updated on 20^th May 2020 at 12.40pm (Press your refresh/reload button for the latest information)

New Run Cattle Tag Prices

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

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

Cattle Tags - New Run Combinations	Retail Price (excl vat)	Discounted Price per 100+ (excl vat)	Discounted Price per 200+ (excl VAT)
Large & Large	£1.42	£1.37	£1.32
Large & Large BVD*	£2.42	£2.00	£1.95
Large & Button	£1.17	£1.12	£1.07
Large & Button BVD*	£2.42	£2.00	£1.95
Large & Medium	£1.42	£1.37	£1.32
Large & Medium BVD*	£2.42	£2.00	£1.95
Medium & Medium	£1.42	£1.37	£1.32
Medium & Medium BVD*	£2.42	£2.00	£1.95
Medium & Button	£1.17	£1.12	£1.07
Medium & Button BVD*	£2.42	£2.00	£1.95
Large & EID Secondary	£2.60	£2.55	£2.50
BVD Test	£2.15	-
BVD Test + BVD Free England	£2.40	-

*Excludes optional BVD testing charge

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

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

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

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

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

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

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

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

Stand on June milk price for almost all Arla Members - (20^th May)

Arla’s member milk price for both conventional and organic will remain at the following levels until July 1^st.

Standard liquid litre price 28.78ppl and based on a manufacturing standard litre price of 29.89ppl.

Organic standard liquid litre price at 37.48ppl and based on a manufacturing standard litre price of 38.93ppl.

In reality the June price has actually reduced by 1 Euro Cent however there is a 1 Euro Cent addition scheduled to start from June 1^st as a climate check/change incentive.

There are less than 180 GB Arla farmers who have yet to sign up and submit their details including those for  Arlagarden Plus details . This is why its effectively a  stand on price claim for the majority of Arla members.. Those 180 or so have until 2^nd June to sign up and the likelihood is only a very small number will fail to cross that line and sign up so it will be 1 Euro Cent off and 1 Euro Cent on for almost everyone.

In the press release the key comment to note other than the price is “The market outlook remains uncertain, with the likelihood of negative development”. This must surely be Danish speak for we expect the milk price to ease in July.

0.61ppl deferred milk price reduction for Marks & Spencers aligned suppliers(7^th May)

The reduction has been delayed by 2 months until 1^st June to assist the retailers 44 aligned farmers.

From June 1^st the M&S standard liquid litre price will reduce to a very healthy 31.72ppl. (source – www.milkprices.com)

0.5ppl milk price reduction for Wensley Dale Creamery (Cheese) from May 1^st(7^th May)

This results in a manufacturing standard litre price of 27.25ppl and based on a liquid standard litre 26.3ppl.

0.5ppl milk price cut for suppliers to Dale Farm Cumbria from May 1^st(7^th May)

This results in a liquid standard litre price of 25.14ppl.

First Milk (Cheese) Stand on/hold its member milk price until at least 1^st July(7^th May)

This maintains members manufacturing standard litre milk price at 27.63ppl and based on a liquid standard litre 26.75ppl.

Belton Farm (cheese) to stand on/hold its producer price until at least 1st July (7^th May)

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

0.43ppl milk price increase for the Co-ops aligned suppliers from May 1^st(7^th May)

This results in a liquid standard litre price of 29.82ppl (Source – www.milkprice.com)

0.8% reduction in GDT average(7^th May)

Tuesday’s GDT auction saw the average all products index reduce by 0.8% to average US $2866 tonne.

Notable price movements were:

Cheddar down 6.8% to average $4115 tonne.

Butter down 5.8%to average $3867 tonne.

SMP down 0.1% to average $2373 tonne.

WMP up 0.1% to average $2745 tonne.

Starbucks cut ties with Freshways  with immediate effect(7^th May)

When Starbucks coffee shops re open it will no longer be using Freshways milk having this week decided it will source from Arla in future. The fact this change of milk supplier has taken place so suddenly is unheard of. Note some Starbucks franchisees will continue to use locally sourced milk. 

On the 22^nd April this bulletin highlighted the eyebrow raising treatment of and questionable communication by Freshways to its loyal supplying farmers, and how for three consecutive weeks this had attracted the attention of numerous press, most notably The Daily Mail which savaged and discredited its owner Bali Nijjar in a way that no dairy company senior executive has been savaged before.

The bulletin commented “The adverse press publicity has not gone unnoticed with several Freshways customers in food service, allegedly exploring how they can distance themselves from the processor’s constant negative press coverage. For sure, most retailers, food service and others are keen that throughout the Covid 19 period, processors treat all their loyal supplying farmers fairly and responsibly”.

Freshways currently have the worst record of any UK dairy processor of how their numerous  changes  have seriously impacted on their  farmers finances  during Covid 19, whilst at the complete opposite end of the spectrum is Starbucks’ new partners Arla. It is no coincidence why the chain moved.

Freshways unprecedented treatment of farmers includes short notice to dump milk without payment, farmers pushed (some have said bullied) to sign new T & C’s or face a June price cut, a retrospective price cut, buying cheap spot milk, and extending payment terms to farmer suppliers , not to mention Freshways increasing the price elderly care homes pay for milk during the Covid pandemic . In addition Freshways directors have come in for criticism from their own farmers who are annoyed Freshways   continue to rack  up serious losses whilst dividends and payments appear to have filled its Directors pockets

This toxic cocktail was always going to come with repercussions. The instant loss of an estimated  10% of its volume to Starbucks is the first blow.

Freshways will probably claim that Starbucks moved because Arla offered cheaper milk, but that would be a laughable, pathetic and even rather desperate claim to make. Indeed, one contributory factor is believed to be that Freshways just delivered the milk to a minimum standard with no added standards or policy on animal welfare or sustainability. It’s no secret that some Freshways suppliers have previously trumpeted the simplicity of the contract, the milk testing frequency and the simple basic standards they have to achieve believing it is a positive. Starbucks is a global brand, as is Arla, and there is little doubt Starbucks would have been attracted to Arla’s calf policy, Arlagarden and 360 programs, plus more. The notion that only retailers are focused on brand protection is false because many food services match them for focus.

Freshways have significantly more problems than other processors and could do with a white knight or Harry Potter to quickly help the firm get out of these very choppy and troubled waters and to help improve its dreadful communications.

Sadly, Freshways farmers are not between a rock and a hard place they are between a rock and no place as Arla have been very public in keeping its recruitment door firmly bolted. If it was open then Arla would have every Freshways farmer in the land queuing up join it and it wouldn’t have a business left. At this moment in time few people would lament its passing.

£1 million milk promotion is launched(7^th May)

AHDB Dairy UK and Government have joined forces and launched a 12 week milk marketing iniative to boost milk consumption and sales of dairy to UK consumers.

Its funded by AHDB, Dairy UK, DEFRA, Scottish Government, Welsh Government and the Northern Ireland Executive.

The promotion starts next week and the contributions are £500,000 from the four governments, £300,000 from Dairy UK’s processor members and £200,000 from farmer levy board AHDB. It will include TV advertising and looks very promising and fingers crossed it boosts sales and is backed and fully supported by all farmers and retailers.

Hardship fund of up to £10,000 per dairy farm in England available(7^th May)

The fund is to help English Dairy farmers who have been hit hardest by Coronavirus e.g. Freshways and Medina suppliers and a few others.

The cornerstone is for the money to go to those most in need of financial help with the target to cover up to 70% of their lost income in April and May. The lower 25% threshold to qualify and access the funding means producers must have lost a minimum of 25% of their income in April and May due to Covid19 disruptions.

There is no limit on the number of farmers who can receive the support aid or on the total funding available.

It will be interesting to see how many successfully apply for the aid and more importantly all eyes will be watching to make sure the existence of aid doesn’t trigger one or more processors to drop farmgate prices further or make other moves with a view to the money actually flowing into processors pockets effectively by passing the intended beneficiaries – the farmers. For sure, one or more processors could be tempted.

2ppl milk price reduction for Meadow Foods suppliers in Cumbria and South Wales - from 1^st May (today) (1^st May)

This reduces producers standard liquid litre price to 22ppl for their A volume milk.

1ppl milk price reduction for Meadow Foods suppliers in Cheshire, Shropshire, Staffordshire, Derbyshire and North Wales – from 1^st May (today) (1^st May)

This reduces producers standard liquid litre price to 25ppl for their A volume milk.

2ppl milk price reduction for Glanbia Cheese suppliers – from 1^st May (today) (1^st May)

This reduces producers standard manufacturing litre price to 25ppl and based on a standard liquid litre 24.17ppl.

Barbers (cheese) to stand for a 8^th Consecutive month until at least 1^st July(1^st May)

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

Saputo (AKA Dairy Crest Davidstow) stand on until at least 1^st July(1^st May)

This was agreed back in January and maintains the minimum standard manufacturing litre price at 28.65ppl and based on a standard liquid litre the minimum floor price 27.63ppl.

South Caernarfon Creameries (Cheese) to stand on until at least 1^st July(1^st May)

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

Crediton Dairy to Stand on until at least 1^st July(1^st May)

This maintains their standard liquid litre price at 27.5ppl.

Muller rescind the 1^st May 1ppl price increase but stand on until at least 1^st July(1^st May)

Muller Direct farmers will not receive the agreed 1ppl 1^st May price increase. This means it will be a stand on milk price at 25.25ppl plus 1ppl to 26.25ppl for farmers who qualify for the Muller Direct Premium and these prices will prevail until at least July 1^st.

In early April when the increase was announced, the heading on our April 2^nd bulletin read;

“1ppl Price Rise for Muller Direct farmers is a big surprise” and Ian commented that “It is likely to be the only milk price increase for a long time and given the market conditions outlined below short-lived”.

Consequently, it’s no surprise to Ian and most others the bizarre increase has been rescinded, especially given the volatility in both butter and cream values during April as detailed below.

However, in a surprise press release the chairman of NFUS Milk Committee, Gary Mitchell stated that he was confused and that NFUS is seeking a full explanation for the decision from Muller. Perhaps the latest AHDB report will help the NFUS dairy team understand the market dynamics and clear up their confusion. (https://ahdb.org.uk/dairy/cream-income-to-a-liquid-processor).

Mullers retailer supplement reemerges for March deliveries(1^st May)

Ian had completely forgotten this supplement was still in the wings but its back and for March deliveries from Muller Direct conventional contracted producers it will add a welcome 0.63ppl.

April’s volatile cream values summary(1^st May)

According to AHDB Dairy, the April cream price was extremely volatile ranging from a low of around £700 tonne to a top of £1200 an incredible 70% band width of price variation and ended the month at around £900 tonne.

Note the value of cream to a liquid processor dropped by 29% between March and April worth 2.11ppl to a liquid processor and is down 39% compared to April 2019 a difference worth 3.22ppl.

AMPE drops a whopping 18% (-5.16ppl) in a month(1^st May)

From the table at the top of this bulletin AHDB Dairy have confirmed that whilst MCVE continues to more or less hold its own AMPE has plummeted by 5.16ppl in just one month.

0.7ppl Milk Price reduction  for Paynes Dairies (Liquid) suppliers – from 1^st May (1^st May)

This reduces producers standard liquid litre price to 25.0ppl.

Freshways keep pushing producers towards the edge(1^st May)

In a letter to producers dated Friday 24^th April, the only interpretation can be that Freshways have confirmed they have been buying cheap spot milk in order to “balance week to week and day to day based on sales fluctuations”. This statement hasn’t been well received by some of the producers Freshways told at very short notice to dump milk without payment from their processor.

At the same time Freshways issued new terms and conditions to producers relating to a number of areas including the 60/40% split of A and B litres plus more, clearly having received legal advice that producers must sign up and agree to the new T’s & C’s.

Then comes the killer statement.

“We requested that famers confirm agreement to last week’s changes and therefore I have to say

that those of you who have not sent that conformation, we may have to look to reduce your A

litre price in June 2020 and this bulletin acts as notice for that June 2020 A litre price”

Most have translated this to mean sign and return or we will drop your A litre price. Guess what, most have signed blind on the basis they only have two options as in quit or take the medicine.

Grahams give notice to six unwanted producers(1^st May)

Grahams Dairies in Scotland have given 12 months’ notice and the criteria for producer selection was:

1. Attitude towards graham’s Dairy (AKA the awkward squad).

2. Distance from Dairy.

3. Milk Quality.

4. Ability to forecast accurately.

It’s a huge blow for the six involved who are estimated to supply towards 12 million litres in total. It is understood that producers are free to leave as soon as they want to but its unlikely given their alternative options are very limited today if indeed they have any.

Dairy Partners stand on with its May milk price(1^st May)

Along with Freshways, Dairy Partners confirmed to its producers it has been purchasing spot milk. The South Wales processor claims it needs the extra milk to increase factory output “utilising spare capacity with lower cost spot milk” rather than processing extra milk from its regular farmer suppliers. The declaration whilst up front and honest has not gone down well.

Subsequent to this, Dairy Partners have announced this week that they will hold producers May price at current levels which we don’t know how this fairs as a standard litre price, however April over supply volumes milk price will be paid at 19.57ppl.

Their hold is a PR plus because for a processor to admit to purchasing cheap spot milk and to then reduce ex farmgate milk prices would be a PR own goal.

0.9ppl (1 Euro Cent) decrease for Arla members from May 1^st (24^th April)

Arla are not immune from the worldwide effects of COVID19 but on the strength of this reduction, its product mix and ability to divert milk is greater than most. For sure this reduction wont help some of Arla’s processing competitors who appear desperate to drop farmgate prices asap and were praying for a 2ppl or more Arla price drop.

This results in a standard manufacturing litre price of 29.89ppl and based on a liquid standard litre 28.74ppl. The Arla member organic price has also decreased by 1 euro cent resulting in a standard manufacturing litre price of 38.93ppl and based on a liquid standard litre 37.43ppl (www.milkprices.com)

According to www.milkprices.com the price change results in the following aligned standard liquid litre prices Tesco 30.16ppl, Morrisons (Grazing) 29.95ppl and Morrisons standard 29.72ppl.

2ppl milk price decrease for Pensworth Dairy suppliers from May 1^st (24^th April)

This reduces the liquid standard litre price to 22.5ppl and to 23ppl for producers who participate in Pensworths animal welfare standards.

Earlier in the month Pensworth temporarily extended its April farmer payment terms and in addition to this 2ppl cut it has now introduced A and B pricing. The May A price, based on 22.5ppl/23.0ppl (as above) will be paid on 70% of the milk supplied whilst the remaining 30% will be based on average market returns achieved in May for skim milk concentrate which recently has been trucked to Poland having been processed by Yew Tree.

Milk production down 2.4% (24^th April)

According to the DEFRA figures total UK milk production in March was down 2.4% at 1.297 billion litres and compared to 2 years ago its down 3.2%.

Dairy Partners farmers furious they are buying cheap spot milk (24^th April)

In a letter to its farmer suppliers, Dairy Partners (mozzarella cheese in South Wales) jaw dropping statement states

“Our revised budget plans are based on farm forecasted volumes and if no action is taken then we will not be able to take maximum opportunity for low cost milk, which in turn would impact all our Direct Supply producers. Please therefore ensure you keep to your own forecasted supply volume over the coming months.”

This can only be described as a real kick in the nuts , a processor requesting loyal farmers do not supply more milk than forecasted in order to allow the business to take advantage of cheap spot milk. Basically, restrict your deliveries to enable us to buy cheap spot milk and if you don’t, we will likely cut your milk price further. Note the last Dairy Partners price cut was 2ppl from April 1^st.

Cutting production is easier said than done as we approach the spring peak and it has left some Dairy Partners farmers furious and understandably questioning whether the business has deeper rooted issues. Clearly it has surplus processing capacity, but wants to buy cheap spot milk from competitors/brokers.

The processor has not confirmed to its farmers at what price any surplus milk will be paid or the formula for calculating that price.

Freshways negative press continues and has registered with customers (24^th April)

During the past three weeks, the Daily Mail has run three stories involving Freshways.

9^th April highlighted the on-farm dumping of milk.

16^th April headline was “As his firm (Freshways) forces family farms to pour milk down the drain meet fat cat who creamed of a fortune from our farmers.” (https://www.dailymail.co.uk/news/article-8223557/Balvinder-Nijjars-milk-firm-Freshways-cut-rates-40-cent-dairy-farmers-produce.html)

22^nd April headline was “Fat cat who is milking our care homes during COVID-19 outbreak: First Balvinder Nijjar slashed the rates he pays dairy farmers, forcing them to pour their milk down the drain - now he's hiked charges for supplying food to nursing homes” (https://www.dailymail.co.uk/news/article-8242685/The-fatcat-milking-care-homes.html)

The 22^nd April article has brought tears to the eyes of some and had the blood boiling of others to learn that the company cut farmgate milk prices, extended payment terms of farmers, told them to dump milk and increased the price of milk to care homes during Covid19.

The adverse press publicity has not gone unnoticed with several Freshways customers in food service, allegedly exploring how they can distance themselves from the processor’s constant negative press coverage. For sure, most retailers, food service and others are keen that throughout the Covid 19 period, processors treat all their loyal supplying farmers fairly and responsibly.

With many supplying farmers extremely unhappy with Freshways attitude and some of its customers looking towards pastures new it’s all suddenly going down hill at speed.

On top of this in a grocer magazine article, Bali Nijjar has confirmed Freshways are in full merger negotiations with Medina and is quoted as saying “with everything that has happened recently, the speed of that merger process (with Medina) will only increase”.

Well the Competitions and Market Authority (CMA) will have the final say on that because its certainly on their radar and no doubt on the radar of The Daily Mail

As several concerned processors have indicated to Ian, Freshways have some excellent farmers who don’t know what to do and cant find an alternative home for their milk if they want to.

Countryfile interview for Sunday prompts a recalculation by NFU (24^th April)

Last weeks declaration to DEFRA by the NFU that “2000 dairy farmers are suffering severe financial pressure” appears to have been recalculated ahead of Tom Heaps investigation into the Dairy Industry expected to be shown on Countryfile.

The figures were crunched and processors and their supplying farmers now categorised by the NFU into high, medium and low risk.

In the original version 1 high-risk category earlier this week the NFU had 5 processors, Freshways, Medina, Pensworth plus two other surprise inclusions neither of whom have told its farmers to dump milk or that they would not be able to pay farmers on time and as stated in their contract. The two were allegedly very forceful that their names were removed from the high risk list claiming that inclusion in that list presents reputational risk on which one was prepared to take action if necessary.

The accepted industry figure, which many knew all along, was that around 550 farmers predominantly supplying Freshways and Medina are in high risk and certainly suffering severe financial pressure. This was the accurate figure more than 10 days ago when the call to arms was made.

Statement made by Secretary of State for Environment and Rural Affairs, George Eustice, on Tuesday demonstrates he already has a grip on the true figures (24^th April)

An extract from his statement reads:-

Coronavirus presents unprecedented challenges to the businesses we rely on to provide essential services which keep people safe – including food supply, water and waste.

Many businesses in these sectors have benefited from Government schemes to support all businesses, including the Coronavirus Job Retention Scheme, Coronavirus Business Interruption Loan Scheme, and the Small Business Grant Scheme and support for the self-employed.

Beyond this, the Government has taken specific action to support the food, farming, water and waste sectors in the delivery of critical services.

Dairy: In particular, the dairy sector has felt a significant impact as a result of the coronavirus pandemic. Between 5 and 10 per cent of total milk production goes to the food service trade and there is therefore a small proportion of milk production that currently has no home. The vast majority of Britain's 10,000 dairy farmers continue to supply their contracts at the usual price and larger processors have been largely unaffected by the market disruption because of their scale and diversified nature. In order to support the affected farmers, on Friday we announced that we will set aside some elements of competition law to make it easier for processors to come together and voluntarily work out how to ease production down in order to create the space in the market for that milk that currently has no home and to support a recovery in the spot price. We have asked the Agriculture and Horticulture Development Board (which supports the interests of dairy farmers and the wider farming industry) and Dairy UK (which represents the processors) to coordinate a proposal and discussions are already underway.

RABDF call for all UK COVID19 affected dairy farmers to complete their survey (24^th April)

The Royal Association of Dairy Farmers is calling on all Covid19 affected dairy farmers to complete its survey to enable it to collate the data and submit to government.

For further details, click the link: https://www.rabdf.co.uk/latest-news/2020/4/20/calls-for-dairy-farmers-across-the-uk-to-submit-daily-accounts-of-losses

0.9ppl (1 Euro Cent) decrease for Arla members from May 1^st (23^rd April 2020)

Arla are not immune from the worldwide effects of COVID19 but on the strength of this reduction, its product mix and ability to divert milk is greater than most.

This results in a standard manufacturing litre price of 29.89ppl and based on a liquid standard litre 28.74ppl. The Arla member organic price has also decreased by 1 euro cent resulting in a standard manufacturing litre price of 38.93ppl and based on a liquid standard litre 37.43ppl (www.milkprices.com)

5ppl milk price reduction in only 12 days for Medina suppliers (17^th April 2020)

Only 12 days ago Medina suppliers were given notice of a 2ppl milk price cut from May 1^st.

Now a further 3ppl reduction is coming, meaning a whopping 5ppl on May 1^st taking producers liquid standard litre price to 20.75ppl.

If that wasn’t enough pain, payments to farmers will be delayed by 21 days with the next payment to be made on the 4^th May.

In the letter dated 15^th April, Medina claim spot milk price is 5ppl that day and cream is trading at 80p kg which is certainly not correct. Spot milk on Wednesday and today was checked by me with three traders and was 15 to 16p and cream was 90p kg. I accept that 10 days ago it was 5p and 80p, but that was very short lived and not a valid reason for Medina to use. The same figures were quoted by Medina’s Arfaiz yesterday to its farmer group and sadly no one challenged them.

This industry appears to be very selective and inaccurate with the data it uses (see below).

Whilst the one positive is Medina will collect all of the milk, there is no doubt the 3-week payment deferral will send shivers down the spine of most, if not all Medina suppliers.

Freshways announce a 13-day backdated price cut and delayed payment terms (17^th April 2020)

In a letter dated 11^th April, the managing director of Freshways, Bali Nijjar, notified suppliers of changes backdated to 29^th March, meaning a minimum 13 days retrospective notice.

The changes included producers A price to be restricted to 60% of their current A volume/quota and from 29^th March this will be paid at a liquid standard litre price of 24ppl (www.milkprices.com)

For milk delivered in March the Freshways payment terms have been extended with payment of 50% of the money owed delayed until 30^th April and the remaining 50% will not be paid until 15^th May.

The price mechanism, if any, for the remaining 40% is unknown and appears to be at the discretion of Freshways.

Like Medina suppliers (see above), the deferred payment terms will be a major worry to all.

Yew Tree Dairies solution is more transparent (17^th April 2020)

In our 8^th April bulletin, we reported that Yew Tree Dairies had temporarily reduced their A price by 2ppl to 23.5ppl from May 1^st, having notified producers in advance on the 6^th April in what could only be viewed as a very upfront detailed letter of the situation the Woodcock family face. Supplying farmers should value such transparency.

The A volume litres to be paid at the standard price was reduced to 54% of each farms original volume from 15^th April.

The remaining milk amounting to 46% of the A volume will be paid according to market returns for skim milk powder, skim milk concentrate and cream. All litres above the total A volume continue to be paid at the fcstonemilkprices.com UKMFE price currently 21.41ppl see below.

All Yew Tree payments to farmers will be on time as usual.

Market Update (17^th April 2020)

10 days ago, spot milk was 5ppl or less and some farmers were told to dump full days collections with no contribution from their processor. Today, there is no one dumping their daily production and spot prices are 15/16p and cream has risen to 90p kg.

In an article (www.milkprices.com) earlier this week reported gains in the futures markets including the average price of butter up for the first time in 5 weeks (+16 euros tonne), SMP up 53 euros a tonne from a 4 week down turn.

The result is a net UK MFE of 21.41ppl. Nothing to trumpet about but it’s a U turn in the right direction and for the trade distress milk could be behind us as several believe we have already passed the dark low point. Note that does not mean further farmgate milk price reductions will not happen because they will.

The COVID19 effects on the fresh UK dairy market are changing almost daily and it’s by no means all downside.

Paynes Dairies update suppliers on market conditions (17^th April 2020)

Charlie Payne wrote to his producers a week ago to inform them of the current market his business faces and offering to update them all weekly with what is a very fast changing market. This should minimise any sudden surprises especially if the updates are comprehensive and is a smart PR move.

Grahams take positive action to find new markets (17^th April 2020)

Scottish fresh milk family business, Grahams, have increased both the areas they cover with doorstep deliveries as well as the range of products they will deliver to doorsteps.

Grahams introduced a doorstep glass bottle service last year which has proved to be a success and attracted a significant number of new regular customers.

In a press release Grahams, unlike some, acknowledged its supplying farmers.

“We are as grateful as ever for the hard work, positivity and determination of our farmers, suppliers and everyone at Graham’s, they are all very much appreciated”.

Two loud calls to government to provide financial support to dairy (17^th April 2020)

1) Today a letter from 13 managing directors/CEOs of 13 GB dairy processors has been sent to David Kennedy, director general for food and farming at DEFRA, which originated from Meadow Foods, CEO Mark Chantler.

The letter references the conference call on Wednesday and refers to DEFRA’s request for accurate and credible supportive data, presumably to back up jaw dropping claims made by the NFU and others (see below).

The letter proposes grants of up to £25,000 or 10ppl be paid to “the most acutely affected farmers” with farmers applying based on their farm income difference in January 2020 compared to the income in April, May and June. Total Maximum cap expected to be £50 million.

Then comes yet another example of poor homework research by the authors with the statement there are approximately 8,500 dairy farmers in the UK. There are 8,454 in England and Wales and circa 12,000 in the UK. This industry needs to do its numbers homework.

The letter claims to represent over 2,000 farmer suppliers and on a quick look down the list of those involved, we assume this number includes Medina, who are not signatories to the letter but presumably part of the Freshways Group. Interestingly, it includes Helers and Long Clawson, both cheese makers alongside milk brokers and middle ground liquid processors, which is a bit of a surprise.

2) At an industry conference call with DEFRA on Wednesday, it appears DEFRA were unimpressed with the lack of detail provided by the NFU’s and others and they certainly didn’t take too kindly to what were interpreted as veiled threats along the lines if the Treasury don’t come up with a financial package by Friday (today) we will go to the press highlighting the necessity for farmers to cull healthy cows, well DEFRA have not come up with a package yet.

Having seen the letter above, it is perhaps this group of 13 who provided the information to the NFU Dairy Board claiming “2000 dairy farmers are suffering severe financial pressure”.

That number is a big surprise and way too high. It was described as a back of the fag packet calculation from an organisation who should be better qualified. One insider claimed the 2000 number includes Meadow Foods but to date, Meadow have not announced any price cuts connected to COVID19, but its no secret with the added problem of circa an extra 150 million litres of ex Arla milk Meadow have to sell from April 1^st, they will be under serious pressure and its farmers will soon be dragged in.

It is a fact that lots of businesses have problems as a result of COVID19 and some will be knocking on the Treasury’s door. When you knock on that door, its essential you go armed with all the relevant facts to win your argument. Note the fishing industry has today been granted a £10m package available to around 1,000 boats for up to 3 months, but they went in armed with a book of accurate up to date data which helped them succeed.

The big question the Treasury will have to address is how any grant or payment to farmers will be used because the danger is that one or more processors might see it as a reason to further cut farmgate milk prices.

Some careful thinking and scrutiny will be needed to avoid any smart jiggery pokery which could mean the main beneficiary of any bail out simply passes to the odd bandit or desperate processor.

The USA’s plan for COVID19 dairy crisis (17^th April 2020)

US estimates claim current milk supply exceeds demand by a whopping 10%.

In a plan put to government, which is at present, a proposal, the nuts and bolts are basically as follows:

1. All producers voluntarily cut milk production by 10% using March 2020 as a baseline.

2. Producers to be paid for the dumped milk until at least June.

3. A working capital loan facility available to processors.

4. Large purchases of dairy products to be distributed to food banks. This latter point has evidently received traction as part of a US government plan to buy milk, meat and a range of agricultural products to be used by food banks or in International Aid. It’s part of a phase 1 $15.5 billion (£12.5 billion) package.

It’s a very ambitious plan to which the outcome is it be confirmed.

Muller Farmers requested to immediately reduce milk supply by 3% (8^th April 2020)

In a letter today to all its producers including retailer aligned, Muller Direct and Muller Organic the firm has requested each farmer reduces deliveries with immediate effect by a minimum of 3% and this to continue until the end of May 2020.

The letter states that this means every farmer reducing daily deliveries by a minimum 3% based on a seven-day average.

This is Muller’s approach to balancing its milk intake and force farmers to take individual action. It will not take long for Muller to establish whether all farmers are playing their part and if not, what further action the company will need to take.

This will be an interesting challenge, if only a few farmers fail to play their part and whether Muller take targeted action to the offending farmers to bring them into line or step up the requirement to cut production on a collective basis thereby effecting all farmers.

0.5ppl Price Rise for Waitrose (Muller) aligned suppliers from April 1st – Producer Notified (8^th April 2020)
This results in a liquid standard litre price of 32.35ppl.

0.43ppl Price Rise for Co-Op (Muller) aligned suppliers from May 1^st (8^th April 2020)
This results in a liquid standard litre price of 29.82ppl.


0.33ppl Price Rise for Tesco (TSDG) aligned suppliers from May 1st – Producer Notified (8^th April 2020)
This results in a liquid standard litre price of 31.51ppl (Muller) and 31.26ppl (Arla) and is the result of the quarterly review of the Tesco cost tracker.


Belton Farm (cheese) to stand on/hold its producer price until at least 1st June (8^th April 2020)
This results in a manufacturing standard litre price of 27ppl and based on a liquid standard litre 26.25ppl.

2ppl milk price cut for Yew Tree Dairy suppliers plus they will only be paid full price for 54%  of their deliveries. (8^th April 2020)
In a letter to farmers dated 6th April Yew Tree announced a 2ppl 1st May price cut in addition to an A and B pricing schedule which means from 15th April the A price ( the one to be reduced by 2ppl from May 1st ) will only be paid on 54% of deliveries with the remaining 46% paid at a B price based on the market returns from a combination of SMP, cream and skim concentrate. On today's market that price would be very indigestible indeed.

That’s a blow and a bitter pill to swallow but that’s how it is. Oh, and the letter closes stating suppliers should refrain from calling unless absolutely necessary.

3ppl Milk Price Cut for suppliers to Lancashire farm (Pakeeza) backdated to April 1^st (8^th April 2020)
This will affect around 40 farmer suppliers. The milk predominantly goes into yoghurt. Lancashire farm have lost around a third of their sales with the resulting surplus milk having to find a new home.

2ppl Price Cut as Medina follow Freshways with delayed payments to farmers (8^th April 2020)
Medina have announced a 2ppl price reduction from 1st May. This takes producers standard liquid litre price to an average of 23.75ppl according towww.milkprices.com
In addition, from April 13th payments to farmer suppliers will be delayed by two weeks. All down to COVID-19 and the loss of food service business, but once again it’s a double blow to farmer suppliers and a mirror image of the Freshways announcement.

Spot Milk Price – if you are a bidder, you are a buyer (8^th April 2020)
The spot milk price fell from 15p last Thursday to 7ppl on Sunday and 5ppl yesterday and now its worthless and cheaper to dump the milk unless you are very lucky. Any bidders will be buyers. Note the spot price is collected and delivered to factory at the cost to the selling processor, which results in 2 to 3ppl deduction from the 5p sale price.
There simply is nowhere for this milk to go and be processed in GB.

Latest update on the dramatic downturn in Dairy (8^th April 2020)
It’s those processors supplying the food service, schools, universities, restaurants, coffee shops, pubs etc who have seen their order books battered and cash flow predictions torpedoed.

The picture is changing daily and at an unbelievable speed, for example in the past 4 days cream values have dropped by 20p kg to between 80 to 85p a deficit of almost 2ppl to a processor.

Yew Tree Dairy have reported sales of Polybottle cream for them have dropped by a whopping 95%!!!
Numerous organisations have issued press releases basically calling for government support/financial aid to assist badly affected dairy farmers, in what is a rapidly deteriorating situation.

The common denominator is a request for government to put its hands in its pockets asap. The Royal Association of British Dairy Farmers (RABDF) estimate around 300 dairy farmers producing around 1 million litres a day, should be eligible for its proposed short-term package. This to be targeted at those who are experiencing significant drops in their ex farmgate milk price and/or having to dispose of unwanted milk their purchaser will or cannot collect from their farm.
The RABDF’s proposal suggests farmers be paid up to a standard litre milk price of 25ppl, with farmers paid by Government via their monthly milk cheque.

One question Ian has is whether the public will view dairy farmers as a priority case for financial support? For sure ahead of them in the queue as far as DEFRA are concerned will be horticulture.  

 It won’t be easy to handle the PR supporting why Government are justified in paying farmers to dump milk at a time food banks are desperately needed, and some households are struggling to feed themselves. Ian’s view is it’s a dangerous area to go down and should be a last resort.

Current Solutions as collated by Ian (8^th April 2020)
The goal is to remove the surplus distressed milk from the market immediately. Please remember this milk is sloshing around as a direct result of the measures taken by government on a market which is unable to adjust at the speed the chaos has snook up on us.  

Ian is not suggesting the government was wrong in making the decision it did to close down the Food Service sector but it has to be pointed out that move has resulted in the current chaos.

So below is a selection of the solutions on offer. You may have others in which case email Ian

1) Pay affected farmers to cull cows as part of a temporary out goers’ scheme, assuming the meat plants can take the extra tonnage. Ian has briefly looked into this and capacity at slaughterhouses is more or less a given with the option to work extra shifts and Saturdays if required. That leaves one problem, what to do with the cow beef and where to sell it with no export market and prices already well back.

2) Fast forward the planned BPS golden handshake/out goers’ scheme and/or introduce a voluntary outgoes scheme for those worst affected as suggested by Kite consultancy.

3) Leave it to individual farmers to claim any milk dumping losses from their farm insurers. Note the NFU Mutual's policy only covers farmers for a maximum 7 days of dumped milk and some policies don’t cover any such claims.

4)   Implement market support measures including government to buy the distress milk and pay farmers to dump it at 15p to 25p and / or place it into AD plants

5) Intervention and/or private storage aid until normality returns.  Intervention is open now and available to the UK and would take butter and SMP at a price equivalent to 19ppl but is subject to strict limits on tonnage accepted. The problem with this is that it simply delays recovery only for the problem to be faced at a later date.

6) Pay the full price for a percentage of the milk from the genuinely and seriously affected processors based on 2019 production figures. i.e. the excess or so-called B litres to be disposed of. This would be a processor set figure. This is Ian’s favourite at the moment but in preferring this option he assumes the A price will remain sensible and reflect the processors normal non-food service business milk price he can pay.

7) Processors to continue to extend payment terms alongside price drops and instructions to dump milk on farm. This is non-tenable. A disaster.

8) Put surplus milk into cheddar. This will give the cheddar market a hangover and its paddling its own canoe successfully at the moment and doesn't need to be dragged into this mess.

9) Farmers agree to voluntarily cut production by x%, or are told to do so.  This will affect production and milk supply later in the year and we all know how easy it would be too get three neighbouring farmers to agree let alone thousands so it has to be compulsory and processor led.

10) Reduce cost, maintain or increase margin and cut milk output by maximising milk from grass for those who don’t already do so.

The issue with most of these options is that the problem is here today and most of these solutions will simply take too long to implement. Yes, individually and collectively they are likely to stabilise the farmgate milk price and reduce the disruption. All the distress milk needs to be taken out of the system but how quick can it be done? The last thing we want is for this milk to drag down the whole market and destabilise prices which is the direction it is heading today.

On a daily basis processor in the so-called middle ground and smaller operators and not collecting milk from farms, dropping farm gate milk prices and/or introducing A and B pricing at short notice.

It’s clear from Ian’s discussions that some processors are trusted by their farmers more than others and some aren't trusted at all. Any scheme or solution involving any financial package will need to be backed up with good due diligence and evidence that the processor has lost orders to COVID-19. 

If a processor is up front, honest and transparent with their producers I suspect most will understand, however the track record in this department is not good in some cases.

The shortage of liquid milk in retail stores is down to consumers erratic and unpredictable buying patterns. At processor level, one or two processors involved appear to be genuinely concerned and actively considering the fairest thing to do for all involved e.g. farmer suppliers and the processors is to move to weekly farmgate milk pricing. 

Finally, we are not alone! GB milk producers are not the only ones told to dump milk due to a sudden drop in demand.  In the US it’s a mirror image with claims that a staggering 10% of current US farmgate milk output has no home or market.

A friendly warning to a handful of vocal farmers. (8^th April 2020)

Understandably, there are a number of farmers who are extremely unhappy with their milk purchaser and certainly one or two milk purchasers appear to be in the farmers firing line.

Ian wishes to warn some farmers against crossing the line from being firm and requesting transparency to becoming a nuisance, particularly if they are geographically some distance from their milk purchaser and/or a farmer with a history of quality and farm assurance issues.

There is little doubt that one or two milk purchasers are seeking any opportunity to reduce their milk intake and dispense with unwanted farmers who are unlikely to find an alternative home for their milk. Be firm, but be careful.

1ppl Price Rise for Muller Direct Farmers is a big surprise (2^nd April 2020)

This won’t be a popular comment, but Muller’s 1ppl price increase from May 1^st is undoubtably a big surprise, so much Ian had to read the Muller 31^st March release twice!

It is likely to be the only milk price increase for a long time and given the market conditions outlined below short lived.

However, in the release, Muller’s Operations Director, Rob Hutchinson comments “We have a resilient supply chain and are well placed to deal with it “. The current market turmoil will put to the test this bold claim.

The liquid standard litre price for Muller Direct nonaligned farmers who fulfil the conditions to gain the 1ppl Muller Direct Premium will be 27.25ppl. For those who don’t qualify for the premium, the standard litre price will be 26.25ppl.

First Milk (Cheese) Stand on/hold its member milk price until at least 1^st June (2^nd April 2020)

This is an excellent result for which First Milk and its partner in cheese, Ornua (formerly Adams) should be applauded, particularly for the stability it delivers.

This maintains members manufacturing standard litre milk price at 27.63ppl and based on a liquid standard litre 26.75ppl.

Barbers (cheese) to stand for a 7^th Consecutive month until at least 1^st June (2^nd April 2020)

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

Saputo (AKA Dairy Crest Davidstow) stand on until at least 1^st July (2^nd April 2020)

This was agreed back in January and maintains the minimum standard manufacturing litre price at 28.7ppl and based on a standard liquid litre the minimum floor price 27.62ppl. Once again, the stability it delivers should be applauded by all involved in what was forward thinking.

Lactalis (AKA Caledonia & The Fresh Milk Company) to stand on until 1^s July (2^nd April 2020)

Lactalis will hold its supplier milk price for the next quarter  until 1^st  July 2020 at a minimum floor at 27.61ppl based on a manufacturing standard litre and 26.5ppl based on a liquid standard litre assuming the market remains normal and there are no seismic up or down movements.

Crediton Dairy to Stand on for May (2^nd April 2020)

This maintains the standard liquid litre price at 27.5ppl.

South Caernarfon Creameries (Cheese) to stand until at least June 1^st (2^nd April 2020)

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

Glanbia (cheese) stand on\hold its price until at least May 1^st (2^nd April 2020)

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

Wensleydale Creamery (Cheese) to stand on until at least May 1^st (2^nd April 2020)

This maintains a manufacturing standard of 27.75ppl and a liquid standard litre of 26.8ppl.

Pensworth Dairy (Liquid) to stand on until 1^st May (2^nd April 2020)

This maintains their liquid standard litre price at 25ppl for those producers who participate in Pensworth’s new animal welfare standards for others who do not qualify it will be 24.5ppl

Pensworth have written to producers outlining how Covid19 has battered their budgets especially given their customer base amongst others includes 230 hospitals, 1700 care homes as well as 100,000 plus doorstep customers many of whom are elderly and self-isolating.

Pensworth have had to confirm extended payment terms for 30 days at 10-day payment intervals with a 25% part payment to farmers with the remaining 75% to follow once funds are received.

This will run from 30th March until the 30^th April and from May 1^st Pensworth have confirmed all farmer payments will be made in full. Certainly, the payment delay is significantly more farmer friendly and considerate than the Freshways terms even if it is unwelcome and unpopular. The hold for April milk price is a big thumbs up.

Wells Farm Dairy Stand on but under constant review – Producer Notified (2^nd April 2020)

In a letter to producers dated 23^rd March, Wells have confirmed they have seen the business hit hard consequently have farmgate milk prices under constant review on almost a daily basis.

0.5ppl Milk Price decrease for Paynes Dairies (Liquid) suppliers – from 1^st of April (2^nd April 2020)

This reduces producers standard liquid litre price to 25.7ppl.

2.25ppl Milk Price reduction for Pattemores (Liquid) suppliers – from May 1^st (2^nd April 2020)

This reduces producers standard liquid litre price to 24ppl.

2ppl Milk Price reduction for Dairy Partners Suppliers (Mozzarella Cheese, Wales) – from April 1^st Producer Notified (2^nd April 2020)

Standard litre price unknown but will be under 25ppl.

Grahams skimming and disposing surplus milk and a 1ppl price cut – from April 10^th (2^nd April 2020)

Grahams dairy in Scotland yesterday informed its supplying farmers that it has been forced to skim and dispose of milk at both its Bridge of Allan and Nairn processing facilities. In addition, they have alerted farmers to the fact “and we have significant concern around our ability to pick up ex-farm milk in the coming days. We are reviewing this position by tomorrow afternoon.”

Grahams have also closed both their Glenfield and Crieff operations. Glenfield for 5 days and Crieff for up to 3 months.

The 10^th April 1ppl price cut reduces producer’s liquid standard litre milk price to 24.5pl, with the clear inference that given the current UK dairy market more tough decisions cannot be ruled out.

Dairy prices in freefall with spot milk at 15ppl plentiful and falling like a stone (2^nd April 2020)

In this bulletin dated 13^th March, Ian stated –

Coronavirus is causing a melt down and if the government introduces restrictions the dairy trade is buckling for a very rough ride with some expecting spot milk to be plentiful and quickly down to circa 20p as orders are reduced or cancelled on mass.

Well it has spectacularly crashed to 15p and falling. There is suddenly oceans of surplus milk desperately trying to find a home. Today some milk has gone into AD plants, three processors have dumped milk and two medium/small processors have informed farmers that they can guarantee to collect all the milk this week but can’t guarantee to collect it all over the weekend and next week and to be prepared to dump it on the farm. Note there are Environmental Agency rules in circulation for the spreading of milk, if anyone would like a copy email sally@ipaquotas.co.uk

One processor claims to have been offered milk FOC for the cost of transporting it!

The milk market has all changed very quickly. The panic buying of dairy products with retailers restricting milk purchases has reversed as demand plummeted. Retailers were screaming for milk 10 days ago and now it has died as quick as it started. The stock piling has stopped and consumers freezers are full of milk and dairy products. Whilst there is an expectation demand will start to increase by retailers there is a definite need for speed. Processors across GB are struggling to manage the huge fluctuations in retailers demand.

To compound matters, the food service, restaurants, pubs, hospitality businesses have been rushing to offload unwanted stock and cancelling orders. Even within retailer stores remember all the dairy products sold over the deli counters and coffee shops that have also closed whilst stores have remained open. This counts as Food Service business and not retail

AHDB have issued a release estimating the UK food service sector accounts for 8 million litres of milk and this will be offset by increased demand from retailers which equates to a 10% increase. That 8 million litre figure is the source of much controversy and debate and nowhere near accurate and should be closer to 20 million litres and for sure retail sales will not offset this figure as suggested by AHDB. In fact, one set of figures claims retail sales are now around 12% below what would be expected at this time of year.

Processors also have the challenge of keeping the show on the road with tanker drivers and other key workers having to self-isolate.

What does this all mean for milk prices? (2^nd April 2020)

With cream prices having dropped from 1.35 to £1 in under three weeks, liquid processors are under pressure.

It’s serious, and don’t shoot the messenger but unless a processor has connections with Ian’s relation, Harry Potter, holding liquid non-aligned farmgate prices at current levels will be close to mission impossible as more milk is forced into commodity markets and with our driers at full stretch distress milk has returned big time.

Also remember its still cold and when things do warm up, the quantities of milk “trying” to find a home will escalate and be serious.

Woodcocks/Yew Tree Dairy’s facility is already rammed full to capacity. There must soon be calls for some sort of intervention type buying / private storage to open asap.

Very quickly farmers will value the security of getting all their milk lifted and paid for. The latter will be a real worry for those who have suddenly gone from a maximum 7 weeks milk outstanding to almost 12 weeks by May under new forced payment arrangements.

This will have very serious long-term consequences and it is starting to feel very painful and time to buckle up and sadly for some it won’t be a case of can I find a new milk purchaser, more can I find a buyer for my cows. 

Processors cash flow budgets have been blown up and whilst some are clearly very worried over long term farm supply base , they either take mitigation steps in conjunction with their farmers or risk shutting up shop. Most liquid processors Ian has spoken to are having to ditch the code one-month price movement notice period and review the situation almost on a daily basis with several stating “I am working to avoid the Freshways approach”. For sure, sadly some businesses will be casualties.

Arla’s member April Milk Price to remain at 30.79ppl (25^th March 2020)

Arla have announced a stand on April 1^st member milk price on both conventional and organic supplies with a small 0.15ppl quarterly currency adjustment.

The resulting manufacturing standard litre price is 30.79ppl (39.83ppl organic) and based on a liquid standard litre 29.61ppl (38.3ppl organic).

2ppl second bombshell price cut from Meadow Foods (25^th March 2020)

A group of Meadow Foods suppliers in South Wales have been informed that they join Meadows Cumbrian farmers in taking a 2ppl price cut from 1^st April.

The resulting liquid standard litre price is 24ppl whilst those Meadow Suppliers closer to its Chester HQ remain on 26ppl.

A number of Meadow farmers hit with the reduction feel that they have been unfairly victimised and have concluded that whilst Meadow want to hold them to 12 months’ notice, the reality is they are no longer wanted and need to either find new homes for their milk or exit the industry. Its brutal, but accurate.

One affected farmer summarised their position and thoughts as “It was a very heated meeting with Meadow Foods. We can’t survive at 24ppl and Meadow have let us down!”.

2ppl bombshell price cut for Freshways suppliers (25^th March 2020)

In my 13^th March edition I wrote:

Coronavirus is causing a melt down and if the government introduces restrictions the dairy trade is buckling for a very rough ride with some expecting spot milk to be plentiful and quickly down to circa 20p as orders are reduced or cancelled on mass.

The problem is primarily in London where the food service industry is gradually grinding to almost a shut down and if schools and universities close it will be close to meltdown especially in coffee shops (people working from home won’t visit coffee shops) and restaurants.

Talk of challenges within the enlarged Freshways Medina combined business have been doing the rounds in recent weeks and the supplying farmers have now had to swallow a very bitter pill in the form of an eye watering 2ppl 29^th March short notice price. If that wasn’t enough, Freshways are also deferring paying their farmers for milk supplied by one extra month. So, March deliveries will be paid for on May 15^th rather than April 15^th.

In a letter to producers, Freshways suggested there were four options available and two of those options have been quickly executed and put extreme pressure on farmers viz, a 2ppl price drop coupled with extended payment terms.

Freshways are very focussed on London, which has seen almost all food service customers (coffee shops, hotels, restaurants etc.) put the shutters up. It’s a section of the Freshways business which accounts for more than 40% of their product outlets.

This is in complete contrast to many other liquid processors who are under extreme pressure to meet the additional demand spike for milk from stay at home consumers, many of whom have been panic buying.

Several Freshways farmers do not accept this is force majeure and have been advised it is a breach of contract and their push is how quickly, without notice, they can get off the Freshways bus.

Freshways 29^th March liquid standard litre price will reduce to 24ppl.

Chinese demand for Dairy is on the up (25^th March 2020)

According to the latest Rabobank analysis, Chinese demand for imported dairy products is “bouncing back” as new cases and deaths continue to decline daily. Yesterday reduced to 4, and new confirmed cases down to 47.

Rabobank predict Chinese consumers dairy buying habits will return to “normal” in the second half of this year. However, the seismic drop in global tourism has been a huge blow to Asia’s food service industry which is unlikely to recover in 2020 and will leave the global dairy industry with a severe hangover.

First Milks First 4 Milk Pledge(25^th March 2020)

First Milk is the latest milk processor to set its own assurance standards covering people, animals and the planet.

Areas covered include a reduction in antibiotic use and a minimum grazing of 120 days and 6 hours each day for each animal as well as a guarantee that no healthy animal (including any calves) will be on farm euthanized.

First Milk have been working on the pledge for several months having recognised consumers key concerns and the direction of travel the dairy industry needs to take.

Ian will be commenting on this and other standards in his next Dairy Farmer Article.

For a brief summary of the impact of Coronavirus (COVID-19) on dairy markets, click on the AHDB link below (25^th March 2020)

https://ahdb.org.uk/news/coronavirus-impact-on-dairy-and-livestock-markets?_cldee=aWFucG90dGVyQGlwYXF1b3Rhcy5jby51aw%3d%3d&recipientid=contact-7c56b5380748e81180cd005056b864bf-8673600defa04a9c95e584e475c13f79&esid=3e97f0ef-f369-ea11-a811-000d3a86d545

2ppl Bombshell price drop from Meadow Foods (13^th March 2020)

Cumbrian suppliers to Meadow Foods were delivered a huge blow late last week with the announcement that Meadow were to cut their milk price by 2ppl from April 1^st resulting in a relegation/bottom of the table standard litre price of 24ppl.

Umpteen furious Meadow farmers emailed Ian having been informed that Meadow have had to make the cut due to reduced demand by Arla of 150 Million litres which means Meadow were brokering 30% of their milk (Circa 500 Million Litres) to Arla. Meadow will continue to supply a reduced, unconfirmed, volume of milk to Arla under their new supply contract agreed last year.

Ian spoke to both Meadow, Arla and others and it’s a certainty that Arla gave notice reference the volume reduction to Meadow many months ago and possibly as some claim as long ago as last April so the volume reduction has been known about for a long time. In addition, given Arla’s extraordinary member milk price more milk from members was always a certainty.

Arla’s recent financial results demonstrated continued brand success and for sure it’s number one priority must be to process all the additional milk from expanding members consequently requiring less 3^rd party milk from Meadow and others.

So, the big unknown is where will this surplus Meadow milk be placed and at what price/cost?

Most farmers grievance appears to be with Meadows Communication in terms of having known about it for months and on the face of it they conclude Meadow failed to take positive mitigating action.

Others highlighted the fact Meadow announced a healthy 25.6 million (4.65ppl profit on each litre processed) profit in January then announced extra 0.5ppl milk price increase to producers from 1^st of February and March in full knowledge this cut was on the cards.

Some believe Meadow had two options to either serve contract termination notice or dramatically cut the price in the hope a heap will quit on the basis they have a few if any alternative buyers possibly with the exception of Yew Tree Dairies.

Serving more termination notices would likely have resulted in Meadow receiving a bigger kicking than it is.

Farmers claim they have to take the 24p on the chin with Meadow insisting any wanting to leave must serve their full 12 months’ notice leading some to say the Meadow master plan is to cut the price and have the cheaper milk for the longest possible period.

Its brutal at 24ppl especially given that price is only paid on the A litres and the April B price could easily be 20p or less. It’s a grim situation and little wonder some argue contract regulation is required. Meadow have handed a bag of hand grenades to those campaigning for contract regulation overnight! It was described by one person to Ian as “extremely reckless and irresponsible behaviour”. 

0.5ppl Milk Price increase for Paynes Dairies (Liquid) suppliers – from 1^st of March (13^th March 2020)

This increase came as a surprise and part or all must surely be coming out of Paynes piggy bank as opposed to price increases achieved with customers from March 1^st.

Credit to Paynes for announcing it which takes their standard liquid litre price to 26.2ppl.

First Milk (Cheese) hold its producer price until at least 1^st of May (13^th March 2020)

First Milk will hold its current member milk price until 1^st May however in addition its 13^th payment to members will double from 0.25ppl to 0.5ppl from April 1^st for those members who have fully paid up their capital contribution.

This results in a manufacturing standard litre price of 27.63ppl and a liquid standard litre price of 26.75ppl. For members on the Tesco cheese contract the manufacturing standard litre price is 29.13ppl.

Belton Farm (cheese) to stand on/hold its producer price until at least 1^st May (13^th March 2020)

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

0.61ppl Milk Price reduction for Muller aligned suppliers to M&S – from 1^st of April (13^th March 2020)

This reduces the producer’s standard liquid litre price to 32.72ppl.

0.05ppl Milk Price reduction for Sainsbury’s aligned suppliers – from 1^st of April (13^th March 2020)

This reduces producer’s standard liquid litre price to 30.7ppl (Muller) and 30.58ppl (Arla).

Prices and Spot Milk could be heading for a meltdown (13^th March 2020)

Spot Milk trading sat at 25p only a couple of weeks ago then suddenly shot up to 30/31p and today is back to 25p and dropping.

Coronavirus is causing a melt down and if the government introduces restrictions the dairy trade is buckling for a very rough ride with some expecting spot milk to be plentiful and quickly down to circa 20p as orders are reduced or cancelled on mass.

The problem is primarily in London where the food service industry is gradually grinding to almost a shut down and if schools and universities close it will be close to meltdown especially in coffee shops (people working from home won’t visit coffee shops) and restaurants.

As well as the possibility of schools and universities closing there is an expectation that Livestock Auctions could be closed. It’s starting to look very serious for the UK as it’s now official that the stats indicate we could be running around 4 weeks behind the pattern the coronavirus took in Italy which if proved to be correct will be extremely serious.

Coronavirus (13^th March 2020)

One prediction from the US Dairy Export Council claims a combination of reduced global demand and a backlog of product sitting in Chinese ports (particularly in the port of Shanghai) as well as heaps held up in distribution depots as a result of the virus could reduce global dairy prices by up to 7% this year.

The backlog is tipped to take months to clear and return to “normality” with what are predominantly dried non-perishable dairy products with numerous ships anchored off shore waiting to dock.

The number of confirmed cases in China and deaths appear to be declining rapidly on a daily basis. Let’s hope the same happens in the other 124 countries with confirmed cases.

Record day for Dairy futures trading (13^th March 2020)

Last Wednesday 4^th March EEX (The European Energy Exchange) reported a record-breaking hat-trick of daily figures trading with 5,475 tonnes traded involving 1095 contracts/deals.

It is the first time the 1,000 contract a day level has been breached in Europe since the launch of EEX in 2010. It was also the first time the 5,000-tonne level was exceeded in a day.

Arla branches out into producing Oat Milks (13^th March 2020)

Arla has announced the launch of three new plant (oat) based milks called JORD, initially available in Denmark and due in the UK later this year.

Arla are not the first major dairy company to diversify into this rapid growth area and at the end of the day if these branded products are profitable, they should get into this market because the profits will flow to Arla’s Co-Op members.

Red Diesel duty is held by The Chancellor (13^th March 2020)

Yesterday’s Budget left the duty on Agricultural red diesel at 11.1ppl as compared to normal fuel duty at 57.7ppl.

New Chairman of AHDB announced (13^th March 2020)

It’s not been the best kept secret in the industry but AHDB have finally announced that Nicolas Saphir will replace Peter Kendall as Chairman of AHDB for what will be a 3-year term starting next month.

Until recently Nicholas was Chairman of the Organic Milk Co-operative OMSCO where he has achieved a great deal. He is understood to be viewed more of a marketeer than Judith Batchelar, Sainsbury Director whom we understand he pipped at the post.

The word from within the corridors of power is that 16 candidates were interviewed and reduced to a shortlist of two one of whom was Nick Saphir and the other was Judith Batchelar. Surprisingly it is also strongly rumoured the recommendation to the minister, following the interview process, was that Judith Batchelar was the preferred person to succeed Peter Kendall, but this was possibly vetoed which if true raises questions as to the process adopted by DEFRA. Clearly information received by Ian suggests Judith understandably a little disgruntled!

At age 76 Nicholas has a comprehensive CV involving 61 Directorships of which 8 remain active.

0.9ppl Milk Price increase from Arla has left others furious (24^th February 2020)

Rumours that Arla were set to increase its member Milk Price ahead of the spring flush were rubbished to Ian by several buyers last week as impossible.

Well Arla have once again done their own thing their way only this time they have really piled the pressure on GB milk processors ending a very impressive 14 month price hold (excluding minor currency adjustments) with a price increase of 1 Euro Cent.

All the talk last week, particularly from liquid processors, pointed towards them having already decided farmgate milk prices need to be cut particularly in respect of a dramatic fall in cream values which www.milkprices.com report as 10p KG in a week with the spot price now down to 25ppl.

If some of those buyers press ahead with planned farmgate price cuts taking their standard liquid litre prices below 25ppl its likely some farmers faced with no alternative milk purchaser will simply throw the towel in and hang their clusters up. Enough will be enough especially given the Arla member increase.

If Arla were to open its recruitment gates the queue would be very long and anything but orderly.

The latest Arla price increase of 1 Euro Cent results in the following 1^st March conventional standard litre prices

Manufacturing 30.94ppl ( + 0.9ppl)

Liquid 29.75ppl ( + 0.86ppl)

Meanwhile the Arla Member Organic milk price has been reduced by the same 1 Euro Cent resulting in a manufacturing standard litre price of 39.98ppl and a liquid litre price of 38.44ppl.

GDT Average down 2.9% as Coronavirus cases increase (24^th February 2020)

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

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

Key Price moves were:

            Butter down 3.9% to average $4090 tonne

            WMP down 2.6% to average $2966 tonne

            SMP down 2.6% to average $2840 tonne

            Cheddar up 5.3% to average $4526 tonne

Arla record positive financials but GB liquid is still its weak link (24^th February 2020)

Arla’s 2019 results were heavily dependant on its continued performance in its branded sales and once again let down by its weak GB liquid market.

Arla’s branded sales grew by 5.1% in 2019 (+3.1% in 2018) and hence brands like its Butterbox and Box are proving very popular with modern consumers.

Diplomatically Arla’s UK MD Ash Amirahmadi commented “we are not immune from the profitability challenges facing the British liquid milk category, which remains a significant part of our business. Performance in this category held back our overall UK results in 2019.”

Given close to 50% of Arla’s UK milk goes into liquid surely as opportunities arise Arla will seek to reduce this exposure to a failing UK Liquid market. That’s a choice Arla can make given its breadth and portfolio, others have limited if any choices.

Both Arla and Muller have reduced costs significantly in the Liquid sector but its still not delivering the sustainable results it should.

Note Arla’s UK business accounts for almost 25% of its revenue.

The Chinese Coronavirus is hitting World Dairy Trade (24^th February 2020)

There are no signs the Coronavirus has turned the corner with Tuesday 18^th February recording 72,440 cases confirmed in China resulting in 1870 deaths and rising daily. Today, six days later, the number of cases in China has risen to 77,345 (+ 4,905) and 2593 deaths (+ 723).

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

This maintains a standard liquid litre price of 25.5ppl

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

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

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

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

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

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

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

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

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

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

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

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

Key Price moves were

WMP down 6.2% to average US $ 3039 tonne

SMP down 4.2% to average US $ 2907 tonne

Cheddar up 6.0% to average US $ 4302 tonne

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Market Update (31^st January)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

& Liquid 26.25ppl.

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

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

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

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

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

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

General Market Update/Snippets (3^rd January)

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

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

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

AHDB also report:

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

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

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

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

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

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

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

For Sale (3^rd January)

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

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

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

1 x 2 Station Desk – Ebay Item Number 274160025914

9 x Swivel Office Chairs –

4 of Ebay Item Number 274160028940

3 of Ebay Item Number 274160031175

2 of Ebay Item Number 274160033577

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

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

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

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

Notable movers were:

WMP down 6.7% to average US $3099 tonne

SMP down 6.3% to average US $2867 tonne

Butter down 2.4% to average US $3886 tonne

Cheddar up 1.7% to average US $3869 tonne

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

There are 11 finance agreements in the queue for payment.

Of the other creditors the notable ones are:

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

Arla Foods £1.66m

Kite Consultancy £37k

OMSCo £89k

Lloyd Fraser Haulage £438k

Willis Haulage £118k

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

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

2016 £1.6m profit

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

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

2019 £2.7m loss

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

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

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

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

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

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

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

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

This maintains a standard liquid litre price of 25.75ppl

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

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

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

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

December and January.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

See top story from this link – Bulletin 04.04.2016

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

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

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

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

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

For Sale (2^nd December)

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

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

1 years MOT

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

Its on BF Goodrich winter tyres

Very well maintained and in great condition.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Notable price movements were:

SMP + 3.3% to average $3,017

Cheddar + 2.5% to average $3,701

WMP + 2.2% to average $3,321

Butter - 1.3% to average $4,061

AMPE leap frogs MCVE – (22^nd November)

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

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

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

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

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

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

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

For Sale

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

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

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

EBay item number:  274097140342 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Notable price movements were:

SMP + 6.7% to average $2924

WMP + 3.6% to average $3254

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

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

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

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

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

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

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

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

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

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

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

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

AHDB issued a Scottish milk surplus update last Tuesday confirming that

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

Compare this to the Muller press release where Muller stated

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

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

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

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

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

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

The forecasts are contracted and submitted quarterly.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

.

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

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

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

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

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

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

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

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

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

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

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

Tomlinson’s Liquid Dairy of Wrexham goes into Administration

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

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

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

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

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

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

The Background to Tomlinson’s & Sainsbury’s

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Medina

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

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

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

This results in the following standard liquid litre prices

Muller SDDG 30.94ppl

Arla SDDG 30.82ppl

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Market Indicators - (11^th October)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

New Run Cattle Tag Prices

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

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

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

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

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

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

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

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

This takes producers standard liquid litre price to 25.75ppl.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Outlook (19^th October 2019)

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

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

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

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

Interesting change at Freshways (19^th October 2019)

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

Cheese / Manufacturing Price Movements

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Liquid Price Movements

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Paynes Dairies expected to announce when Charlie decides

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

Freshways – Any information to Ian will be gratefully received.

New Run Tag Prices

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Wells Farm Dairy Correction (29^th August 2019)

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

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

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

PRICE DROPS

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

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

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

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

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

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

PRICE HOLDS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

OTHER NEWS

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

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

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

All product prices declined and notable movements were

Butter down 5.5% to average $4165 tonne.

Cheddar down 2.0% to average $3838 tonne.

WMP down 1.7% to average $3039 tonne.

SMP down 1.6% to average $2482 tonne.

Domestic Milk Production (9^th August 2019)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Turnover + 7.8% to £272.3m

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

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

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

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

All in all a good solid set of financials.

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

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

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

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

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

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

Notable prices were:

SMP up + 3.2% to average $2430 tonne

WMP No Change to average $2969 tonne

Cheddar down - 1.5% to average $3756 tonne

Butter down - 4.8% to average $4339 tonne

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

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

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

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

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