Dairy Industry news and features

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

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

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

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)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

This looks like a smart move by DC.

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

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

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

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

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

Notable movements were:

Butter down 5.7% to average US $4553 tonne

Cheddar down 4.3% to average US $3781 tonne

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

This reduces producers standard liquid litre milk price to 28.2ppl

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

NO ESSENTIAL ISSUES

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

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

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

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

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

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

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

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

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

Notable prices-(24^th April)

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

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

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

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

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

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

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

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

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

This results is a manufacturing standard litre price of 28.03ppl

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Milk Deliveries update (5^th April)

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

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

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

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

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

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

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

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

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

Conventional Organic

Manufacturing standard Litre 30.23ppl 41.98ppl

Liquid Standard litre 29.06ppl 40.34ppl

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

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

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

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

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

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

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

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

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

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

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

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

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

Purchaser	Mar-19
Arla Foods	29.07
Davidstow	28.82
Barbers	28.09
Glanbia	28.07
Crediton Dairy	28
Pattemores 1 Million	28
Wyke Farms	28
Belton	28
First Milk	27.5
Lactalis/Caledonian	27.5
Meadow Foods	27.5
Grahams Dairies	26.75
Muller Wiseman; standard	26.75
Paynes	26.7

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Notable price movements were:

Cheddar          up 6%              to average US $3888 tonne

WMP               up 6%              to average US $3186 tonne

Butter              up 3.7%           to average US $4657 tonne

SMP                down 4.3%      to average US $2462 tonne

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

This results in a standard liquid litre price of 26.7ppl

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Production update (1^st March 2019)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Snow storm takes 1800 cows (1^st March 2019)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

EU Aged SMP is sold (31st January 2019)

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

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

Save the date

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

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

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

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

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

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

The Arla standard litre member prices for January and February are

Liquid Manufacturing

Conventional 29.06ppl 30.24ppl

Organic 42.72ppl 44.45ppl

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

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

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

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

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

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

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

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

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

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

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

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

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

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

This results in a standard liquid litre of 27.5ppl

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

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

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

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

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

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

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

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

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

Key movers were

SMP + 10.3% to average $2405 tonne

Butter + 4.6% to average $4262 tonne

Cheddar + 4.2% to average $3504 tonne

WMP + 3.0% to average $2777 tonne

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Pensworth standard liquid litre price remains at 27.6ppl.

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

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

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

The Grahams standard liquid litre price remains at 27.5ppl.

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

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

Meadow Foods (3^rd January 2019)

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

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

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

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

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

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

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

Key Movers were:

SMP + 7.9% to average US $2201 tonne.

Butter + 3.9% to average US $4076 tonne.

Cheddar + 3.2% to average US $3371 tonne.

WMP + 1.2% to average US $2705 tonne.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Notable prices were:

Butter up 4.9% to average US$3928 tonne

SMP up 3.4% to average US$2042 tonne

Cheddar up 2.2% to average US3263 tonne

WMP up 0.3% to average US$2674 tonne

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

All prices increased with the exception of cheddar:

Butter up 2.7% to average US$3745 tonne

WMP up 2.5% to average US$2667 tonne

SMP up 0.3% to average US$1970 tonne

Cheddar down 2.2% to average US$3184 tonne

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Meanwhile, cheddar prices continue to trend south.

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

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

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

Venue: Wembley

Time: 19:45 hours

Date: Friday 22^nd March 2019

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Notable movers were:

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

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

SMP down 1.6% to average $1965

Cheddar up 0.2% to average $3252

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Speakers

Rory Christie - Dairy Farmer

Tom Hind - Chief Strategy Officer at AHDB

Roddy McLean - Director of Agriculture, Royal Bank of Scotland

Ian Potter - Industry Commentator and PIA

GDT continues to fall (6^th November 2018)

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

Notable movers were:

Cheddar down 4.6% to average US$3250 tonne

WMP down 2.9% to average US$2655 tonne

Butter down 1.7% to average US$4045 tonne

SMP up 1.2% to average US$1997 tonne

MILK PRICES UP

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

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

MILK PRICES DOWN

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

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

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

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

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

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

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

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

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

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

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

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

MILK PRICES ON HOLD

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Dry running compressed air outfit suitable for above.

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

Stainless steel water heater.

Milk plate coolers x 2.

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

For sale due to unforeseen circumstances

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Notable movers were:-

Cheddar down 1.8% to average US$3404 tonne

WMP down 0.9% to average US$2729 tonne

SMP no change US$1977 tonne

Butter + 2.4% to average US$4114 tonne

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

Liquid Manufacturing

Standard litre Standard litre

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

Crediton Dairy 30.00 (30.00) -

Freshways 29.80 (29.59)

Wyke Farms 29.65 (29.65) 30.69 (30.69)

Barbers 29.58 (29.58) 30.68 (30.68)

South Caernarfon Creameries 29.55 (29.55) 30.52 (30.52)

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

Payne’s 29.50 (29.50) -

Meadow Foods 29.50 (29.50) -

Yew Tree Dairies 29.50 (29.50) -

Belton 29.50 (29.50) 30.25 (30.25)

Muller 29.50 (29.50) -

Dairy Crest Davidstow 29.32 (29.32) 30.40 (30.40)

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

Glanbia 28.99 (28.99) 30.00 (30.00)

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

Arla Direct 28.75 (28.00) -

Joseph Heler (Cheese)

CORRECTION (17^th October 2018)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Collingthwaite Farm, Nottinghamshire won the Environment category.

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

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

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

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

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

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

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

Dry running compressed air outfit suitable for above.

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

Stainless steel water heater.

Milk plate coolers x 2.

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

For sale due to unforeseen circumstances

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

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

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

Variable costs 18.15ppl

Overhead costs 11.22ppl

Depreciation 1.87ppl

31.24ppl

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Notable prices at today’s auction were:

Butter down 5.9% to average US $4016 tonne

WMP down 1.2% to average US $2753 tonne

Cheddar down 1.2% to average US $3468 tonne

SMP down 0.3% to average US $1982 tonne

The Outlook (2^nd October 2018)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

OR

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

“Buttle UK “

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

Thank you all in advance

News

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Key movers in last Tuesday’s GDT auction were:

Cheddar down 3.5% to average US$3503 tonne

WMP down 1.8% to average US$2768 tonne

SMP down 1.1% to average US$1980 tonne

Butter down 0.1% to average US$4270 tonne

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

followed by:

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

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

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

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

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

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

First Milk (25^th September 2018)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

For further details email ianpotter@ipaquotas.co.uk

WANTED BY IAN (25^th September 2018)

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

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

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

This takes producers liquid standard litre price to 29.8ppl.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The liquid standard litre 4% bf, 3.3% protein, 30,000/ml Bactoscans, 200,000/ml SCC, 1 million litres a year on EODC but before seasonality, monthly profile payments, balancing, B price additions, capital retentions or annual incentive schemes.  The manufacturing standard litre is to exactly the same specification with the exception of 4.2%bf and 3.4% protein.

Liquid Manufacturing

Standard litre Standard litre

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

Crediton Dairy 30.00 (29.00) -

Wyke Farms 29.65 (29.15) 30.69 (30.18)

Barbers 29.58 (29.08) 30.68 (30.16)

South Caernarfon Creameries 29.55 (28.81) 30.52 (29.78)

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

Payne’s 29.50 (29.00) -

Meadow Foods 29.50 (28.50) -

Yew Tree Dairies 29.50 (28.50) -

Belton 29.50 (28.50) 30.25 (29.25)

Muller 29.50 (28.00) -

Dairy Crest Davidstow 29.32 (29.32) 30.40 (30.40)

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

Glanbia 28.99 (28.03) 30.00 (29.00)

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

Arla Direct 28.00 (28.00) -

Joseph Heler (Cheese) (Answers on a postcard)

Information request on Halloumi (4^th September 2018)

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

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

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

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

For further details email ianpotter@ipaquotas.co.uk

ENGLAND V USA (4^th September 2018)

Venue: Wembley Stadium

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

7^th August 21^st August (today)

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

Quantity Sold 34076 tonnes 32041 tonnes (-5.9%)

Number of Bidders 191 158 (-17.3%)

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

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

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

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

Brief Market Outlook (21^st August 2018)

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

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

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

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

New Zealand co-op Fonterra has revised its 2017/2018 farm gate milk forecast to NZ$6.70 per kg milk solids equivalent to a UK liquid standard litre price of 26.08ppl. Note, this is for last year not the current year.

2.67ppl organic milk price reduction for Arla members who utilise a derogation (21^st August 2018)

It’s a hot potato but Arla have confirmed that any UK organic supplier who utilises a derogation to use non-organic forage, including those who only use the derogation for young stock, will suffer a 2.67ppl deduction and their milk will be segregated and go into the Arla conventional pool. Arla’s organic milk price for September is held at 40.8ppl based on a liquid standard litre and 42.45ppl based on a standard manufacturing litre.

Arla to help distribute Forage Aid for UK farmers (21^st August 2018)

Arla is offering logistics support to help Forage Aid by delivering emergency supplies of animal feed to livestock farmers during the extreme drought conditions.

Graham Wilkinson talks about why it is important for farmers to support farmers in these challenging conditions;

"Last year our logistics colleagues did a fantastic job of supporting Forage Aid by helping them distribute emergency supplies to farmers impacted by the Cumbrian floods and now we have a very different threat to our farmers and their livestock due to the extreme drought conditions. Forage Aid is a fantastic charity and it makes me extremely proud that a farmer owned business like ours can support other farmers at their time of need in this way."

Forage Aid is the charity that supports farmers whose livestock has been affected by an extreme weather event by providing forage and/or bedding to those in need.

40ppl milk on offer by FarmFoods – Who’s the processor? (21^st August 2018)

A jaw dropping promotion by FarmFoods of 4 litres of whole or semi-skimmed milk for £1.60 has caused a bit of a stir. From the leaflet the code reads like UKOHO29EC. Two middle ground usual suspects names are in circulation but rather than setting hares running it would be good to crack the code and print the name of the processor. If any reader can crack the code please email Ian (ianpotter@ipaquotas.co.uk)

1.5ppl milk price increase for suppliers to Grahams Dairies Scotland – from 1^st September (3^rd August 2018)

This takes producers standard liquid litre price to 29.5ppl

1.5ppl milk price increase for suppliers to Muller – from 1^st September (3^rd August 2018)

This takes producers standard liquid litre price to 29.5ppl

1ppl milk price increase for suppliers to Belton Farm (Cheese) – from 1^st September

This takes producers standard liquid litre price litre to 29.5ppl and based on a standard manufacturing litre to 30.25ppl (3^rd August 2018)

1ppl milk price increase for suppliers to Yew Tree Dairies – from 1^st September (3^rd August 2018)

This takes producers standard liquid litre price litre to 29.5ppl

1ppl milk price increase for suppliers to Glanbia (Cheese) – from 1^st September (3^rd August 2018)

This takes producers standard liquid litre price to 28.99ppl and based on a standard manufacturing litre to 30ppl

1ppl milk prices increase for suppliers to Joseph Heler Cheese – from 1^st September (PRODUCER NOTIFIED) (3^rd August 2018)

1ppl milk price increase for suppliers to The Fresh Milk Company – from 1^st August (3^rd August 2018)

This takes producers standard liquid litre 29ppl manufacturing 30.03ppl

1ppl milk price increase for suppliers to Wensleydale Creamery – from 1^st August (3^rd August 2018)

This takes producers standard liquid litre 29ppl manufacturing 29.95ppl

1ppl milk price increase for suppliers to Pensworth – from 1^st September (3^rd August 2018)

This takes producer’s standard liquid litre 28.95ppl

0.8ppl milk price increase for Payne’s Dairies – from 1^st August (3^rd August 2018)

This takes producer’s standard liquid litre to 29ppl

0.8ppl milk price increase for suppliers and members of First Milk – from 1^st August (3^rd August 2018)

This takes producers standard liquid litre price to 28ppl and based on a standard manufacturing litre to 28.95ppl

0.75ppl milk price increase for suppliers to South Caernarfon Creameries (Cheese) – from 1^st September (3^rd August 2018)

This takes producers standard liquid litre price to 29.55ppl and based on a standard manufacturing litre to 30.53ppl

0.7ppl milk price increase for Arla direct suppliers – from 1^st August (3^rd August 2018)

This takes producers standard liquid litre price to 28ppl and manufacturing 29.19ppl

0.5ppl milk price increase for suppliers to Barbers (Cheese) – from 1^st September (3^rd August 2018)

This takes producers standard liquid litre price to 29.58ppl and based on a standard manufacturing litre to 30.68ppl

0.5ppl Extreme weather supplement for suppliers to Dairy Crest Davidstow (cheese) – from 1^st September (3^rd August 2018)

This is a supplement which will be reviewed monthly and is not a price increase but is a payment to assist supplying farmers who are struggling with the drought and additional expense.

This means no increase in milk price so a Dairy Crest Producer will continue to receive 29.32ppl from September 1^st based on a standard liquid litre and 30.4ppl based on a standard manufacturing litre.

Paine Partners sell their Meadow Foods share after less than 2 years ownership (3^rd August 2018)

Their has been no secret that US based Paine and Partners have been keen to exit their Meadow Foods investment and have now sold their shares to Exponent a UK private equity firm after less than two years of buying them from the Pickering and Chantler families.

At last AHDB production figures confirm reality on the ground (3^rd August 2018)

Several farmers have been questioning reports from AHDB claiming UK milk production was not dropping in July.

One such farmer stated “How on earth can AHDB Dairy claim on farm production has not dropped with no grass anywhere, a serious shortage of fodder, following a sh*t spring, many cattle on full winter rations?”.

Well according to its latest update production dropped below those of July 2017 with week ending 21^st July down 1.2%/day

Arla’s Organic stance turns sour (3^rd August 2018)

Arla’s 30^th July statement concerning its No Stance on organic feed derogations is certainly causing a stir and could soon turn sour on the European Giant.

The main bone of contention is the words “Please be aware that Arla’s position is that this (the no stance on utilising a derogation) will also include exemptions for the feeding of non-organic forage to dairy young stock”.

So, on the one hand the two organic certification bodies viz OF&G and the Soil Association are willing to issues derogations under the EU regulations but Arla are saying that’s not good enough for us.

Ironically the Soil Association certify Arla for its organic milk intake!

For the man in the street feeding non-milking young stock non-organic feed on welfare grounds when fodder is short is unlikely to be of concern.

Arla may have to revisit this decision because some of its organic suppliers are clearly unhappy as are the two organic certification Authorities.

It’s a complicated area and includes things like TB derogations. Question is will Arla stick 2 fingers up and say to O F & G and the Soil Association stuff your regulations, we are doing our own thing crisis or no crisis. For some organic farmers it’s just adding pressure to what’s set to be a very difficult and extremely expensive Autumn and Winter.

Correction to Ian’s August Dairy Farmer Article (3^rd August 2018)

The responses to this weeks August article was frankly phenomenal, so thankyou for all those who emailed Ian. However most respondents supporting my jottings were on the ball in pointing out Ian’ obvious typo when stated that Germany and the UK have more than 200 million flexitarians. It should have stated 20 million. Apologies

August 1^st Milk Price league based on www.milkprices.com standard litres (3^rd August 2018)

The liquid standard litre 4% bf, 3.3% protein, 30,000/ml Bactoscans, 200,000/ml SCC, 1 million litres a year on EODC but before seasonality, monthly profile payments, balancing, B price additions, capital retentions or annual incentive schemes.  The manufacturing standard litre is to exactly the same specification with the exception of 4.2%bf and 3.4% protein.

Liquid standard litre Manufacturing standard litre (cheese)

Arla Co-op members 30.16 31.38

Crediton Dairy 30.00 -

Dairy Crest Davidstow 29.32 30.4

Wyke Farms 29.15 30.18

Barbers 29.08 30.16

Fresh Milk Company (lactalis) 29.00 30.03

Wensleydale Creamery (cheese) 29.00 29.95

Payne’s 29.00 -

South Caernarfon Creameries 28.81 29.78

Yew Tree Dairies 28.50 -

Belton 28.50 29.25

Meadow Foods 28.50 -

Glanbia 28.03 29.00

Arla Direct 28.00 -

Muller 28.00 -

First Milk Co-op members 28.00 28.95

Joseph Heler (cheese)

0.85ppl milk price increase for Arla members – from 1^st August (24^th July 2018)

This is a 1 Euro Cent increase, which equates to 0.85ppl addition to the standard liquid litre to give a 1^st August price of 30.16ppl and a 0.88ppl addition to the standard manufacturing litre to give 31.38ppl.

No change in respect of the Arla organic milk price, which remains at 40ppl (liquid) and 40.8ppl (manufacturing)

This increase has been attributed to the confirmed hot weather, which has impacted negatively on Arla’s European milk intake.

Arla says no organic feed derogations (24^th July 2018)

Arla has decided not to utilise any milk from UK farms who obtain a derogation to feed non-organic fodder/feed as a measure to maintain consumer confidence in Arla’s branded organic products.

It is expected that derogations will be issued by various authorities very soon as a result of the exceptionally hot weather, including the UK.

Any farmer who uses the derogation and feeds non-organic feed will find his or her milk excluded from Arla’s organic products until six months after the farm returns to full organic forage. It is anticipated that from September 1^st Arla will have two organic milk pool prices viz: farmers who continue to feed only organic feed and a lower price for those who obtain a derogation. Sadly for some farmers the need to obtain a derogation asap will not be optional.

First Milk appoints new Chairman (24^th July 2018)

First Milk has appointed Chris Thomas as non-executive Chairman to replace Clive Sharpe from 1^st August.

Chris has held a number of senior executive positions in businesses like Tulip UK, St Ivel, PepsiCo and Mars.

First Milk to invest £6.5million in its Haverfordwest Creamery (24^th July 2018)

This will come over the next 2 years and will boost the sites cheese output and efficiency.

1ppl milk price increase for suppliers to Crediton Dairy plus 30ppl 2018 guaranteed minimum – from 1^st September (20^th July 2018)

Crediton’s latest 1ppl price increase takes producers’ standard liquid litre milk price to 30ppl, a price which Crediton have committed to hold until at least 31^st December 2018 as a minimum floor price not a maximum.

1ppl milk price increase for suppliers to Pattermores – from 1^st August (PRODUCER NOTIFIED) (20^th July 2018)

0.75ppl milk price increase for suppliers to Pensworth Dairies – from 1^st July (20^th July 2018)

This takes producers’ standard liquid litre milk price to 27.95ppl

Auction average down another 1.7% (20^th July 2018)

Last week’s GDT auction produced the 4^th consecutive average price fall in only 6 weeks with the average achieved down 1.7% to US$3222 to its lowest point in 2018 and hot on the heels of an eye-watering 5% drop only two weeks ago.

Volumes available were down 4% to 25,454 tonnes and the negative trend is a concern, particularly for New Zealand dairy farmers.

Notable prices were:

Butter down 8.1% to average US$4953 tonne

Cheddar down 3.3% to average US$3596 tonne

SMP up 0.8% to average US$1959 tonne

WMP up 1.5% to average US$2973 tonne

Market Update (20^th July 2018)

The general trend is still negative.

Butter futures on the EEX were down 1.43% on the week, which takes the accumulated total drop to 11% in the past 6 weeks.

SMP futures on the EEX were down 1.63% on the week, which takes the accumulated total drop to 5% in the past month.

To make matters worse the value of sterling strengthened against the Euro.

Intervention Sales (20^th July 2018)

The EU sold only 2,400 tonnes of its June 2016 SMP stocks this week at prices ranging from €1125 tonne to €1200 tonne (£1,004 to £1,071).

This is a disappointing result both in terms of tonnage sold and the price achieved compared to the tender result achieved only a month earlier when 23,532 tonnes sold (10 x this months) for between €1195 to €1400 (£1,067 to £1,250)

The Commission now look unlikely to achieve their goal of clearing all remaining Intervention SMP stocks by the end of 2018. Note, for the October & November tenders there will be two tenders each month.

Production (20^th July 2018)

EU total milk production January to April is up 2% year on year.

Denmark saw its May production the largest on record since quotas were introduced in May 1984. Germany up 3.2% (January to April 2018), France +3.7%

Glanbia Cheese to build a new 45,000 tonne Mozzarella factory (20^th July 2018)

Glanbia Cheese have announced plans to build a state of the art 45,000 tonnes per annum Mozzarella cheese factory in Portlaoise, Co Laois, Central Southern Ireland.

At the moment Glanbia produce around 90,000 tonnes of Mozarella at two plants one in North Wales and one in Northern Ireland. So, if all three plants are operational the new output will represent a 50% increase in output.

The expectation is for the new plant to be operational by 2020, subject to planning permission. It involves an investment of €130 million (£117 million) creating 78 full time jobs.

Belton Farm announces £1.25 million investment (20^th July 2018)

Belton Farm cheese-makers from Shropshire have announced a significant £1.25m investment programme to upgrade and upscale its current processing facility. Belton is enjoying sales increases, particularly with of its Red & White fox as well as its Belton Farm branded cheeses, both domestically and abroad, particularly in the US market as well as in Canada, South Africa, Australia and the EU.

In addition, Belton are seeking to selectively recruit a handful of new local milk suppliers to join its existing family of 80 supplying farmers.

Arla and Yeo Valley deal is cleared by the CMA (20^th July 2018)

The Competition & Markets Authority (CMA) has given the unconditional green light to the February 2018 announcement that Arla Foods had agreed terms for a licence to utilise the Yeo Valley brand for Arla’s organic liquid, cheese and spreads.

Yeo Valley yoghurts, cream and dairy desserts business will remain under the ownership of The Mead family. Suppliers to the Coombe Farms Milk Group will move across to supply Arla.

Arla warns that Brexit could hjt UK dairy consumers pockets (20^th July 2018)

Following a report “The Impact of Brexit on the UK Dairy Sector” produced by the London School of Economics, Arla has issued a warning that if the findings in the report prove to be correct in terms of restricted access to labour and non-tariff barriers, UK consumers will likely see the availability of butter, yoghurts and cheese restricted and at higher prices.

The report not only points to the potential economic consequences of a farm labour shortage but also in terms of vets, lorry drivers, etc.

The report also notes the UK has the second largest dairy trade deficit in the world at up to 16% with 98% of the UK’s dairy imports currently originating from the EU and no doubt a big slug from Arla!

Warble Fly Warning (20^th July 2018)

A reader from North Devon has alerted us to the presence of a significant infestation of warble flies and the urgent need to be vigilant and take precautions. They even provided a photograph of the unwelcome beast on a cow, which fortunately had been treated.

If you encounter warble fly or any other unusual and unwanted pests in this dry spell, please email us.

1.5ppl milk price increase for suppliers to Blackmore Vale Farm – from 1^st August (9^th July 2018)

This takes producers’ standard liquid litre price to 29ppl.

1.25ppl milk price increase for suppliers to Barbers Farmhouse Cheesemakers – from 1^st August (9^th July 2018)

This takes producers’ standard manufacturing price to 30.16ppl and standard liquid litre price to 29.08ppl. Barbers continue to maintain a very healthy rolling 12 month pay out over 30ppl (30.08ppl) based on a manufacturing standard litre with 31.23ppl paid for June milk above 104% of base milk volume, which is effectively a transparent B milk price.

1.25ppl milk price increase for suppliers to Wensleydale Creamery, Hawes – from 1^st July (9^th July 2018)

This takes producers’ standard manufacturing price to 28.95ppl and based on a standard liquid price of 28ppl.

1ppl milk price increase for suppliers to Belton Farm (Cheesemakers) – from 1^st August (9^th July 2018)

This takes producers’ standard manufacturing price to 29.25ppl and the standard litre price to 28.5ppl

0.89ppl milk price increase for suppliers to Muller’s Co-operative Dairy Group – from 1^st August (9^th July 2018)

This takes producers’ standard liquid price to 28.88ppl

0.5ppl milk price increase for suppliers to Meadow Foods – from 1^st August (9^th July 2018)

This takes producers’ standard liquid litre price to 28.5ppl and based on a manufacturing standard litre 28.88ppl (Chester) and 28.75ppl (Cumbria)

0.5ppl milk price increase for suppliers to Yew Tree Dairies (AKA Woodcock’s) – from 1^st August (PRODUCER NOTIFIED) (9^th July 2018)

This takes producers’ standard liquid litre price to 28.5ppl

What are Arla tipped to do for August? (9^th July 2018)

Our inside knowledge that Muller would stand on with its August milk price at 28ppl proved to be bang on the money and similar reliable intelligence has firmly indicated that Arla will likely do the same for August and remain at 29.31ppl (standard liquid litre price) to be followed by a 1^st September increase.

Certainly this weather is hurting and escalating on farm milk production costs both for this winter and the here and now for those who are attempting to maintain forecast production. Without more money in the kitty to pay for the additional cost and to repay the previous price drop financial mess many will likely say blow the production or even worse throw in the towel. Time will tell whether our information on Arla’s non movement for August is as good as Ian believes it is.

July and August will see Mother Nature have the last say on milk production and by default determine milk prices and will be a favourite to win a tug of war against claims weakening cream and butter prices.

AMPE & MCVE both pushing north (9^th July 2018)

The June AHDB dairy indicator prices show AMPE price 33.23ppl, whilst its sister, MCVE 32.77ppl. (See above table)

5% Crash in GDT Auction results (3^rd July 2018)

Today’s 10^th anniversary GDT auction is no reason for farmers to celebrate as the average price crashed back by a whopping 5% to average $3232 for the 26,519 tonnes sold, which  is the third consecutive fall in only 4 weeks.

Notable prices were:

WMP down 7.3% to average US $2905 tonne

SMP down 4.6% to average US $1913 tonne

Cheddar down 4.3% to average US $3713 tonne

Butter down 4.0% to average US $5390 tonne

The overall index has fallen by US $405 (11.1%) in only 7 weeks.

The auction started in July 2008 just as the global crash in dairy prices started to go in freefall. During these 10 years more than $22 billion (£16.7 billion) of dairy products have been traded to buyers in more than 80 countries.

1.75ppl milk price increase for Dairy Crest suppliers - from 1^st August (29^th June 2018)

This takes producers’ standard manufacturing price to 30.40ppl

1.5ppl milk price increase for Wyke Farms (Cheesemakers) - from 1^st August (29^th June 2018)

This takes producers’ standard manufacturing price to 30.18ppl and standard liquid price to 29.15ppl

1.5ppl milk price increase for Lactalis/The Fresh Milk Company (Cheesemakers) suppliers – from 1^st July (29^th June 2018)

This takes producers’ standard manufacturing price to 28.99ppl and standard liquid price to 28ppl

1.25ppl milk increase for South Caernarfon Creameries suppliers - from 1^st August (29^th June 2018)

This takes producers’ standard manufacturing price to 29.78ppl

1ppl milk price increase for Glanbia Cheese Suppliers – from 1^st August (29^th June 2018)

This takes producers’ standard manufacturing price to 29ppl and standard liquid price to 28.03ppl

1ppl milk price increase for Paynes Dairies suppliers – from 1^st July (29^th June 2018)

This takes producers’ standard liquid price to 28.2ppl

0.75ppl milk price increase for Joseph Heler Cheese – from 1^st July (29^th June 2018)

0.33ppl milk price increase for Tesco/TSDG dedicated suppliers - from 1st August (29^th June 2018)

This increase is as a result of the quarterly review of prices for feed fertilizer and fuel. This takes producers’ standard liquid price to 30.17ppl

No price change for Muller suppliers in August (29^th June 2018)

Muller have confirmed that there will be no price change for its suppliers in August, which is what we were informed 10 days ago and resulted in us commenting in last week’s bulletin “and in one case almost decided privately not to push through an August price increase.” The Muller standard liquid litre price for August will therefore remain at 28ppl.

What’s the headline outlook (29^th June 2018)

Commodity prices for SMP and butter continue to weaken in the forward and spot markets, which is of concern. However, the current spell of hot weather across Europe was the main talking point at  this week’s Dairy UK Dinner and Seminar with most realising production is set to drop below forecast unless the weather changes.

Spot milk is reflecting the mood of buyers with trade now at 35ppl and trending up on almost a daily basis.

Several milk purchasers have notified producers of July and August milk price increase stressing the need to maintain profiles and supplies as well as updated forecasts.

As we all know mother nature can wreck any predictions in a matter of days and the only sure way to guarantee farmers will feed compound to replace lost milk production is if the milk price incentivises them.

Arla are now leading the charge and from the figures above some are certainly struggling to keep up with them.

Dale Farm secure Number 1 position as cheddar supplier to Lidl (29^th June 2018)

Lidl has signed a deal with Northern Ireland based co-op subsidiary Dale Farm to supply cheddar cheese to 8,000 Lidl stores in 22 countries, including the UK, Europe and USA.

In turn Lidl is now Dale Farm’s biggest cheddar cheese customer. The co-op is the UK’s largest indigenous co-op with 1300 members.

There will likely be one or more losers but we haven’t found out yet who they are and whether the cheese was made from UK milk.

1.92ppl milk price increase for Arla members from July 1^st puts Arla back in front (22^nd June 2018)

On the day Ash Amirahmadi takes up his position as top honcho in Arla UK (see story below) his co-op members will be in a UK milk league table champions league position with this latest increase.

This takes the 1^st July standard liquid litre price to 29.31ppl and based on a manufacturing standard litre to 30.5ppl with a clear hint that the expectation is for further increases to follow soon. This price increase serves as a challenge to most other milk purchasers some of whom will be scratching  their heads having considered  and in one case almost decided privately not to push through an August price increase. This policy will need to be revisited and as one farmer emailed Ian it’s a wake up call to others to up their game and quickly, especially if they want to recruit more suppliers or even retain existing ones. The race to the top is back on.

Arla’s organic standard litre price remains unchanged at 42.85ppl (manufacturing) and 40.80ppl (liquid) mainly due to the fact organic milk supply continues to increase.

2ppl milk price increase for Arla Directs – from 1^st July (22^nd June 2018)

This takes producers standard liquid litre milk price to 27.3ppl

1.5ppl milk price increase for suppliers to Crediton Dairy – from 1^st August (22^nd June 2018)

This takes producers standard liquid litre milk price to 29ppl

1.25ppl milk price increase for Grahams Dairies suppliers – from 1^st July (22^nd June 2018)

This takes producers standard liquid litre milk price to 28ppl

0.674ppl milk price increase for Freshways suppliers – from June 1st (PRODUCER NOTIFIED) (22^nd June 2018)

This takes producers standard liquid litre milk price to 26.95ppl

GDT auction index down 1.2% (22^nd June 2018)

This week’s GDT auction saw second consecutive average decline.

Notable prices were:

Cheddar down 3.6% to average US$3848 tonne

SMP down 1.1% to average US$2003 tonne

WMP down 1.0% to average US$3189 tonne

Butter up 0.8% to average US$3488 tonne

Correction (22^nd June 2018)

In last week’s bulletin we made a typo error when we quoted the new Sainsburys standard litre price as 24.48ppl when it should have been 28.48ppl. Apologies and the error was quickly corrected on our website www.ipaquotas.com/quotanews.htm

European Commission sell a further 23,533 tonnes of Intervention SMP (22^nd June 2018)

The total offered in this month’s tender was 144,844 tonnes and the cheapest sold was at €1195 tonne, circa £1050. This leaves around 280,000 tonnes in store. Back in May 41,958 tonnes were sold.

Viking rule of Arla UK comes to a sudden  end (19^th June 2018)

Danishman Thomas Pietrangeli will leave his position as UK MD of Arla UK in 10 days time to be replaced by Ash Amirahmadi, who has quickly risen through the Arla ranks since he joined the business in 2004 and is popular in many quarters.

This is a seismic move by Arla, who for more than 10 years have always had one of 3 Danish rulers heading up Arla’s UK operation.  Now it’s essentially a home grown non-Danish person heading up the UK operation which most will welcome.

Ash has certainly had a good grounding having worked on the farmer member, retail, trading and the commercial divisions of Arla.  There are certainly some big changes taking place at Arla and this one looks like a change in Danish attitude and perhaps the realisation that if a fourth Dane had been parachuted in to take charge of the UK, the business could have had a backlash to wrestle with.

1.2ppl milk price increase for Pensworth Dairy suppliers – from 1^st July (15^th June 2018)

This takes producers’ standard liquid litre price to 27.2ppl.

1.2ppl milk price increase for First Milk members – from 1^st July (15^th June 2018)

This takes producers’ standard liquid litre price to 27.2ppl and based on a standard manufacturing litre to 28.12ppl.

1ppl milk price increase for South Caernarfon Creameries suppliers – from 1^st July (15^th June 2018)

This takes producers’ standard liquid litre price to 27.6ppl and based on a standard manufacturing litre to 28.53ppl.

1ppl milk price increase for Meadow Foods suppliers – from 1^st July (15^th June 2018)

This takes producers’ standard liquid litre price to 28ppl and based on a standard manufacturing litre to 28.38ppl (Chester) and 28.25ppl (Cumbria).

0.36ppl milk price increase for Sainsburys Dairy Group suppliers – from 1^st July (15^th June 2018)

This takes producers’ standard liquid litre price to 28.48ppl (Muller) and 28.36ppl (Arla). The increase is based on the quarterly cost tracker review, in particular an increase in the cost of feed.

Concerning Discounts (15^th June 2018)

1. Tesco do half price Cathedral City

In a surprise move Tesco are now selling No. 1 cheese brand, Cathedral City Cheddar at an eye watering £5 per kilo. One headline described the deal as “insanely cheap”.

The normal Tesco price for Cathedral City is or rather was £10 kilo.

2. Cash & Carry’s discount Yew Tree milk to only 65p

Notorious Wolverhampton cash & carry dairy suppliers, Johal Dairies, are evidently the suppliers of milk, which is advertised as Yew Tree milk at 65p for 2 litres suddenly down by 27% from 89p. The price drop started in the first week of June.

1ppl milk price increase for suppliers to Paynes Dairies – from 1^st June (4^th June 2018)

This takes producers standard liquid litre price to 27.2ppl

1.5ppl milk price increase for suppliers to Pattemores – from 1^st July PRODUCER NOTIFIED (4^th June 2018)

This takes producers standard liquid litre price to 28ppl and based on a manufacturing standard litre to 28.93ppl

1ppl milk price increase for suppliers to Belton Farm (Cheese) – from 1^st July (4^th June 2018)

This takes producers standard liquid litre price to 27.5ppl and based on a manufacturing standard litre to 28.25ppl

1.25ppl milk price increase for Muller Directs – from 1^st July (4^th June 2018)

This takes producers standard liquid litre price to 28ppl

1ppl milk price increase for suppliers to Glanbia Cheese – from 1^st July (4^th June 2018)

This takes producers standard liquid litre price to 27.1ppl and based on a manufacturing standard litre to 28ppl

0.65ppl Milk Price for Suppliers to Dairy Crest Davidstow – from 1^st July (4^th June 2018)

This takes producers standard liquid litre price to 27.57ppl and based on a manufacturing standard litre to 28.65ppl

Market Outlook and Statistics as 30ppl for June Milk quickly becomes an unexpected reality (4^th June 2018)

In general the outlook is cautiously optimistic and those at the most responsive end of commodity market movements will receive over 30ppl for June deliveries.

Yew Tree Dairy have already notified producers on their ingredients contract that their June price will be over 30ppl based on standard manufacturing contract and in excess of 29ppl based on a standard liquid litre.

Meanwhile, Barbers Farmhouse Cheesemakers suppliers receive 31.08ppl on their over base litres (AMPE 33.08 minus 2ppl). So a farmer with a base of 100,000 litres for the month has 4% added and if he produces say 110,000 litres he receives 31.08ppl on the 6,000 litres above the 104%. On the 104,000 litres for May, June & July the Barbers price has been a constant 28.87 based on a manufacturing standard litre.

During May AHDB dairy calculated average UK butter prices increased by 11% (£520 tonne) to £5180.

Despite the fact the European Commission sold 42,000 tonnes of Intervention SMP at a knock down price it appears to have help boost the price for fresh SMP which in May increased by 14% (£165 tonne) to £1320.

Last but not least cream values increased by 13% (£270 tonne) to £2350 this increase is worth an extra 1.6ppl to a liquid processor.

Spot milk is trading circa 25p litre but most processors are close to capacity and unable to take much if any advantage from this price.

169 jobs to go at Arla as Llandyrnog and others are closed (4^th June 2018)

Arla has announced that 169 jobs are under consultation in the UK as part of its 3 year calcium transformation programme.

Today’s announcement will see Arla’s Llandyrnog Creamery close impacting on 97 staff, its Malpas cheese packing site close impacting on 43 jobs, closure of its Lockerbie cheese packing facility impacting on 14 jobs plus a further 15 roles at its Leeds HQ.

The total anticipated redundancy comes to 169 and the work from all three facilities will be redistributed to Arlas other premises. A further 180 job cuts are understood to have been announced in mainland Europe.

The Llandyrnog factory has undoubtedly been severely affected by Arla’s loss of the Sainsburys cheese business, estimated to be somewhere between 13 to 14,000 tonnes year, which must have been the final nail in the coffin for a factory operating at below 50% capacity.

So whilst Arla is or perhaps was one of the UK’s largest cheese producers as well as the worlds 5^th largest dairy processor it is certainly finding life tough and indeed downsizing at the same time as two of its main GB competitors are making major investments to increase production.

Last week Dairy Crest announced a £75 million investment in its Davidstow Creamery to boost factory output by 23,000 tonnes. In addition, Wyke Farms have just announced the building of a new dairy which will see its existing 18,000 tonnes increased by almost 3 fold to 50,000 tonnes once its various phases are completed.

Challenging times for Arla both in the UK and globally and today’s announcement is expected to be the first of several.

Arla serves notice on 11 supplying farmers (4^th June 2018)

Its not a good week for Arla globally with the news that 11 of its 33 supplying farmers to its Hollandtown, Wisconsin USA plant have received termination notices due to a serious milk over supply.

These are the latest in an alarming list of notices served on US dairy farmers, including 75 farmers supplying Grassland Dairy and 100 under notice from Dean Foods. Several believe more farmers are likely to receive similar notices to these 186 farmers.

Wyke Farms to build 50,000 tonne cheese factory (4^th June 2018)

Wyke from Somerset are set to build Ivy’s Dairy a 50,000 tonnes facility named after the Clothier family’s famous Grandmother Ivy Clothier. The dairy will be built over a period of eight years.

Muller signs up gold medallist as part of its brand ambassador (4^th June 2018)

Commonwealth Games and World Indoor Championship gold medallist Katarina Johnson-Thompson has been signed up as the Muller brand ambassador and joins a squad of 10 top athletes promoting the Muller brand which ranks 7^th in the Grocers Top 100 British Brands

1.15ppl increase in Arlas standard litre price from 1^st June (25^th May 2018)

Arla have announced a 0.88ppl (1 Euro Cent) member price increase from June 1^st. In addition, the 0.27ppl artic loading supplement is now achieved by more that half of Arla members and consequently this amount will be added to both the liquid and manufacturing standard litre prices published by www.milkprices.com.

The 1.15ppl total increase gives the following standard litre prices

Liquid standard litre 27.51ppl

Manufacturing standard litre 28.58ppl

1ppl milk price increase for Arla direct suppliers from 1^st June - This increases the standard litre price to 25.3ppl (25^th May 2018)

0.8ppl milk price increase for Helers Cheese suppliers from 1st June (25^th May 2018)

The UK’s peak daily production passes as MCVE & AMPE both increase (25^th May 2018)

Last weekend saw the UK reach its peak daily production in what has been undoubtedly a much smaller spring flush as a result of nature’s intervention.

At the same time the May AMPE increased to 33.08ppl up 4.18ppl in 4 weeks with MCVE up to 32.33ppl an increase of 0.95ppl

Muller / Lidl 28ppl fixed price contract closes fully subscribed (25^th May 2018)

The innovative fixed price hedge offered to Muller direct suppliers to fix up to 50% of their milk for up to three years is now fully subscribed and closed.

Almost all of the 180million litres on offer has been allocated with percentages committed varying from 10% to the maximum 50% and averaging 40% for each farmer with the majority of the deals  for the maximum 3 years.

It has certainly been a successful launch and no doubt Muller will be hoping farmers don’t leave signing up and committing to similar deals in future until the last 48 hours as happened with this offering but that’s wishful thinking and reminds Ian of the quota trading years.

GDT average increases by 1.9% with talk of new butter record prices to come (25^th May 2018)

Last Tuesday’s GDT auction recorded a 1.9% all products average increase to US $3637 compared to that achieved two weeks ago.

The butter average was up a further 2.4% and has jumped by 30% in the past six months. There is now talk of a likely global butter shortage which is tipped to top trump and eclipse the record highs recorded in 2017.

Key price changes were

Cheddar index up 4.4% to average US $4205 tonne

SMP index up 3% to average US $2047 tonne

Butter index up 2.4% to average US $5787 tonne

WMP index up 0.2% to average US $3226 tonne

Dairy Crest to invest £85 million and will require an additional 200 million litres/ year (25^th May 2018)

Of the total £85 million spend £75 million will be invested in Dairy Crests flagship  Davidstow Creamery and will result in the cheese output from the factory increasing from 54,000 to 77,000 tonnes a year by 2023.

The creamery in Cornwall will require an additional 200 million litres a year from a combination of its existing 330 suppliers as well as some new recruits

0.5ppl May milk price reduction cancelled by Grahams Dairies (11^th May 2018)

In a move other milk purchasers should take note of Grahams Dairies have rescinded their confirmed 0.5ppl milk price reduction, which took effect from May 1^st. This results in an above average producer standard liquid litre price of 26.75ppl for May deliveries.

In a letter to its suppliers, Grahams Dairies focus on the fact they are agile and that markets have strengthened.

So whilst others have retained their May milk price cut Grahams appear to have done the right thing by their farmers. They could easily have gone down 0.5ppl for May and back up 0.5ppl for June and banked the difference. The big question is whether rescinding price cuts will be permitted in the government’s new compulsory milk contracts, which removes milk buyer discretion and agility. An idea of the contracts detail is anticipated very soon.

In the letter Grahams point out that actual deliveries to the dairy are currently running 3% below farmers forecast, which appears to be representative of the rest of GB and indeed Europe. (See below)

1ppl milk price increase for suppliers to Meadow Foods – from June 1^st (11^th May 2018)

This takes producers’ standard liquid litre price to 27ppl and based on a manufacturing standard litre to 27.38ppl (Chester suppliers) and 27.25ppl (Cumbria suppliers).

The key influencing factor is the improvement in wholesale cream values.

The only way is up baby (11^th May 2018)

That’s the opening lyrics to the Yazz and The Plastic Population record and its now the only way UK, European and world dairy prices are moving. Key influencers are:

Milk deliveries are 3 to 5% lower than budgeted.

Futures prices are increasing, especially for the second half of 2018 due to product availability concerns.

Wholesale prices for most, if not all, dairy products are rising globally.

Paynes offer a fixed price option for 28ppl (11^th May 2018)

Paynes Dairies are offering a fixed price contract at 28ppl, which will run until November 2019. The positive interest and uptake has been excellent with a couple of exceptions who declined on the basis it’s not enough money! Initially all Paynes suppliers have been offered the opportunity to fix up to 2% of their production, which could prove to be an administrative nightmare. The identity of the customer offering the fixed price is currently embargoed, however, it is anticipated they will recognise the benefits of publically attaching their name to the initiative. Charlie Payne has confirmed to Ian that he is in negotiations with other customers over similar smoothing mechanisms.

Tesco selling milk for £480.18 per litre (11^th May 2018)

One eagle eyed regular reader spotted Britain’s most expensive milk in a Tesco store.

It was Tesco branded 1% milk proudly stating “Tesco fair for farmers guarantee”. If Tesco pay the farmers a fair share of £480.00 litre they will certainly rise to the top of the tank with the cream.

Meanwhile Tesco have reduced the shelf price of 4 pints from £1.10 by 1ppl to £1.09. Are we to believe shoppers will bother over a 1ppl reduction??

0.75ppl milk price increase for Muller Direct suppliers – from 1^st June breaks the log jam (4^th May 2018)

This takes Muller Directs standard liquid litre milk price to 26.75ppl as a result of strengthening markets (see below)

Stand on prices for June will not be reported (4^th May 2018)

Apologies to any processors who feel that trumpeting a June stand on price is worthy of a mention in this bulletin but it won’t be. Only GB price increases for June will be reported.

Prices are certainly trending up both on the spot and with futures prices and remember both AMPE and MCVE are both up (see above). The mood is both positive and cautiously optimistic for continuing gradual increases

April wholesale dairy prices were positive (4^th May 2018)

AHDB’s April dairy wholesale round up confirms cream increased by £150 tonne worth just under 1pp to a liquid processor and making the total value of cream to a liquid processor 12.16ppl

Butter was up £440 tonne and even SMP recorded a small increase, as fresh SMP became harder to find.

GDT auction prices down 1.1% to average US$3465 tonne (4^th May 2018)

An increased tonnage of 19,508 tonnes (+1.3%) saw the average price fall predominantly due to the fall in WMP.

Notable movers were:

SMP up 3.6% to average US$1999 tonne

Cheddar up 3.1% to average US$4024 tonne

Butter stand on to average US$1990 tonne

WMP down 1.5% to average US$3231 tonne

Friesland Campina down again but still returning 29ppl (4^th May 2018)

Although it’s their 6^th consecutive price drop the European dairy giants latest equivalent 0.27ppl price drop results in a standard liquid litre price of 29.019ppl, which most in GB can only dream about.

Muller open their recruitment doors (4^th May 2018)

There is no secret that Muller have had a good 2018 in terms of quietly recruiting a number of large producers across GB. Now the doors are publically open as Muller’s planned investments mean they require more milk than their existing 1700 suppliers are expected to be able to deliver.

0.5ppl milk price reduction for supplies to Grahams Dairies (Scotland) – from May 1^st (27^th April 2018)

This takes producers standard liquid litre price down to 26.25ppl. This could be the last 1^st May price cut.

AMPE and MCVE continue to head North (27^th April 2018)

The April AMPE price weighs in at 28.90 a 2.22ppl increase in a month, whilst MCVE stands at 31.38ppl for April, a monthly increase of 0.33ppl. The AMPE increase is almost entirely down to the rise in the value of butter, however, SMP also increased in value.

First Milk to hold its member milk price (27^th April 2018)

This means the standard liquid litre price for May will remain at 26ppl and based on a manufacturing standard litre will remain at 26.88ppl.

Cheese exports up 23% (27^th April 2018)

According to AHDB Dairy UK cheese exports increased by 23% in 2017 compared to 2016 with a value in excess of £615 million involving in excess of 170,000 tonnes.

The majority was exported from the UK to the EU27, in particular to Ireland, France and Holland.

Relief for all as Arla confirm no further price cut for May deliveries (25^th April 2018)

Arla members conventional standard liquid litre milk price for May will be a stand on at 26.39ppl and based on a manufacturing standard litre equates to 27.43ppl.

However, for members supplying organic milk the supply continues to increase consequently UK members will see a 0.88ppl (1 Euro Cent) reduction taking the standard liquid litre to 40.43ppl and based on a manufacturing standard litre equates to 42.04ppl. Arla organic suppliers in both Denmark and Sweden receive a cut twice as large at 2 Euro Cents (1.78ppl).

400 million Euro cost saving target over 3 years for Arla (25^th April 2018)

Arla has publicised its “calcium” cost cutting programme where the aim is to reduce cost by an eye watering 400 million Euro and the target is for 300 million (£263 million) of these savings to be returned to its 11,200 farmer members with the remaining 100 million Euros of savings to be re-invested in the business. This equates to an extra £23,500 per member assuming the savings targets are achieved.

Arla senior management are certainly under intense pressure to deliver better milk prices to members in all 7 countries and many in mainland Europe are very unhappy about the hit the weaker pound is having in this post Brexit vote period, which is estimated to have cost the co-op around £130 million plus. One key person commented to Ian “Arla’s GB operation and members are a real pain in the A”

It’s a big number with a huge internal transformation plan and will inevitably result in job losses and potentially premises closures. At least Arla are doing something big and positive in an effort to boost the co-op’s performance whether it will come quick enough is debatable.

1.5ppl milk price drop for suppliers to Tomlinson’s Dairies – from April 1st (PRODUCER NOTIFIED) (20^th April 2018)

This takes producers’ liquid standard litre price to 26ppl. The price for May deliveries will be held at 26ppl.

1.5ppl milk price reduction for suppliers to South Caernarfon Creameries – from 1^st May (20^th April 2018)

This takes producers’ manufacturing standard litre price to 27.53ppl and based on a liquid standard litre price to 26.64ppl.

1ppl milk price reduction for suppliers to Crediton Dairy – from 1^st May (20^th April 2018)

This takes producers’ liquid standard litre price to 27ppl.

0.88ppl milk price reduction for suppliers to Muller Co-operative Group (CTRG) – from 1^st May (20^th April 2018)

This takes producers’ liquid standard litre price to 27.99ppl.

0.6ppl milk price reduction for suppliers to Waitrose – from 1^st May (20^th April 2018)

This takes producers’ liquid standard litre price to 30.94ppl.

0.32ppl milk price increase for Tesco (TSDG) suppliers – from 1^st May (20^th April 2018)

This takes producers’ liquid standard litre prices to

29.84ppl Muller Milk Group

29.59ppl Arla suppliers

The price adjustment is based on the quarterly cost tracker review.

Muller Directs option to fix up to 50% of their milk at 28ppl for 3 years (20^th April 2018)

This is a very interesting initiative between Muller and Lidl we previously featured and certainly ups the anti on fixed price contracts and ex-farm gate milk price volatility management. The farmer uptake at 28ppl for 3 years will be very interesting to monitor but you would expect it to be high, if not over subscribed.

GDT bounces up and Intervention stock of SMP diminish (20^th April 2018)

Tuesday’s GDT auction saw the average price increase by 2.7% to $3587/tonne, which is the first increase in 2 months where the previous four auctions have all recorded consecutive falls. All products offered for sale recorded gains.

Notable movers were:

Cheddar up 4.6% to average US$3855 tonne

SMP up 3.6% to average US$1913 tonne

Butter up 2.9% to average US$5654 tonne

WMP up 0.9% to average US$3111 tonne