Dairy Industry news
and features
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Note, all standard
litre prices are those quoted by www.milkprices.com
and are based on the following:
The liquid standard
litre 4% bf, 3.3% protein, 30,000/ml Bactoscans,
200,000/ml SCC, 1 million litres a year on EODC but before seasonality, monthly
profile payments, balancing, B price additions, capital retentions or annual
incentive schemes.
The manufacturing
standard litre is to exactly the same specification with the exception of
4.2%bf and 3.4% protein
AMPE & MCVE continue to head North (5th November 2019)
Both market
indicators are showing positive signs of recovery see above.
Wyke Farms to Stand
on/hold it’s supplier price for November (5th November 2019)
This is one of the
final November Milk Price announcements and results in a standard litre
manufacturing price of 26.91ppl and based on a liquid standard litre 26ppl.
Barbers (Cheese) to stand on/hold its
supplier price for December (5th
November 2019)
This maintains
Barbers standard manufacturing litre price at 27.79ppl and based on a liquid
standard of 26.8ppl
Glanbia (Cheese) to stand
on/hold its supplier milk price until at least January 2020 (5th November 2019)
This maintains Glanbia’s standard manufacturing litre price at 27ppl and
based on a standard liquid litre 26.1ppl.
Belton Farm (Cheese) to stand on/hold
its supplier price for December (5th
November 2019)
This maintains
Belton’s standard manufacturing litre price at 27ppl and based on a liquid
standard litre of 26.25ppl.
Crediton Dairy (Liquid) to
stand on/hold its supplier price for December (5th November 2019)
This maintains Crediton’s standard liquid litre price at 28.5ppl.
GDT Auction bounces up by 3.7% (5th
November 2019)
Todays Global Dairy
Trade auction saw prices increase by 3.7% to average US $3446 tonne compared to
only 2 weeks ago.
Notable price
movements were:
SMP + 6.7% to
average $2924
WMP + 3.6% to
average $3254
Freshways & Medina
Merger/Amalgamation (5th
November 2019)
Ian has attempted
to speak with one of the Directors to clarify the detail behind the deal
without success. From information received a deal has been agreed and according
to one of our wholesale readers, let’s call him Mr Smith from North London the
name of the merged business will be M & F Dairies.
According to Mr
Smith the abbreviation has been translated by customers uncharitably to Mother
Fu--er Dairies.
It should certainly
be a bonus for the two loss making liquid dairies to join forces lets hope they
jointly turn around their combined business.
According to
another customer, code named Mr Jones from the Midlands, the merged business
will not be a 50:50 split with the final split decided according to capital
values input by each party.
Muller solution to Scottish milk
output (25%) surge is painful but many feared deeper surgery. (5th November 2019)
Muller’s October
review into rocketing Scottish milk output from its 230 supplying farmers has
concluded.
Disappointingly 14
farmers in Aberdeen have been given 12 months notice to find a new milk
purchaser with the likelihood they would be allowed to leave earlier if they
can secure a new home for their milk.
In addition a
tiered transport charged will be introduced from February 2020 involving all
Muller farmers (216 post November 1st 2020) and includes aligned and
non aligned producers. The tiering will see those who
have expanded most, since the 2017 calendar base year, pay the highest charge.
Charges range from 0.25ppl to 0.85ppl. The charge will not include Aberdeen
farmers who already pay a 1.75ppl transport charge.
Note all charges
will be reviewed annually and at the moment Muller claim they are transporting
180 million litres each year to its English processing facilities involving
6,000 tankers.
Do the Muller numbers stand up to
scrutiny (5th November 2019)
Several Muller
farmers were quick to contact Ian raising questions about the Muller Scotland
production figures and their proposed remedies.
AHDB issued a
Scottish milk surplus update last Tuesday confirming that
“Milk Collections of farms in Scotland are
estimated at 1,478 million litres in 2018/19 an increase of 55 million litres
(+4%) compared with 2014/15”.
Compare this to the
Muller press release where Muller stated
“Production from Scottish farms who
supply us (Muller) however is up by 25% since 2014 as a result Muller is
transporting 180 million litres per annum to dairies in England”.
If these figures
are accurate it means Lactalis (The Fresh Milk
Company), Grahams Dairies, First Milk & Woodcocks, Arla
Lockerbie plus others have all lost significant volumes during the same period!
That alone should
trigger challenges on the accuracy of the two sets of figures.
Meanwhile, some
Muller producers are claiming Muller provided them with letters confirming they
required the extra milk. The letters were requested by farmer’s bankers in
order to facilitate bank funding for expansion. “So Muller knew and accepted the extra
milk was coming”.
This has prompted
some to claim that if Muller management didn’t realise the volumes were coming
down the pipeline then it’s a management failure.
Add to this the
fact that Muller farmers have informed Ian that they all have to submit 15
month advance production forecasts.
Failure to submit is non negotiable and in the event the forecast is out
of kilter to the actual producers suffer a price penalty on a sliding “accuracy
scale” based on a percentage variance (%).
The forecasts are
contracted and submitted quarterly.
On top of that the
Muller contract obliges producers to give a minimum 3 months advance notice of
any intention to significantly increase milk production by 10% or more.
Another subscribes
to the conspiracy theory that it’s all simply a plot to terminate some
contracts and “to cut milk prices (sorry haulage charges)”.
Remember Muller’s Willy Waving? (5th November 2019)
Finally remember
the press release dated 27th February 2013 when Muller “signalled its
intention to be the UK’s largest and most successful dairy company” which
at the time Ian mischievously labelled as willy waving.
In that release New
Muller Suppliers were offered a 1ppl recruitment incentive based on all volume
produced in a year 1in addition to the 30.5ppl standard litre price.
The 1ppl was also paid
to Muller’s non aligned farmers starting from 1st April 2013.
This was paid on
the entire 12 months milk production if the farm produced a minimum of 2% more
milk “on
average worth £14,000”.
To rub salt in the
wound Muller stated that Western Scotland was a milk field Muller wanted to
increase supplies of milk from both new & existing farmers.
There is now
increasing farmer pressure for this cocktail of numbers and statements to be
further investigated and looks set to be the biggest representation test the
Muller Milk Group Farmer Board have ever faced. All eyes are turning towards
that board to see how big their balls are now the Muller willy waving is over!
Campbeltown/Mull of Kintyre
creamery to close after almost 100 years (5th
November 2019)
After 18 months of
trying to sell its Campbeltown Creamery, First Milk
have had to admit defeat and have on Friday (1st Nov) entered into
the required consultation period with 14 employees.
The last hope for a
sale as a going concern lay with what turned out to be a successful crowd
funding bid from the 29 local supplying dairy famers. Sadly when the
commercials were crunched it simply wasn’t even close to looking like it would
be a viable sustainable business to preserve & continue.
The farmers
explored numerous avenues with the aim of securing the sites future and its
Mull of Kintyre cheddar cheese brand but it was simply a massive vertical hill
to climb, so having opened in 1923 the doors look set to close in 2019 after
almost 100 years of cheese production.
The farmers waved
the white flag at a meeting last Wednesday evening. Better to have tried and
failed than not to try at all but the world of cheese brand promotion and
retail sales is very tough and not for the feint hearted.
The good news
consolation for those 29 farmers is that going forward they will continue to
have their milk collected and paid for by First Milk at the Co-op’s member
price with no additional haulage charge unlike some others in Scotland! (See
Above).
Sadly for the 14
employees there appears to be no income protection.
Sainsbury’s
currently buy an estimated 400 tonnes of Mull of Kintyre cheese and one
proposal was to ramp up the tonnage sold to Sainsbury’s and at the same time
charge them up to an additional £1000 tonne to circa £4000 tonne for the
creamery’s total anticipated output of circa 1400 tonnes year.
It wasn’t an offer
Sainsbury’s or other retailers could back and given the harsh commercials it
could easily be a relief that those farmers didn’t take on the creamery.
Closure has been on
the cards for several years and it has not come without a huge effort to
prevent the doors closing by all involved.
One producer sent
Ian a copy of Page 5 of last weeks Scottish Farmer and a poorly researched
article by Ken Fletcher. It claimed staff had been informed of the closure last
Tuesday, before the farmer bid was shelved, and even talked about “a producer
backlash” both of which were miles away from the truth and the dairy equivalent
of fake news.
Arla to hold its Member
conventional Milk Price for a 10th consecutive month.- (22nd
October 2019)
Arla has today confirmed a stand on member milk price
for a 10th consecutive month starting 1st of November at
30.19ppl based on a manufacturing standard litre and 29.02ppl (liquid standard
litre).
Arla’s UK organic members will see a 0.91ppl (1 euro cent)
reduction to 40.22ppl based on a manufacturing standard litre and 38.66ppl
(liquid standard litre). UK organic milk sales have declined for a number of
reasons in 2019 which is a concern.
Note this 1 euro
cent comes a month after Arla reduced its Swedish
Organic milk price by 1 euro cent.
Marks and Spencer’s do the honourable
thing and pay all its Welsh Tomlinson’s suppliers- (22nd October
2019)
Whilst there were
we believe only two M&S aligned producers affected by the recent collapse
of Wrexham based Tomlinson’s Dairies the top end retailer has paid both farmers
directly for all the milk delivered up to and including Saturday 12th
of October when Tomlinson’s closed it’s doors.
In fact Ian understands M & S took over all farmer payments at least
2 months ago declining to pay Tomlinson’s for the farmers share.
Sainsbury’s only have one realistic
option- (22nd October 2019)
The move by M&S
to do the honourable thing and pay its dairy farmers in full piles even more
pressure on Sainsbury’s whose reputation is certainly that it has skin like a
rhinoceros. To date Sainsbury’s has shown no inclination to the numerous
criticisms and attacks it is experiencing in connection with the outstanding
milk money due to its SDDG Tomlinson’s farmers.
If Sainsbury’s want
to maintain a good reputation, goodwill and relationships with their supplying
farmers, as M&S have, they only have one option and they would be wise to
declare it very soon. Otherwise its set to be a long drawn out costly process.
Together with Sainsbury’s – Tomorrow’s
Conference - (22nd October 2019)
Tomorrow
Sainsbury’s are holding their 2019 farming conference at the Park Plaza,
Westminster from 10am. It’s billed by Sainsbury’s Head of Agriculture Barney
Kay as
“A great
opportunity for you to ask questions which will be put to the Q and A panels by
Charlotte Smith” (as in BBC Radio 4 farming today).
Send your questions
to register@sainsburys-events.co.uk . Ian hopes Sainsbury’s SDDG Tomlinson’s farmers attend and/or and
others step forward and don’t let Barney down because he hopes “you find the
conference engaging, informative and thought provoking”.
It’s the best place
to be heard and to ask one simple non confrontational question “Will Tomlinson’s SDDG farmers be paid in
full for the milk they sold to Sainsburys via Tomlinsons Dairy from September 1st to October
12th?”
Sainsbury’s V M&S - (22nd
October 2019)
M&S read the
signs and took control of the money due to its Welsh Farmers whereas
Sainsbury’s appear to have taken no action to protect its farmers. In addition
Sainsbury’s allegedly paid Tomlinson’s on a daily basis to aid cash flow.
That may have helped
Tomlinson’s but having made that move Sainsbury’s are exposed without any
trunks on now the tide has gone out because the farmers want paying and
Sainsbury’s were aware of how serious the financial position of Tomlinson’s
was.
.
These 40 or so SDDG
farmers were definitely encouraged, persuaded and induced to give up a Muller
contract in favour of a Tomlinson’s contract and that will be cannon fodder for
the lawyers if they get a shot at the retailer.
At least one litigation funder is smelling blood along with at least one
legal firm who is using these words plus ‘enticement and pressure’.
Sainsbury’s have to
show their hand because the farmers are now overdue their September milk
payment and are starting to get anxious and showing signs of wanting answers
and money.
One suggested to
Ian Sainsbury’s are like rhinoceroses and thick skinned. But they aren’t
complete idiots (yet to be confirmed) and are highly unlikely to let this
proceed to court.
Tomlinson’s sites up for sale but
where’s the milk - (22nd October 2019)
PWC as
administrators for Tomlinson’s of Wrexham are attempting to close bids for up
to three Tomlinson sites in less than a week.
All of Tomlinson’s
direct suppliers have fled to various parts of the country in a bid to find a
new home and the Sainsbury’s suppliers have all been given Muller contracts as
have the M & S producers. So it’s a
liquid business for sale without any milk.
It’s a mystery why
the business didn’t continue to run under the administrator in a bid to
maximise the value or why attempts to sell earlier as a going concern didn’t
happen. A liquid processing facility
with no milk will be difficult if not near impossible to achieve anything more
than salvage value on.
On offer today at Sainsbury’s - (22nd
October 2019)
Sainsbury’s have a
toy sale and you can buy a Hotwheels Corkscrew Crash
for only £25 (was £50) plus a Play-Doh Animal Discovery Bucket for £10 (was
£20).
Tomlinson’s SDDG
farmers believe Sainsbury’s James Car Crash Curtis who is credited as been
instrumental in introducing 2 wild card processors to Sainsbury’s (Medina &
Tomlinson’s) in 2016 is the driver of the Hotwheels
Milk Screw Crash and that the Play-Doh Animal Discovery Bucket has had all its
milking cows taken out.
Sainsbury’s
& Tomlinson’s Special Edition -
(15th October 2019)
Tomlinson’s
Liquid Dairy of Wrexham goes into Administration
On Saturday evening around 33 direct
suppliers plus approximately 39 (15%) of Sainsbury’s Dairy Development Group
(SDDG) suppliers were told Sunday’s milk would not be going to Tomlinson’s for
processing and its doors were closed.
On Monday (yesterday) Pricewaterhouse
Coopers were appointed as administrators.
The Tomlinson’s family business employed 331
staff and started 36 years ago and until 2016 was a well respected solid family
business. Then came the award of a
Sainsbury’s liquid contract in May 2016 and the need to double capacity to
around 200 million litres within a 16 month period.
PWC in their announcement confirm “Tomlinson’s had
suffered an accumulation of significant operating losses over recent years”.
The business was profitable and nose dived in
the year ending March 2018 where it lost around £5 million and a further £2
Million to March 2019. For the 331 staff its devastating news, for the 72 or so
farmers it will be painful and the potential, yet to be confirmed, loss of 6
weeks milk money will certainly push some over the edge. All of these farmers need support, advice and
help to cope and see a way forward and a future.
Credit to Lloyd Fraser (haulier), Muller and
Sainsbury’s for ensuring Sunday’s milk and thereafter was all lifted, processed,
delivered to Sainsbury’s stores and will presumably be paid for, to ensure
seamless continuity of customer supply.
The
Background to Tomlinson’s & Sainsbury’s
All of the 39 or so SDDG farmers were
originally with Muller where they committed to deliver what Sainsbury’s
required including investing in Sainsbury’s higher standards and welfare.
The farmers have accommodated everything
Sainsbury’s have asked of them and have done nothing to deserve this
consequently Sainsbury’s must surely accept responsibility for the dire
situation they have put these loyal farmers in.
Let’s face facts the farmers involved are
only linked to Tomlinson’s because they were told to move from Muller if they
wanted to retain their Sainsbury’s supplier status. It was a postcode lottery over which the
farmers have no control or say.
When Sainsbury’s encouraged them to move from Muller to
Tomlinson’s those farmers trusted Sainsbury’s and believed the retailer had
carried out due diligence on the Tomlinson’s family business.
It’s now time for Sainsbury’s to step forward
accept responsibility and comment on what’s next in particular their position
on the money its SDDG farmers are due on milk supplied from 1st of
September to the 12th of October.
Barney Kay in particular needs to be visible
especially given he hails from Tomlinson’s area coming from Stoke-on-Trent and
living within 7 miles of the Potter office (Barney the kettles on if you do the
school run). Barney has a good
agricultural background, was a NFU regional director, general manager of the
National Pig Association, general manager at Moy Park, Head of Agriculture at
Tesco (2015-2019) and a few months ago moved to Head of Agriculture at
Sainsbury’s. He knows about farming.
Let’s see Sainsbury’s through Barney and his
side kick Gavin Hodgson, Sainsbury’s Head of Livestock, demonstrate how strong
Sainsbury’s value the relationship with the Tomlinson’s SDDG farmers.
Will Sainsbury’s be honourable and do the
right thing or will they dig their heels in and go on the defensive?
If Sainsbury’s don’t do the right thing it
will likely destroy some farmers and will certainly severely dent farmer’s
faith in retailers and their aligned contracts. Already there is local talk of
several on the edge if no money comes.
One solution must be for Sainsbury’s to be
invoiced for the 6 weeks milk by each farmer and for Sainsbury’s to pay them
direct subject to a signed debt transfer enabling Sainsbury’s to receive any
proceeds from the administrator thereby avoiding double funding.
In a nut shell it’s a case of Sainsbury’s
deciding between Value v Values!
What
next for the Tomlinson’s SDDG (Sainsbury’s Dairy Debt Group)?
Affected farmers are asking about payment for
milk they supplied to Sainsbury’s in good faith. Depending on how Sainsbury’s
choose to play this out will determine whether the 39 or so SDDG Tomlinson’s
farmers are judged to have had a fair deal.
Affected farmers have renamed their group as the Sainsbury’s Dairy Debt
Group.
I believe if Sainsbury’s effectively stick
two fingers up to paying the farmers for the milk delivered to Tomlinson’s the
lawyers will be quick to sharpen their teeth. Christine Tacon
as the current Groceries Code Adjudicator GCA can expect to be wheeled into the
frame as matters escalate especially given she also lives in the heart of the
area.
At that point the National Press are likely
to take a keen interest alerting Sainsbury’s customers to the situation. Any
legal or GCA process will take time but as Sainsbury’s know from past
experience its customers will ultimately decide whether they believe these SDDG
farmers have been treated fairly or hung out to dry.
Only last night there was a TV documentary
covering 150 years of Sainsbury’s a period where the retail giant held pole
position as the countries No 1 retailer until recent years when it slipped to 3rd
position..
The programme highlighted a number of recent
gaffs & own goals by Sainsbury’s including their bizarre decision to sell a
Sainsbury’s brand of ‘Fairly Traded Red Label tea’. Having successfully
pioneered fair trade and trading terms with farmers in developing countries
ensuring they were paid a fair price in 2017 came Fairly Traded tea from
Sainsbury’s which was instantly viewed as undermining those farmers and confused
consumers.
Then came the Greenpeace report stating that
Sainsbury’s were worst in class for their use of single use plastic and
non-recyclable packaging. Greenpeace subsequently promoted an orange strap line
stating Sainsbury’s ‘couldn’t care less’.
As I have stated previously Sainsbury’s have
to pick between value and values on this issue.
Medina
Liquid middle ground processor Medina has
just published its financials for the 78 week period to 27th October 2018 and
has posted an eye watering £1.4 million loss compared to a £2.57 million profit
in the year (52 week period) ending 29th April 2017 pre its
involvement with the Sainsbury’s business.
Like Tomlinson’s Medina borrowed to expand and accommodate the
additional business from Sainsbury’s in 2016.
There is an extremely serious PR series of
events Sainsbury’s Dairy appear to be at the heart off. No wonder some are linking where Sainsbury’s
go with their dairy business tends to follows ‘a trail of orange destruction’. Some liquid processors might be better off
not having major retailer’s liquid business.
0.79ppl milk price increase for Sainsburys (SDDG) ALIGNED SUPPLIERS- From 1st
October- (11th October)
This results in the
following standard liquid litre prices
Muller SDDG 30.94ppl
Arla SDDG
30.82ppl
The change is
partly due to the following cost of production movements on the three F’s. Feed 10.34ppl (down0.11ppl), fertiliser
0.95ppl (up 0.04ppl) and fuel 0.78ppl (up 0.04ppl)
0.90ppl Milk Price reduction for suppliers
to Pattemores Dairy (liquid) from-1st
November - (11th October)
This takes
producers standard liquid milk price to 26.25ppl and based on a standard
manufacturing litre to 27.12ppl.
0.75ppl Milk Price reduction for
suppliers to Barbers (cheese) –from 1st November- (11th
October)
This takes
producers standard manufacturing litre milk price to 27.79ppl and based on a
standard liquid litre to 26.80ppl.
0.75ppl Milk Price reduction for
suppliers to South Caernafon Creameries (cheese) –
from 1st November - (11th October)
This takes
producers standard manufacturing milk price to 27.28ppl and based on a liquid
standard litre 26.34ppl.
0.63ppl Milk Price reduction for
suppliers to The Fresh Milk Company Scotland (cheese) AKA Lactalis
from 1st October - (11th October)
This is actually a
quarterly floor price and means for
October, November & December the lowest price based on a manufacturing
standard litre will be 27.61ppl and based on a liquid standard litre 26.5ppl,
0.45ppl
Milk Reduction for First Milk members (Cheese) – from 1st November -
(11th October)
This takes members manufacturing standard
litre milk price to 27.9ppl and 27ppl based on a liquid standard litre.
Crediton Dairy to hold its
producers Milk Price for November - (11th
October)
This hold maintains the liquid standard litre
price at 28.5ppl.
Belton Cheese to stand on/hold its
producer Milk Price for November - (11th
October)
This means the existing manufacturing
standard litre price of 27ppl continues and based on a standard liquid litre
26.25ppl
Saputo (Davidstow
AKA Dairy Crest) to stand on/hold its producer Milk Price for November - (11th October)
This is an impressive 9th
consecutive month hold at a manufacturing standard litre price of 29.90ppl and
based on a liquid standard litre 28.82ppl.
Wensleydale Creamery (Cheese)
targets a hold for its producer Milk Price for November - (11th
October)
This will be the 8th consecutive
monthly price hold although it is yet to be officially confirmed. The
standard manufacturing litre price will remain at 28.35ppl and the standard
liquid litre price will continue at 27.40ppl.
Meadow Foods (Liquid) to stand on/hold
its producers Milk Price for November -
(11th October)
This means the existing liquid standard litre
price of 25ppl continues.
Wells Dairy (Liquid) to stand on/hold
its producers Milk Price for November -
(11th October)
This means the existing liquid standard litre
price of 25.3ppl continues.
Paynes Dairies (Liquid) to stand on/hold its
producers Milk Price for November - (11th
October)
This means the existing liquid standard litre
price of 25.75ppl continues.
Yew Tree Dairies to stand on/hold its
producer Milk Price for November - (11th October)
This means the
existing liquid standard litre price of 25.5ppl will continue.
Freshways (liquid) to stand
on/hold its producer Milk Price for November - (11th October)
This means the existing liquid standard litre
price of 25ppl will continue.
Pensworth Dairies (Liquid) to
stand on/hold its producer price for November -
(11th October)
This means the existing liquid standard litre
price of 24ppl will continue.
Grahams Dairies Scotland (liquid) to
hold its producer milk price for November - (11th October)
This means the existing standard litre price
of 26ppl continues.
First Milk to double its Member
Premium in 2020 - (11th October)
This is effectively
a 13th payment and will increase from the current 0.25ppl to 0.5ppl
from April next year.
Glanbia defer November Milk
Price decision fearing a No deal Brexit car crash - (11th October)
In a comprehensive
letter to its Anglesey mozzarella cheese factory suppliers Glanbia’s
CEO Paul Vernon has outlined the crisis the company would face if we end up
with a no deal Brexit and the proposed tariffs.
Cheese sales to the
EU will incur a crippling tariff of 1852 Euros/tonne which represents a cost of
approximately 60% on current sale prices and in PPL terms represents 18ppl!!
Glanbia Anglesey export almost half of its Mozzarella
output and this tariff coupled with Zero tariffs on imported mozzarella results
in l a very potent cocktail to swallow.
Consequently Glanbia has suspended its policy of giving producers one
clear calendar months notice of milk price changes until its clear what future
trading relationships post 31st October will be in place.
Market Indicators - (11th October)
Given the Brexit no
deal possibility Ian has decided not to report on UK Wholesale prices for cheese,
SMP, Cream etc because it could all go downhill and
change very quickly and to give price indicators a this stage would be
pointless.
No deal dairy tariff car crash could
cost the UK dairy industry £1.3 billion - (11th October)
Jaws could be heard
hitting the desks of dairy processors earlier this week when the government
dropped the bombshell that it’s temporary no deal Brexit will see European
dairy products able to come into the UK subject to Zero or minimal tariffs. Meanwhile the significant volume of UK dairy
exports currently going into Europe (90% of our dairy exports) will be hit with
WTO tariffs which were was described by Dairy UK as “cripplingly high” and will
make our dairy products uncompetitive in Europe.
The tariffs will be
nothing short of catastrophic and result in an estimated 150,000 tonnes of
cheese and 33,000 tonnes of butter flooding the UK market creating “the
potential for huge farmgate milk price collapses”
racking up to £1.3 billion in lost revenue. (See above Glanbia
story)
Dairy UK are
calling (or perhaps screaming) at government to put equivalent/reciprocal
tariffs in place to protect the industry and a car crash in farmgate
milk prices. The only alternatives
appear to be either government support or potential quick exodus of dairy
famers and possibly some processors. Lets all point our prayer mats towards
London and a deal because this scenario could result in farmgate
milk prices across the piste crashing suddenly.
Another liquid Processor to close
- (11th October)
“17years of
marvellous milk and yummy yoghurts” from Marybelle
dairy in Suffolk looks set to come to an end very soon.
The processor
supplies its products to local Co-op stores, Asda, Morrisons
& Waitrose plus other outlets but simply cannot make money, and with its
closure goes the last dairy processor in East Anglia and the loss of 19
jobs.
Single Farm Payment Exchange Rate Set
- (11th October)
The 2019 SFP Basic
payment exchange rate will be 89.092p to the Euro compared to 89.47p in 2018.
Muller set to address rocketing
Scottish Milk output - (11th October)
Muller has an oversupply problem in Scotland
which it is tackling this month having experienced a 25% surge in milk supplies
from its 230 Scottish farms which is way ahead of demand during the past 5
years.
This equates to 180 million litres of
additional milk equivalent to 33 litres of extra milk per person living in
Scotland.
By my calculations thats
6,316 tankers a year @ 28,500 litres with each trip from Bellshill to
Manchester (Muller’s most Northerly English dairy) amounting to 410 miles
return. The simple arithmetic is that this means an eye watering 2.6 million
lorry miles year.
In
addition to the financial implications of trucking the surplus milk to England
there are serious environmental costs which are unsustainable and particularly
unacceptable to consumers.
Some
Muller producers have apparently doubled production in that time with one
almost tripling and we are talking multiple millions of extra litres coming
from individual farms in many cases. Most have expanded with many choosing not
to check what demand for fresh milk is doing in Scotland with Muller prior to
making their long term investments.
Ian
put a number of direct questions to Muller some of which were answered including
the fact that there is no distinction between the volume expansion between
aligned and non aligned Muller suppliers both have expanded in parallel.
In
addition Muller have not recruited in Scotland since 2013 so no increase from
new arrivals.
The
review, or rather the solution, is anticipated by the end of the month and it’s
likely the end result will be a cocktail of measures some of which may be
painful and unpalatable for some producers.
Ian
believes transport charges exclusive to Mullers
Scotland Farmers could be one result plus the likely ditching of volume
incentives and the serving of termination notices to some producers. For any
farmer unfortunate enough to be served notice it could be the end of the road
with no where to sell their milk- worrying times.
One
problem which appears difficult to negotiate is the offenders might not be the
ones or the only ones who are penalised.
Others
in the frame as encouraging and trumpeting Scottish milk expansion include
NFUS. For example in 2013 they called for a doubling of Scottish milk
production to 1.6 billion litres by 2025 (when the average farmgate
milk price was over 30pp!) but interestingly little mention was made of
profitable outlets for this enormous quantity of extra milk. The golden
rule is markets and customers first as in demand led expansion.
Only
this week the NFUS Scotland’s President confirmed that NFUS has “the ambition
to double the size of the farming, food and drink industry in Scotland to £30
billion”
Dairy Farmer Crowd Funding bid to save
Campletown Creamery - (11th October)
29 Kintyre
Peninsula Dairy Farmers have announced a crowd funding bid seeking £50,000 to
acquire the Mull of Kintyre cheddar cheese processing site from First
Milk. Their plan is to use a combination
of crowd funding plus a per litre levy on all milk supplied. The Kintyre site has processed local farmers
milk since 1923.
For details see http://www.crowdfunder.co.uk/mokcheddar
|
Milk
Prices Purchaser
(Non Aligned) |
|||||
|
|
Liquid |
||||
|
Arla Foods Non-Aligned |
29.02 |
||||
|
Davidstow/Saputo (AKA Dairy
Crest) |
28.82 |
29.90 |
28.82 |
||
|
Crediton Dairy |
28.50 |
|
28.50 |
||
|
First Milk |
27.45 |
28.37 |
27.00 |
||
|
Wensleydale Creamery |
27.40 |
||||
|
Barbers |
27.34 |
28.56 |
26.80 |
||
|
Pattemores |
27.15 |
||||
|
SouthCaernarfon Creameries
(Cheese) |
|||||
|
Yew Tree Dairy |
|||||
|
Lactalis/Caledonian/Fresh
Milk |
26.50 |
||||
|
Belton (Cheese) |
26.25 |
||||
|
Glanbia |
26.10 |
27.00 |
tbc |
||
|
Wyke Farms |
26.00 |
||||
|
Grahams Scotland (Liquid) |
|||||
|
Paynes |
25.75 |
||||
|
Muller Wiseman; standard |
25.75 |
|
25.75 |
||
|
Wells Farm (Liquid) |
25.3 |
||||
|
Freshways |
25.00 |
||||
|
Meadow Foods |
25.00 |
||||
|
Pensworth |
24.00 |
||||
|
Buckleys
(Medina) |
|||||
New Run Cattle Tag Prices
We supply a full range of all types of Cattle & Sheep
tags at very competitive prices including BVD, EID & Management tags.
|
Cattle Tags - New Run Combinations |
Retail Price (excl vat) |
|
Large
& Large |
£1.37 |
|
Large
& Button |
£1.09 |
|
Large
& Medium |
£1.35 |
|
Large
& Metal |
£1.09 |
|
Medium
& Medium |
£1.35 |
|
Medium
& Button |
£1.05 |
|
Medium
& Metal |
£1.05 |
|
Large
& EID Secondary |
£2.30 |
Please contact the office on 01335 320016 or
email sales@ipaquotas.co.uk for more
information, or visit our website http://www.ipaquotas.com
Remember this
bulletin continues to be available free of charge and takes Ian & the team
considerable time to produce. The only encouragement to keep producing it is a combination
of enthusiasm, tag sales & enquiries from our readers
Cheese / Manufacturing Price
Movements
New Run Tag Prices
We also supply a full range of all types of Cattle & Sheep
tags at very competitive prices including BVD, EID & Management tags.
|
New Run Combinations |
Retail Price (excl vat) |
|
Large &
Large |
£1.37 |
|
Large &
Button |
£1.09 |
|
Large &
Medium |
£1.35 |
|
Large &
Metal |
£1.09 |
|
Medium
& Medium |
£1.35 |
|
Medium
& Button |
£1.05 |
|
Medium
& Metal |
£1.05 |
|
Large &
EID Secondary |
£2.30 |
Please
contact the office on 01335 320016 or email sales@ipaquotas.co.uk for more information, or visit our
website http://www.ipaquotas.com
Remember this
bulletin continues to be available free of charge and takes Ian & the team
considerable time to produce. The only encouragement to keep producing it is a
combination of enthusiasm, tag sales & enquiries from our readers
GDT
Auction more or less stand on (4th
July 2019)
Tuesday GDT Auction saw prices down by only
0.4% to average US $3302 tonne. Whilst technically this is the fourth
consecutive auction fall, following a 3.8% drop only two weeks ago, it is
viewed as more or less a stand on result.
Notable prices were:
SMP up + 3.2% to
average $2430 tonne
WMP No
Change to average $2969 tonne
Cheddar down -
1.5% to average $3756 tonne
Butter down
- 4.8% to
average $4339 tonne
0.5ppl
milk price reduction for Dale Farm members for May deliveries(4th July 2019)
This takes producers supplying Dale Farm in
Kendall to 27.14ppl based on a standard liquid litre and 26.34ppl for those
supplying Dale Farm in its homeland in Northern Ireland.
0.19ppl
milk price reduction for Mullers Co-Op (CTRG)
suppliers from 1st August
PRODUCER NOTIFIED (4th July 2019)
This results in a standard liquid litre milk
price of 29.37ppl
0.07ppl
milk price reduction for Tesco (TSDG) suppliers from 1st August PRODUCER NOTIFIED (4th
July 2019)
The reduction arises as a result of the
quarterly cost tracker review. The 1st August Muller TSDG standard
litre price will be 31.07ppl and for an Arla TSDG
producer 30.95ppl.
By comparison www.milkprices.com’s standard liquid
litre milk price for August 2018 was 30.17ppl for a TSDG Muller Supplier.
Arla to stand on with its July milk price for a 6th
consecutive month (4th July
2019)
This is indeed a significant achievement by Arla who have managed the 2019 spring flush at a constant
30.22ppl based on a standard manufacturing litre and 29.05ppl for a standard
liquid litre.
For Arla Organic
suppliers the standard litre price remains at 41.97ppl (manufacturing) and
40.33ppl (liquid).
Note there has been a tiny 0.01ppl currency
smoothing adjustment to all Arlas ppl
prices.
Saputo
Dairy UK (AKA Dairy Crest Davidstow) stand on August
milk price for a 6th consecutive month (4th July 2019)
This is a notable achievement by the cheese
processor and DCD which means producers August standard litre milk price of
29.90ppl (manufacturing) and 28.82ppl (liquid) continues for a 6th
consecutive month.
Barbers
(cheese) stand on August milk price (4th
July 2019)
This means continuation of the standard
manufacturing litre price of 28.56ppl and based on a liquid standard litre
27.75ppl.
Meadow
Foods Bombshell notice to find another Milk Buyer (4th July 2019)
Last week Meadow sent a letter to a number of
its producers giving them 12 months notice that they no longer require their
milk. Meadow declined to confirm how many notices have been issued but judging
by the people who have contacted Ian and alternative milk purchasers it could
easily number 50 plus affected farmers.
Meadow informed Ian the notices are linked to
quantity of milk supplied, farm assurance, milk quality including claiming they
have weeded out the “farms we couldn’t take a customer onto”. This does not run
true with farmers Ian has spoken to or indeed the notice letters which make no
reference to milk quality or any farm assurance concerns or failures. In
addition Meadow informed Ian some of the others under notice were small pickups
of under 750 litres/day.
The sting in the tail is Meadows statement
that from April 1st 2020 for their final 3 months notice period
those farmers under notice will be paid at a B litre milk price. This must
surely be challenged by those involved because if Meadows contractual notice
period is 12 months how can they pay a B price for the final 3 months?
Ian would like to hear, on or off record,
from affected Meadow producers via email but it looks like a smoke screen with
Meadow having lost a serious amount of contracted volume somewhere and needing
to cut volume and cost quickly and if possible by squeezing loyal producers to
quit early.
The
Dairy Crest name has been ditched (4th
July 2019)
It hasn’t taken long for Dairy Crests new
Canadian owners Saputo to change the signs to Saputo Dairy UK as the name Dairy
Crest is confined to the history books. The Dairy Crest name was christened in
the 60’s by the MMB who started to sell its cheese under the brand name. Will
DCD be rebadged as SDD (Saputo Dairy Direct) which is the same abbreviation for
same day delivery?
Muller
confirms the closure of its Foston Derbyshire
facility (4th July
2019)
It was a forgone conclusion that as part of Mullers £100 million project Darwin it would close at least
one factory and it was no surprise that Foston is the
one to be closed by the end of this year with the loss of 223 full time jobs.
Most of the milk will be diverted to Mullers
Manchester or Market Drayton facilities.
Regrettably 31 farmers are likely to be
served 12 months notice by Muller as a result of the closure mainly due to
geographical location. Muller will shortly be meeting the farmers involved both
in groups and individually.
The main issue is the constant annual
reduction in liquid consumption which is reducing by approximately 70 to 80
million litres year. In addition Fostons geographical
location in relation to Mullers other operations and
its relatively small size circa 350 million litres year are both key factors in
the decision to close.
In order to achieve Mullers
2 year £100 million turnaround target under Project Darwin Muller are likely to
have to make further tough announcements and decisions.
Muller acquired the Foston
factory from Dairy Crest 3 years ago, so this is not a knee jerk reaction. With
a minimum target of all its processing facilities to be at 90% plus utilisation
and today with Foston averaging under 80% utilisation
(180 farmers suppling 270 million litres annually) Muller were forced to take
action. The site is not for sale and is likely to be put to new uses by the
Muller Group.
AHDB’s
Dairy Contracts Legislation briefing tows the Unions Line on contract
legislation (4th July
2019)
Ian had a sneak preview of AHDB’s latest
briefing ahead of its publication on their website yesterday.
Its certainly a political hot potato and
could easily have been written by the NFU’s and over stamped with AHDB’s Market
Intelligence branding.
Four pages of the 10 page briefing are
devoted to reviewing how legislated milk contracts in Italy, France and Spain
operate yet no mention is made of the fundamental basics as to whether such
legislation is delivering those farmers a consistently better milk price than
that paid to GB farmers under discretionary pricing.
On page 5 there is a curious 1 to 5 star
rating which clearly gives a high star rating to formula pricing and a very low
star rating to the current buyer discretion pricing. This is likely to be a hot
topic for discussion and further analysis/challenges.
The one statement in the reports summary
which had Ian rolling his eyes back and taking a double take was the one
claiming that relationships where farmers and processors work in partnership
towards a common goal having strong lines of communication are not widespread
in GB. The report concludes “unfortunately those types of relationships are not
widespread.”
This must be a typo because GB wide such
relationships are fortunately widespread with farmer representation, PO’s,
Co-Ops etc eg, Muller, Arla, First Milk, Barbers, Tesco, Sainsburys,
Saputo Dairy UK (AKA Dairy Crest), Lactalis, M &
S, SCC plus more.
Surely it’s a fact that ineffective or non
existent supply chain relationships which allow some smaller milk buyers to
steam roller over supplying farmers with unacceptable changes is the problem
and there are only a handful of rogues. Frankly Ian doubts any legislation
would change how these rogues operate and in some respects legislation could
play into their hands.
These are the bad apples. More on that in Ians July Dairy Farmer Article.
The conclusion is its a bit like Ians school reports AHDB could do better than this and
should do but read it and make your own minds up.
Dairy
Crest (Saputo Dairy UK) launches low calorie Cathedral City Cheese (4th July 2019)
Dairy Crest continues to drive innovation
with its latest development of a 50% less fat Cathedral City branded cheese
called “Cathedral City 82”. Its
a half fat cheese with one third less
calories than standard cheese.
The 82 range is initially exclusively
available in Tesco stores for nine months until March 2020.
This looks like a smart move by DC.
Note from the Editor AKA Ian (18th June 2019)
Given the lack of
real Dairy News this bulletin will be continue to produced as and when there is
anything newsworthy to report. Normal
Friday weekly editions will resume when necessary. Many Thanks Ian & Associates.
GDT down for a third consecutive Auction (18th June 2019)
Todays GDT saw the
third consecutive all prices reduction this time the fall was a further 3.8% to
average US $3208 tonne for 24,239 tonnes sold.
The previous two
auctions recorded falls of 1.2% and 3.4%.
Notable movements
were:
Butter down 5.7% to average
US $4553 tonne
Cheddar down 4.3% to average US
$3781 tonne
Whole Milk Powder down 4.3% to average US $3006 tonne
Skim Milk Powder down 3.5% to average US $2358 tonne
0.6ppl milk price reduction for direct suppliers to
Arla – from July 1st (18th June
2019)
This reduces
producer’s standard liquid litre milk price to 26.4ppl and based on a standard
manufacturing litre to 27.53ppl.
0.5ppl milk price decrease for suppliers to Pattemores (liquid) – from 1st July (18th June
2019)
This reduces
producers standard liquid litre milk price to 27.15ppl and based on a
manufacturing standard litre 28.05ppl.
0.5ppl milk price decrease for Sainsbury’s (Muller
& Arla) producers from 1st July (18th June 2019)
The reduction
arises due to its quarterly cost tracker review of feed, fertiliser and fuel
prices.
The resulting
standard liquid litre prices are 30.15ppl (Muller) and 30.3ppl (Arla).
Dairy Crest to stand-on with its July producer milk
price (18th June 2019)
This hold
maintains producer’s standard manufacturing litre price at 29.90ppl and based
on a standard liquid litre at 28.82ppl which is another excellent achievement
for DC and DCD.
Belton Farm (Cheese) to stand-on with its June milk
price (18th June 2019)
This hold
maintains producers standard manufacturing litre price at 28ppl and based on a
standard liquid litre at 27.25ppl.
First Milk to stand-on with its July member milk
price (18th June 2019)
This hold
maintains member’s standard manufacturing litre price at 28.37ppl and based on
a standard liquid litre at 27.45ppl.
Freshways to stand-on with
its June producer milk price – PRODUCER NOTIFIED (18th June 2019)
Freshways standard liquid litres for June will remain at
27.06ppl and this will be the minimum price for July.
Freshways will now give its suppliers a minimum 21 days
notice of any further price charges which unless our Freshway
moles have failed to press on any recent communications translates to the same
price being paid for June and July deliveries.
African Swine Fever ripples from China (18th June 2019)
The African Swine
Fever outbreak which was first recorded last August is rampant in Asia with
others fearing it is now a case of when it spreads to other parts of the world
not if.
ASF is reducing
Chinas pig herd at an alarming rate and with it comes a significant reduction
in the demand for whey (cheese makers
valuable by product) a key component in piglets feeds.
Many predict a
total reduction in the Chinese pork herd of 25% would be a good result and
remember China is responsible for 50% of global pork production so a 25%
reduction equates to 12.5% of world output.
Pig prices across
the world are heading North as China seeks to replace its lost output. In
addition Chinese beef imports have rocketed. In April China imported 130,000
tonnes up 75% compared to April 2018 figures and domestic Chinese beef prices
are also heading North. There are now reports, due to reduced pork availability
and increasing prices it is influencing Chinese farmers who have started to
prematurely slaughter dairy cows for the beef market.
So worldwide
demand for beef and other meats from China is on the increase and the
likelihood is that for the remainder of 2019 the ASF outbreak in China is going
to play a major role in the volatility of world meat prices and whey prices
with one up and the other down.
1ppl milk price
reduction for Pensworth (liquid) suppliers –from June 1st . (24th May 2019)
This
reduces producers standard manufacturing litre milk price to 25.35ppl and based
on an Organic standard litre 39.35ppl
0.5ppl milk price
reduction for Wyke Farms (cheese) suppliers – June 1st
(24th May 2019)
This
reduces producers standard manufacturing litre milk price to 28.47ppl and based
on a standard liquid litre to 27.5ppl.
0.3ppl milk price
reduction for First Milk Members – from
June 1st (24th
May 2019)
This
reduces producers standard manufacturing litre milk price to 28.37ppl and based
on a standard liquid litre to 27.45ppl.
Arla to stand-on with its June member milk price (24th
May 2019)
This
hold means the current champions league standard manufacturing litre price of
30.23ppl and standard liquid litre price of 29.06ppl are retained for a 5th
consecutive month.
Arlas Organic members standard litre milk price
remains at 41.98ppl (manufacturing) and 40.34ppl (liquid).
Credition Dairy to stand-on with is June producer milk
price (24th May 2019)
This
hold means the current very healthy standard liquid litre milk price of 28.5ppl
is retained.
Freshways Suppliers vent their anger over major
contract change (24th May 2019)
The
Nijjar family yesterday demonstrated how little its
Directors feel any necessity to engage with its supplying farmers having given
them all five weeks bombshell notice of a significant price drop and contract
change.
Ian
calls it the Arla factor because Arla’s
5 months standard liquid litre price of
29.06ppl and its inclusion in the Freshways
basket price is “now making us (Freshways) even more uncompetitive” as commented by MD
Bali Nijjar in his letter to producers this week.
Freshways have operated a transparent basket price
featuring five liquid processors for 16 years (since 2003) which now include Arla, Muller Meadow,
Paynes & Yew Tree. However now the Arla price doesn’t suit Freshways
and in a letter to producers state “Their
(Arlas) June price of 29.06ppl is substantially
higher than the remaining 4 in the basket who average 26.6ppl.”
Result
is after 16 years Freshways have given just over 1
months notice that its contract pricing terms will be unilaterally changed and
the basket price will be ditched to be replaced with a Freshways
schedule which simply translates to a significant price cut.
To
say this has come as a complete bombshell is an under statement especially
given the fact several Freshways Farmers suppliers
claim their farmer representatives were not consulted and the change was
imposed.
If
correct Freshways are playing a very dangerous game
because the change is coming at a time when total GB output is heading towards
“normal” and futures prices and market sentiment is cautiously looking towards
at least stability in milk prices if not some small increases. In other words
the change is short notice and well behind market movements.
It’s
a long time since so many farmers vented their anger at Ian as much as Freshways suppliers have in the past 24 hours.
To
summarise these Freshways farmers do not feel Freshways have been fair and to change a pricing mechanism
which has operated for 16 years at a months notice with zero consultation has
been interpreted that Freshways can steam roller any
changes they wish and “stick two fingers
up to producers.”
Back
in January in Ians Dairy Farmer Article he wrote “I agree there have been a small handful of
milk purchasers who have crossed the line with unacceptable behaviour.” And
that “such practices have to be stamped
out.”
Michael
Oakes, NFU Dairy Board chairman stated “milk
purchasers cant be trusted to deliver fair contract terms and continue to use
and abuse farmers.”
As
a generalisation applied to UK milk purchasers Ian disagreed with Oakes but
understands why Freshways suppliers are furious and
feel both Michael Oakes and Ians comments now apply
to Freshways.
Several
Freshways farmers are threatening to walk on the
basis if the contract terms can be changed to drop their milk price in a months
time they should be able to leave on the 28th July or after.
For
these farmers any Trust has evaporated over night and I guess voting with their
feet is the only way their anger will be registered.
Whilst
Muller have project Darwin Freshways perhaps need
project Thunderbird because for sure International Rescue is needed to improve
its relationship and communication with its suppliers.
Mark Allen sails into
the sunset as the name Dairy Crest Vanishes (24th May 2019)
Mark
Allen has announced his decision to step down ass CEO of Dairy Crest with
immediate effect which will come as no surprise to all involved given it’s a
case of “Job Done”.
Mark
will be around until July when the Dairy Crest brand will be confined to the
history books and replaced with the brand name Saputo Dairy UK.
0.75ppl
milk price reduction for Grahams Dairies producers from 1st May (3rd May 2019)
This reduces producers standard liquid litre
milk price to 26ppl.
In a letter to producers Grahams are upfront
in declaring they are having to handle significant additional unplanned volumes
which have necessitated the forward sale of 1 million litres of spot milk at
14ppl as well as 8 surplus artic loads having been sold on the 27th
April alone!!
Grahams report that 65% of its producers have
increased milk production compared to 2018 levels and around 10 producers who
are having the biggest impact are talking to Grahams on a 1:1.
Having scrapped its A & B system prior to
the 2017 flush it means all Grahams producers feel the pain and not just those
who are contributing to the dramatic increase.
0.75ppl
milk price reduction for Barbers (cheese) producers milk price – from 1st
June (3rd
May 2019)
This reduces producers standard manufacturing
litre milk price to 28.36ppl and based on a liquid standard litre to 27.34ppl.
0.5ppl
milk price reduction for Blackmore Vale Farm Cream from May 1st –
PRODUCER NOTIFIED (3rd
May 2019)
This reduces producers standard liquid litre
milk price to 28.2ppl
0.35ppl
milk price reduction for Wensleydale (Cheese)
producers milk price – from 1st May – PRODUCER NOTIFIED (3rd May 2019)
Very last minute price changes are still
around and this one reduces producers standard manufacturing litre milk price
to 28.35ppl and based on a liquid standard litre to 27.4ppl.
0.35ppl
milk price reduction for Pattemores Dairy producers –
from 1st June (3rd
May 2019)
This reduces producers liquid standard litre
milk price to 27.65ppl and based on a manufacturing standard litre 28.57ppl.
Dairy
Crest (Cheese) to stand-on with its June producer milk price at 29.9ppl (3rd May 2019)
This is fourth consecutive Dairy Crest
producer milk price hold and is worthy of a mention and thumbs up to all
involved in achieving a hold until at least 1st July.
The hold means the manufacturing standard
litre remains at 29.9ppl and on a liquid standard litre 28.82ppl.
Belton
Farm (cheese) stands on until July 1st at 28ppl (3rd May 2019)
The hold means the manufacturing standard
litre remains at 28ppl and on a liquid standard litre 27.25ppl.
Muller
possible Dairy Closure as part of Project Darwin (3rd
May 2019)
Local knowledge to Ian’s office indicates
employees at Muller’s Foston Dairy are now under a 45
day consultation with a view to Muller having to close the factory.
The former Amelca
plant has certainly had a very chequered history from when it first opened and
closed after a few weeks when the business folded spectacularly.
Project Darwin was launched in February this
year with a clear target to achieve £100 million in savings by the end of 2020
at the latest and this is another stepping stone towards that target.
Mullers six dairies are
under capacity and need to be pushing at 90% or more capacity and to achieve
this one site will close.
Muller process and supply more than 50% of
the GB fresh milk requirements and margins are almost non existent.
In addition to the closures Ian has received
emails from a couple of Muller wholesale customers who are rather annoyed that
Muller are ditching their business on the basis it’s uneconomical to continue
to supply them with fresh milk products. Tough as it is Muller did give plenty
of advance warning and it has to turn this business around.
All eyes and ears will be on CEO of Muller
Patrick Muller when he presents at next weeks annual Dairy Industry News
conference.
This is Arlas 4th
consecutive member milk price hold keeping the standard liquid litre price at
29.06ppl and based on a manufacturing standard litre 30.23ppl.
This is a welcome if not remarkable
achievement by Arla and certainly puts more pressure
on other processors who are finding current prices extremely challenging.
During the past week spot milk has been regularly trading between 13 to 15ppl
and the signs are pointing towards further weakening as milk production
continues to increase. Several processors who in previous years have managed to
track Arla have now been left standing and many,
particularly liquid processors will have little option other than to do their
own thing and do what is right for the survival of their businesses.
Arlas members who supply
Organic Milk also benefit from a price hold at 41.98 based on a manufacturing
standard litre and 40.34ppl based on a liquid standard litre.
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
Wykes standard liquid
litre price will remain at 28ppl and based on a standard manufacturing litre
28.99ppl.
This results in a standard liquid litre price
of 29.56ppl.
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.
0.75ppl
milk price reduction for suppliers to South Caernarfon Creameries (cheese) –
from 1st May (5th
April 2019)
This results is a manufacturing standard
litre price of 28.03ppl
0.75ppl
milk price reduction for suppliers to Belton Farm (cheese) from 1st
May (5th April 2019)
This results in a manufacturing standard
litre milk price of 28ppl and based on a liquid standard litre 27.25ppl.
0.37ppl
milk price reductionfor suppliers to Lactalis (cheese) from 1st April - (5th
April 2019)
This takes producers standard manufacturing
litre milk price to 28.27ppl and 27.13ppl based on a standard liquid litre.
0.3ppl
milk price reduction for suppliers to Freshways –
from April 1st – PRODUCER NOTIFIED (5th
April 2019
Freshways have notified its
producers of a further 0.3ppl milk price reduction on their A litres from April
1st which reduces the A price liquid standard litre to 27.06ppl
0.34ppl
milk price reduction for Tesco aligned producers from 1st May – PRODUCER NOTIFIED (5th April 2019)
Muller
(liquid) to stand on with its May milk price at 26.75ppl (5th April 2019)
The 26.75ppl is a standard liquid litre price
which includes the 0.5ppl premium. The Muller Direct Organic standard liquid
litre May price is 40.25ppl.
Crediton Dairy (liquid) to stand on with its May milk
price at 28.5ppl (5th April
2019)
Crediton continue to head the
liquid processor league table with a liquid standard litre price of 28.5ppl.
Pattemores (liquid) to stand on again with its May milk
price at 28ppl (5th April
2019)
Pattemores standard liquid
litre price of 28ppl is set to remain one of the leading liquid processor milk
prices for yet another month only to be top trumped by Crediton
Dairy.
Dairy
Crest (cheese) to stand on with its May milk price at 29.9ppl (5th April 2019)
This is an impressive move by Dairy Crest who
have held their producer milk price at 29.9ppl (based on a standard
manufacturing litre) for four consecutive months. Based on a standard liquid
litre the price remains at 28.82ppl.
Barbers
(cheese) to stand on with its May milk price at 29.13ppl (5th April 2019)
This is the fourth consecutive month Barbers
have held producer prices at this level which is 29.13ppl based on a standard
manufacturing litre and 28.09ppl based on a standard liquid litre.
First
Milk (cheese) stand on with its May member milk price at 28.68ppl (5th April 2019)
First Milks decision to hold its April milk
price for May results in a standard manufacturing litre milk price of 28.68ppl
(including the 0.25ppl member premium paid in April 2020) and based on a
standard liquid litre 27.75ppl.
Milk
Deliveries update (5th
April)
According to AHDB Dairy GB milk deliveries
for week ending 23rd March were up 4.3% compared to the same week
last year equivalent to an additional 1.5million litres day and heading for the
most milk produced in 32 years and towards 15 billion litres.
To add to the problem is the fact milk
production in Southern Ireland is also at record levels. January to February
2019 production is up 3.2% and The Emerald Isles 2018 milk output was up 4.4%
to 7.58 billion litres up a whopping 53% on the 2007 to 2009 average annual
production.
Dairy
Crest 1 Billion pound sale is approved
(5th April 2019)
The sale of the remaining Dairy Crest
business to Canadian Saputo has been approved at 6.20 per share valuing the
business at almost £1 Billion. The new owners will take charge on April 15th.
0.37ppl
milk price reductionfor suppliers to Lactalis (cheese) from 1st April (26th
March 2019)
This takes producers standard manufacturing
litre milk price to 28.27ppl and 27.13ppl based on a standard liquid litre.
Arla to stand on with Members April milk price
which continues to defy gravity (22nd March 2019)
Arla continue to leave
most of its UK competitors scratching their heads having today announced that
their will be no change to the Arla member April milk
price which is Arla’s third consecutive monthly price
hold.
This means from April 1st the
following www.milkprices.com standard
litre prices will be paid.
Conventional Organic
Manufacturing standard Litre 30.23ppl 41.98ppl
Liquid Standard litre
29.06ppl 40.34ppl
There has been a tiny 0.01ppl quarterly
smoothing adjustment to be the above prices.
Arla’s milk price to date
has defied gravity and is certainly a talking point amongst Arla
members and non Arla suppliers especially those who
have been on the receiving end of numerous 2019 price cuts.
0.5ppl
bonus for suppliers to Crediton Dairy = from 1st
April (22nd March 2019)
From 1st April Crediton
dairy will introduce a 0.5ppl bonus for
producers who opt into recording
specified health & Welfare parameters under its Farm Metrics Scheme which
includes lameness, mastitis etc.
Whilst the scheme is optional it is
anticipated that a very significant percentage of Creditons
suppliers will opt in and achieve the new premium. Payments will be made each month and not
accumulated and paid at the end of the year as practised by some milk
purchasers who appear to fear producers might give notice to leave in which
case those under notice forfeit any such bonus.
Crediton are understandably more confident in
the stability and loyalties of its producer base hence the decision to pay all
who qualify for the bonus on a monthly basis.
Given the almost inevitable certainty that
more than 50% of Crediton suppliers will take part it
will increase the Crediton standard litre price to
28.5ppl.
Morrison’s
are the latest retailer to sign up to Arla 360 (22nd
March 2019)
Morrison’s are the second retailer to sign up
to the Arla 360 farm standards scheme and follow Aldi
who were first past the post. The Arla 360 standard is a scheme whereby one standard has been
set by the farmer members/processor as opposed to various retailers setting
multiple standards for farmers and retailers to abide by.
Approximately 200 Arla
farmers are aligned to Morrison’s and set to benefit. All will be paid a “top secret” supplement in
return they will have six months to deliver the standards and comply in six
distinct areas. The rumour is that the payment is around 1ppl which will
certainly inject multi millions into farmers pockets.
Anyone who opts out or fails to meet the
standard will be replaced with another Arla member.
Morrison’s are the first retailer to sign up
to the Arla UK 360 standards across the complete
range of Arla milk supply.
They currently have their own group and
clearly having signed up view this as a longer term commitment to both Arla and their aligned farmers.
1st
March Standard liquid Milk Price league table (22nd
March 2019)
|
Purchaser |
Mar-19 |
|
Arla Foods |
29.07 |
|
Davidstow |
28.82 |
|
Barbers |
28.09 |
|
Glanbia |
28.07 |
|
Crediton Dairy |
28 |
|
Pattemores 1 Million |
28 |
|
Wyke Farms |
28 |
|
Belton |
28 |
|
First Milk |
27.5 |
|
Lactalis/Caledonian |
27.5 |
|
Meadow Foods |
27.5 |
|
Grahams Dairies |
26.75 |
|
Muller Wiseman;
standard |
26.75 |
|
Paynes |
26.7 |
1ppl milk price reduction for
suppliers to Glanbia (Cheese) – from 1st
April (15th March 2019)
This results in a manufacturing standard
litre milk price of 28ppl and based on a liquid standard litre 27.07ppl
1ppl milk price reduction for
suppliers Dale Farm (Kendal) (8th
March 2019)
This results in a standard liquid litre milk
price of 28.14ppl.
0.75ppl milk price reduction for
suppliers to Meadow Foods – from 1st April (15th March 2019)
This takes producers standard liquid litre
milk price down to 26.75ppl
0.75ppl milk price reduction for
suppliers to Joseph Heler Cheese – from 1st
April – PRODUCER NOTIFIED (15th March 2019)
Its top secret what the Heler
standard litre price will be so much so that even the supplying farmers don’t
know and can’t compare. Apologies.
0.75ppl milk price reduction for
suppliers to Yew Tree Dairy – from 1st April (15th March 2019)
This results in a standard liquid litre milk
price of 26.75ppl
Belton Farm (Cheesemakers) to hold
prices for March (15th
March 2019)
This retains producers’ standard
manufacturing litre milk price at 28.75ppl and based on a standard liquid litre
at 28ppl.
Barbers (Cheese) to hold suppliers
milk price for a Third consecutive month (15th March 2019)
This retains producers’ standard
manufacturing litre milk price at 29.13ppl and based on a standard liquid litre
at 28.09ppl.
First Milk to hold its Member Milk
price for April (15th
March 2019)
This means for February, March and April
First Milk members manufacturing Standard Litre milk price has remained
unchanged at 28.43ppl and based on a standard liquid litre 27.5ppl.
0.54ppl milk price increase for Marks
& Spencers Suppliers from – 1st April (15th March 2019)
This results in a standard liquid litre milk
price of 33.36ppl.
0.25ppl 13th Payment/Member
Premium to be paid to First Milk members in 2020 (15th March 2019)
This is a new additional 13th
payment which is calculated monthly based on capital invested and paid as a
lump sum in April next year.
To receive the full 0.25ppl a member must
have reached their capital contribution target. The maximum capital a First
Milk member can achieve is 200% which would result in a 0.5ppl payment.
Taking into account the 0.25ppl payment this
increases the First Milk manufacturing standard litre milk price to 28.68ppl
and on a liquid standard litre to 27.75ppl.
GDT Auction jumps up + 3.3% (15th March 2019)
Last weeks GDT Auction saw the average all
products index increase by 3.3% to average $3309 tonne the highest seen for 9
months. The only casualty was SMP where prices dipped by 4.3% since the
previous action only two weeks ago. This is the 7th consecutive
average price rise since December 4th 2018 and New Zealand analysts
say that with the current strong ex farm milk output the increased prices are
demand driven mainly from China.
Notable price movements were:
Cheddar
up 6%
to average US $3888 tonne
WMP
up 6%
to average US $3186 tonne
Butter
up 3.7% to average
US $4657 tonne
SMP
down 4.3% to average US $2462 tonne
Milk Price Outlook is heading for
further price reductions (15th
March 2019)
UK milk output is simply a pipeline heading
rapidly towards full bore and pressure.
It’s a fact that other than the dramatic and
sudden intervention of Mother Nature with a second Beast from any direction the
only signal likely to rein in production will be further processor price drops.
Spot milk is heading South and is under 20p
with trades today reported at 18ppl and showing no signs of levelling with some
fearing a return of single digit prices.
Cream has dropped by 25p from £1.65 and
hovering around £1.40 in only 4 weeks a reduction equivalent to around 2.5ppl
to a liquid processor or retailer depending on contract terms.
The forward market signals offer no
encouragement and are sliding South.
Arla and most of the
cheese processors are indeed performing extremely well in holding farmgate milk prices at current levels for the moment. If
they can ride through spring holding current prices it will be a cracking
result.
One positive is that only 1,400 tonnes of SMP
remain in EU Intervention stores compared to 380,000 tonnes in 16 months ago in
November 2017.
Not sure how much foreign cheese is in our
stores in the run up to Brexit but its a fact there has been significant
forward buying of dairy products in the run up to Brexit which is likely to
cool down from this point forward as buyers sit back. That’s unless we end up
with a delay and they opt to keep topping their dairy stocks up as an
insurance.
According to the predictions of industry
analyst Chris Walkland the UK has only ever produced 45 million litres a day on
two previous days and this year we could touch 46 million litres/day.
Unless things change very soon he predicts
spring 2019 will see that 45 million litre day smashed for 30 consecutive days.
That leaves one big question. Do we have the
capacity to process all the milk or will we see distress milk?
It won’t matter a jot what Ian Potter
says because what will be will be and it now seems inevitable that further
price cuts are on the cards especially from some liquid processors, unless
something sensational happens to cut UK milk output and quickly.
Back in October Ian stated by spring 2019
there would be a price correction to somewhere between 26 to 27ppl for liquid
processors and not a price crash. That assumed it was a “normal” year. Its by
no means a normal year in terms of milk volumes in terms of the political
uncertainty the industry faces so those predictions could be history within
weeks.
Overall the Outlook is not looking good with
the likelihood of more pain before any gain. Don’t shoot the messenger who has
a pretty good track record of calling this market. Nervous times are
certainly here.
Arla to be Carbon
neutral/net Zero by 2050 (15th
March 2019)
Arla has set a target
from the cow to the consumer to be carbon zero by 2050 with any unavoidable
emissions entirely offset by actions elsewhere in the supply chain. In addition
Arla will balance Nitrogen and phosphorus cycles to
support clean water and equally important to be more closely aligned with
Nature to further increase bio diversity across the British countryside.
Its an impressive target for which detailed
plans specific to the UK will be published shortly and will involve all at Arla from the dairy farmer to the consumer.
It’s the sort if plan which gets you noticed
with retailers and food service buyers.
Arlas UK MD Ash Amirahmadi comments “One of the greatest challenges
facing us all is providing natural, nutritious food for a growing population
whilst reducing our collective impact on the world around us. Arla has already shown this is possible and the new
ambitions announced today will ensure Arla’s
farmers”.
2nd year of Dairy Promotion
hits Cinema screens in London (15th
March 2019)
The joint AHDB/Dairy UK funded Department of
Dairy Related Scrumptious Affairs consumer advertising is now in its second
year and from this Monday (11th March) includes Cinema advertising.
The £1.2 million campaign will run across the
nation for 10 weeks and is targeted at yound parents
and uses powerful messages reminding young parents of the nutritional value in
dairy products.
0.8ppl
milk price reduction for suppliers to Paynes Dairies
– from 1st March (1st March 2019)
This results in a standard liquid litre price
of 26.7ppl
Arla maintain their leading
position by holding producer prices for a 2nd consecutive month (1st March 2019)
Arla will
maintain its conventional member milk price at 30.24ppl based on a manufacturing
standard litre and 29.07ppl based on a standard liquid litre.
Muller to stand on for April will be a huge relief to its
suppliers (PRODUCER
NOTIFIED) (1st March 2019)
Following last months 1.25ppl
shock March milk price reduction Muller farmers will be pleased with the news
that their will be no milk price reduction for April deliveries. The Muller
liquid standard litre price for March & April is 26.75ppl including the
0.5ppl premium paid in arrears and without that premium its 26.25ppl.
The equivalent March price for Arla members (see above) is 29.07ppl a gap of 2.32ppl if
you include the Muller 0.5ppl premium.
Without the premium the gap is an eye watering 2.82ppl.
Dairy Crest to stand on for April milk payments
(1st
March 2019)
The standard manufacturing
litre price will remain at 29.9ppl and based on a standard liquid litre
28.82ppl.
Meadow Foods to stand on for March milk payments (1st March 2019)
This means Meadow have held
their producer price for February and March at 27.5ppl for a standard liquid
litre.
Barbers cheese to stand on for a third consecutive month (1st March
2019)
For a third month Barbers
standard manufacturing litre price will remain at 29.13ppl and based on a
standard liquid litre 28.09ppl.i
Pattermores to stand on for April milk
payments (1st
March 2019)
The standard liquid litres will
remain at 28ppl and based on standard manufacturing litre 28.93ppl
0.9ppl Arla Organic member milk price
reduction- from 1st March. (1st March
2019)
This reduction still leaves Arla winning at Top Trumps and results in an organic
standard manufacturing litre price of 43.55ppl and based on a liquid standard
liquid litre 41.85ppl.
In the last bulletin we
confirmed that Omsco had reduced its March producer
milk price by 1ppl. Based on a standard liquid litre this result in a 41ppl
price.
Arla will pay its former members
its entire 2018 net profit of 290 million Euros/£257 million. (1st March 2019)
This will amount to an
additional 2.3 euro cents per kg/milk or 2.07ppl for its 11,200 European
members on all milk delivered.
UK wise Arlas
revenue from retail and Food service was up 3.3% to break the £2 billion
barrier (2017 £1.9 4 billion).
Without doubt when you sift
through all of the numbers it's Arlas huge basket of
branded products on offer to the UK consumers which are driving these results. Arla branded product sales grew 8.6% and have an average
annual growth for the last 5 years of 8.8%.
The total member pay out is
£245 million of which 2,500 UK members will receive £64 million this month.
Production update (1st March
2019)
Whilst milk production in the
key mainland Europe Nations of France, Germany and Holland are lower than they
were in 2018 that certainly is not the case in GB with milk flowing at such a
rate it's heading for the rocks with the real possibility we simply won't have
sufficient processing capacity at peak production.
According to AHDB Dairy GB milk
deliveries are running at 800,000 litres a day up (+2.2%) or + 5.6 million a
week.
Saputo from Canada to buy Dairy Crest for close to 1
billion. (1st March
2019)
Once Dairy Crest succeeded in
offloading its liquid business to Muller it was inevitable the more profitable
and attractive. Davidstow
Cheese facility would be sold and it's heading for ownership by Saputo who are
in the top 10 largest in the world.
Canadian owned world dairy
giant Saputo have made a cash offer of £6.20 per share totalling £964 million
and Dairy Crest board approval is set to be unanimous.
Dairy Crest is certainly a
solid, branded profitable operation which for the last financial year delivered
a profit after tax of 150 million.
It's good news for Dairy Crest
share holders, great news CEO Mark Allen (who will be off with the Loot into
the Sun set) and appears to be good news for the Dairy Crest farmer suppliers.
Saputo have no operations in
Europe which means a very limited if not negligible threat from Saputo
importing cheese to the UK.
It's a near certainty Saputo will change very little and will certainly value
their inherited supplying farmers who should view this as a great result and
will simply see business as usual.
Another advantage is that
Saputo will be in a strong position to fund and accelerate growth and expansion
at the Davidstow processing facility.
Trade for First Milk shares is a buyers market (1st March 2019)
Yesterday saw the second asset
match monthly sale of First Milk C preference shares close where only 186,000
shares changed hands at 11p per share down almost 40% on last months sale
average which saw 152,000 shares trade for 18p out of a total issue of 68.5
million shares..
Not good news for former First
Milk suppliers seeking to cash in their investment.
George Eustice quits as Environment Minister (1st March 2019)
George Eustice, who was a big
supporter of Brexit, has resigned over The Prime Ministers promise to allow
MP’s to vote on a Brexit delay if her deal
is rejected on the 12th March.
He is basically against the
government going to the EU only 17 days before 29th March begging
for an extension.
Snow storm takes 1800 cows
(1st
March 2019)
A combination of serious
snowfall and extreme temperatures in Southern Washington (USA) has seen 1800
cows perish bringing with it a bill of over £3 million excluding lost milk
which was dumped.
1.25ppl
milk price reduction for suppliers to Pensworth
(liquid) – from 1st March (15th February 2019)
This result in a standard liquid litre price
of 26.35ppl.
1ppl
milk price reduction for suppliers to OMSCO – from 1st March (15th
February 2019)
The price change will affect 250 OMSCO
supplying farmers and is a direct reflection on the challenging uncertainties
OMSCO face as a no deal Brexit looms closer to reality.
In addition members have been notified it is
unlikely there will be and 13th payment for the 2018/19 milk year.
At the same time the Co-op is also
introducing an A & B milk pricing mechanism in a bid to limit the impact of
the additional litres they have to handle both in terms of increasing
production and in the event OMSCO’s successful dairy product exports come to a
sudden halt on 27th March.
0.75ppl
milk price reduction for suppliers to Wensleydale
Creamery – from 1st February (15th February 2019)
This is highly likely to be the final
February 1st price change which was notified to producers at the end
of January,
The result s a standard manufacturing litre
milk price of 28.7ppl and based on a standard liquid litre 27.75ppl.
Belton
Farm to hold its producer milk price for March (15th
February 2019)
This means until 1st April the
Belton standard manufacturing litre milk price will be 28.75ppl and based on a
standard liquid litre 28ppl.
1.25ppl
shock price drop for Muller Direct producers from 1st March (31st January 2019)
Muller have shocked the majority of the Dairy
Industry with a 1st March price drop amounting to 1.25ppl.
Muller say one of the key reasons for the
drop is a surge of unplanned milk smashing all forecasts and expectations.
Muller have indicated they were irresponsibly
scare mongered by various organisations that on farm winter production would be
hit hard following last summers drought. The reality is the opposite has
occurred with a significant production surge.
Muller, and others, are having to handle the
biggest GB milk output for more than 25 years and say they simply cannot absorb
the extra milk and associated cost especially in the ridiculously cut throat
and marginless liquid packing business.
This 1.25ppl drop reduces the February
standard litre price for 700 Muller Direct Farmers from 28ppl to 26.75ppl a
price which includes the 0.5ppl Muller premium which an estimated 80% of Muller
Direct producers achieve and is paid annually in arrears to those who quality
who are not under notice to leave. Some refer to it as a loyalty bonus!
Without that 0.5ppl premium the standard
litre price is 26.25ppl.
Mullers spin Doctor has
certainly been taking steroids and is keen to remind everyone that around one
third of the 700 Muller Direct producers will continue to receive 28ppl for the
portion of their milk output they committed under the fixed price contact
option.
There can be no doubt Muller have broad
shoulders and “big balls” especially given they are one of the few remaining
voluntary code complaint milk buyers and offer a short 3 month farmer notice
period.
All eyes will now be on Arla
when they declare their 1st March milk price. If Arla
do manage to announce a no price change it will leave a whopping 2.81ppl
standard liquid litre price gap between them and Muller (or 2.31ppl if the
Muller Premium is included). If that happens the big question will be how and
why this gap can happen.
In addition its looking very much like Muller
could be one of the lowest March prices however it’s a fact a bunch of middle
ground liquid processors will be breathing a huge sigh of relief as they really
battle to breakeven. Watch out for the introduction of A + B pricing by some as
a solution.
What
message does Ian think Muller are sending to the Industry (31st January 2019)
Muller were unavailable for coment today but Ian thinks their message is very simple.
“We can’t
make money in the UK liquid market having invested a shed load of money. The
NFU’s are insisting farmers share the risks and rewards with milk processors.
Consequently we have cut the farmer milk price to share the risks and lack of
rewards with our farmer suppliers just as the NFU’s are insisting.”
So Muller could now be fully on board with
the NFU’s and their contract reform demands.
Unfortunate
Market Intelligence comment from AHDB (31st
January 2019)
Within minutes of the Muller price drop announcement
came an AHDB Dairy Market weekly update with a headline:
“Boost
to market value of milk may halt drops in farmgate
prices.”
The news item pointed to a reversal of “the
direction of market trends “ which could put an end to downward pressure on market
farmgate prices. Very unfortunate timing by AHDB
Dairy Market Intelligence.
Dairy
Crest Direct (Davidstow) to hold its milk price for
March (31st January 2019)
This means that for March deliveries the
Dairy Crest standard Manufacturing litre milk price remains at 29.9ppl and
based on a standard liquid litre is at 28.82ppl
UK
Milk Futures Equivalent (UK MFE) prices take a battering (31st January 2019)
The FC store milkprices.com UKMFE forward
trades took a battering last week with weaker prices for butter, and SMP plus a
further strengthening of sterling against the euro.
www.milkprices.com
calculate that in the past 4 weeks these combined price movements equate to
1.48ppl drop in milk values and takes the net UK MFE milk price to 27.10ppl
Wyke Farms to double its capacity (31st January 2019)
Farmhouse cheese makers Wyke
have secured planning permission which when complete will almost treble its
output from the current 18,000 tonnes to around 50,000 tonnes. The new facility
will be named Ivys Dairy after the familys famous grandmother and will be built in stages over
8 years.
Crediton Dairy unveil its £12m Expansion (31st
January 2019)
Starting next month Crediton
will invest £12 million in its flavoured milk processing facility boosting its
processing capacity. Completion is planned for August 2019.
Since the Management buyout less than 6 years
ago this will take the total Crediton investment will
amount to £26 million.
EU
Aged SMP is sold (31st January 2019)
At last the European Union has almost cleared
the last of close to 400,000 tonnes of Intervention SMP. This is good news and
eliminates a big black cloud which has hung over Europe and the world dairy
industry for almost 4 years.
The tonnage started to accumulate in the
summer of 2015. Its sale will certainly help the current price of fresh SMP.
Save the date
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).
Yeo Valley launches
conventional direct supply contract (25th January 2019)
Yeo Valley is recruiting its own
direct conventional milk pool with milk going into its Blagdon
and Cannington processing facilities destined for own label yoghurts for
the majority if the UK’s major retailers.
The contract and recruitment is a
partnership with First Milk who are administering the contract and this will
certainly be of interest to farmers within the Somerset and Devon and Dorset Borders
It appears to be a premium
contract along with a a floor price feature offering
protection in the form of a minimum price guarantee of not less that the
average www.milkprices.com monthly price of a basket involving Arla members, Muller direct and First Milk Midlands which
is a fairly strong floor price.
The initial requirements are
believed to be circa 20 million litres and our info suggests some of this was
signed up this week only days after the launch, First Milk are the guys to
contact if anyone is interested.
2.03ppl
milk price reduction for suppliers to Freshways (18th
January 2019)
According to wwwmilkprices.com the 2.03ppl
reduction is split into two parts with a 0.972ppl reduction for December
deliveries and a further 1.058ppl for January deliveries based on Freshways basket tracker.
The reductions result in a standard liquid
litre milk price of 27.77ppl on January 1st and 28.83ppl based on a
standard manufacturing litre.
1ppl
milk price reduction for suppliers to Paynes Dairies
– from 1st January (18th January 2019)
This results in a standard liquid litre of
27.5ppl
0.5ppl
milk price reduction for suppliers to Dale Farm GB but 30p plus is a great
result (18th
January 2019)
Dale Farm suppliers to its Cumbrian
processing facility from December 1st were still paid a standard
liquid litre price of 30.14ppl following this latest reduction which is without
doubt one of the leading prices paid on December.
0.5ppl
milk price reduction for suppliers to Belton Farm (Cheese) – from 1st
February (18th January 2019)
This results in a standard manufacturing
litre price of 28.75ppl and based on a standard liquid litre 28ppl.
0.25ppl
milk price reduction for members of 1st Milk- from February 1st (18th January 2019)
This results in a standard manufacturing
litre price of 28.43ppl and based on a standard liquid litre 27.5ppl.
GDT
bounces up again by a further 4.2% (18th January 2019)
Tuesdays GDT Auction saw the average all
products price up a further 4.2% which is its 4th consecutive rise
and follows hot on the heels of rises of 2.2%, 1.7% and 2.8%. This is yet more encouraging
news to emphasise the necessity for farmgate milk
prices to at least stabilise from March 1st at the latest.
In less than two months the average price has
now bounced up by 12% from $2727 to average $3057 tonne.
Key movers were
SMP +
10.3% to average $2405 tonne
Butter +
4.6% to average $4262 tonne
Cheddar +
4.2% to average $3504 tonne
WMP +
3.0% to average $2777 tonne
Total tonnage sold 27,909 tonnes. The next
GDT Auction will be held on 6th February.
0.86ppl milk price decrease for Arla Members - from 1st December (27th
November 2018)
Arla have announced what
should be the final 2018 milk price announcement which is a 0.86ppl standard
liquid litre milk price reduction (0.89ppl reduction based on the standard
manufacturing litre).
This takes producers’ standard liquid litre
price to 30.35ppl and 31.57ppl based on the manufacturing standard litre.
1.72ppl milk price increase for Arla Organic members - from 1st
December (27th November 2018)
An Arla Organic
members milk price increase for liquid of 1.72ppl takes the standard liquid
litre price to 42.71ppl and the 1.79ppl manufacturing increase takes the
standard manufacturing litre price to 44.43ppl. Both prices exclude the
derogation penalty of 3 Euro cents/litre. Note, this Arla
members organic milk price increase only applies to GB members with mainland
Europe Arla members organic milk price unchanged for
December.
0.46ppl backdated rebate for Sainsbury’s
suppliers (16th November 2018)
Sainsbury’s have back-dated a 1st
October additional 0.46ppl increase to its SDDG suppliers following a
recent review of it’s COP model involving family labour as operated by
Kite Consultancy.
Less than two months ago in this bulletin we
featured a news item “Sainsbury’s under attack from its farmer
suppliers”. This followed the retail giants decision to pay its farmers
only 0.6ppl out of a 0.9ppl loss having incorrectly costed Megalac
and calf milk powder in the model at the feed wheat price. Having
identified the error this extra wasn’t backdated and yes Sainsbury’s pocketed
the 0.3ppl.
In that same article Ian referred to the
constant dilution of the COP model in ppl terms for
family labour and now they have tried to correct this error.
The big question Sainsbury’s suppliers need
an answer to is why their retailer model is so wrong and requiring
surgery. First the extra on feed and now extra on family labour.
It’s looking like a lot of back-tracking and a flawed/broken model. Time
for some answers and an independent review.
1ppl
milk price reduction for suppliers to Grahams Dairies (liquid/Scotland) – from 1st
December (16th
November 2018)
This take producers’ standard liquid milk
price to 28.5ppl (www.milkprices.com)
Stand
on December milk price for First Milk members (16th
November 2018)
First Milk have declared their December 1st
milk price much earlier than normal (2nd November) and members will
be pleased to know that the co-op is holding its current price until at least 1st
January 2019.
The First Milk members liquid standard litre
price remains at 28.5ppl and 29.47ppl based on a manufacturing standard
litre. For First Milk’s Haverfordwest Cheese Group will continue to receive a
manufacturing standard litre price of 30.97ppl.
To date we are unaware of any GB hard cheese
producer who has announced a 2018 supplier milk price reduction unlike the
situation liquid processors face.
Freshways losses are not unique (16th
November 2018)
For the year ending December 2017 Freshways have recorded a pre-tax loss of £4.2m compared to
a £1.9m profit in the previous year.
It’s an eye watering swing of £6.1m in only 12 months. Freshways bank
borrowings were up 28% to £14.8m. Of
more concern is the fact Freshways still has an
ongoing HMRC investigation.
Whilst these figures are not good news and
highly unlikely to be reversed in the current year Freshways
have significantly more security and collateral than many others in the same
sector. They are by no means expected to
be at the bottom of a pile of liquid processors financial results, which are
anticipated in one or two instances to be grim and potentially end up with one
on life support. Watch this space for
further results between now and the year end.
Cornish
clotted cream to China (16th November 2018)
The name Roddas =
Clotted cream and their luxury product is now heading for China following this
week’s Food & Hotel China exhibition in Shanghai.
Discovery
4 Commercial Van from 2013 (16th November 2018)
It has had Landrover
dealer fitted genuine full 7 seat interior so identical to a normal car. Commercial registered van, so fully vat
reclaimable running costs are business expenses annual road tax around £220 a
year. 96,600 miles. Brand new set
tyre just fitted. Fully valeted. Host of extras. £19,500 + VAT. Location Yorkshire. For further details email
ianpotter@ipaquotas.co.uk
Ian will
be joining a panel at AgriScot next Wednesday – 21st
November at 1pm to 2pm (16th November 2018)
Ian’s contribution is certain to be
enlightening, lively and honest.
Speakers
Rory Christie - Dairy Farmer
Tom Hind - Chief Strategy Officer at AHDB
Roddy McLean - Director of Agriculture, Royal Bank of
Scotland
Ian Potter - Industry Commentator and PIA
GDT continues to fall (6th November 2018)
It’s now 11
consecutive GDT auctions with no upward average price movement. Today’s auction recorded an average price of
US$2851 down a further 2% from the US$2885 recorded 3 weeks ago although SMP
recorded an increase.
Notable movers
were:
Cheddar down 4.6% to average US$3250 tonne
WMP down 2.9% to average US$2655
tonne
Butter down 1.7% to average US$4045
tonne
SMP up 1.2% to average US$1997
tonne
MILK PRICES UP
0.43ppl milk price increase for Waitrose aligned
suppliers – from 1st December (6th
November 2018)
This results in a
standard liquid litre milk price of 31.85ppl
MILK
PRICES DOWN
Muller
break the log jam with a 1ppl 1st December price cut (6th November 2018)
Given the fact Muller are one of only a few
milk purchasers who remain Voluntary Code compliant they were always set to be
the dam busters and have confirmed a 1ppl price drop for 1st
December, which has come as no surprise to those who study the markets.
The Muller standard liquid litre price for
November 1st is 29.5ppl and from December 1st will be
28.5ppl
Note, whilst Muller are the first GB milk purchaser
to declare a price reduction according to our records back on 30th
April Muller were the first to break the log jam with a 0.75ppl increase for 1st
June, which others followed. So they
were first up and first down. Watch out
for one or two who could be last up and first down!
1ppl
milk price reduction for Glanbia (Cheese) suppliers – from 1st
December (6th November 2018)
This results in a
standard liquid litre milk price of 27.99ppl and standard manufacturing price
of 29.00ppl
1ppl
milk price reduction for Meadow Food suppliers – from 1st
December (6th November 2018)
This results in a
standard liquid litre milk price of 28.5ppl
1ppl
milk price reduction for suppliers to Pensworth
(Liquid)
- from 1st December (6th November 2018)
This results in a
standard liquid litre milk price of 28.8ppl
1ppl
milk price reduction for suppliers to Woodcocks/Yew Tree Dairy (liquid) - from 1st December (6th November 2018)
This results in a
standard liquid litre milk price of 28.5ppl
MILK
PRICES ON HOLD
Arla will hold its member’s milk price until 1st
December (6th
November 2018)
Arla have confirmed there
will be no change in its November 1st Milk price at 31.21ppl based
on the standard liquid litre and 32.37ppl on a standard manufacturing litre
Wyke Farms (Cheese) will hold suppliers prices
until at least 1st January 2019 (6th
November 2018)
This results in a
standard liquid litre milk price of 29.65ppl and standard manufacturing price
of 30.69ppl
Lactalis (AKA The Fresh Milk Company) will hold
suppliers prices until at least 1st January 2019 (6th November 2018)
This results in a
standard liquid litre milk price of 29.00ppl and standard manufacturing price
of 30.03ppl
South
Caernarfon Creameries (Cheese) will hold suppliers prices until at least 1st
January 2019 (6th
November 2018)
This results in a
standard liquid litre milk price of 29.55ppl and standard manufacturing price
of 30.52ppl
Pattemores Dairy (liquid) will hold suppliers milk
price until at least 1st January 2019 (6th November 2018)
This results in a
standard liquid litre milk price of 29.5ppl and standard manufacturing price of
30.47ppl
Wensleydale Creamery (Cheese) will hold suppliers milk
price until 1st December (6th
November 2018)
This results in a
standard liquid litre milk price of 29.5ppl and standard manufacturing price of
30.45ppl
Barber’s (Cheese) will hold suppliers milk price
until at least 1st January 2019 (6th
November 2018)
This results in a
standard liquid litre milk price of 29.58ppl and standard manufacturing price
of 30.68ppl
Grahams (Liquid) still to declare its 1st
December milk price position (6th November
2018)
Paynes Dairies (Liquid)
still to declare its 1st December milk price positon (6th November 2018)
First Milk (Cheese) will hold members’ milk price
until 1st December (6th
November 2018)
This results in a
standard liquid litre milk price of 28.9ppl and standard manufacturing price of
29.47ppl
Spot Milk – for
those who are interested spot milk is trading at 24ppl (6th
November 2018)
For Sale - 2 x Merlin Robotic Milking Cates (6th November 2018)
In excellent
working order complete with milk conductivity sensing and recording, automatic
plant washing and auto cow identification. Adapted for Jerseys, could be
converted for HF.
Fullwood Q3
vacuum pumping outfit and electric motor suitable for above.
Dry running compressed air
outfit suitable for above.
Shuttle milk sampling system
for NMR recording suitable for Fullwood or Lely
robots x 2.
Stainless steel water heater.
Milk plate coolers x 2.
Bulk milk tank 5000 litre with A.P.V valve to
allow auto milk transfer from robots.
For sale due to unforeseen circumstances
For any further details contact rm.cf.joyce@btinternet.com
Arla stand on with its producer price for
November 1st at 31.21ppl (31st October 2018)
Arla have confirmed there
will be no change in its November 1st milk price at 31.21ppl based
on the standard liquid litre and 32.37ppl on a standard manufacturing litre
Muller
break the log jam with a 1ppl 1st December price cut (31st
October 2018)
Given the fact Muller are one of only a few
milk purchasers who are Voluntary Code compliant they were always set to be the
dam busters and today have confirmed a 1ppl price drop for 1st
December, which has come as no surprise to those who study the markets.
During the next day or two it’s a near
certainty a heap of milk purchasers, particularly those in the liquid middle
ground area, will follow Muller with 1st December price cuts and you
wouldn’t rule out the odd cheeky and desperate milk buyer even cutting producer
prices from 1st November which would cause a stir!!
The Muller standard liquid litre price for
November 1st is 29.5ppl and from December 1st will be
28.5ppl
0.21ppl
milk price increase for Freshways suppliers- from 1st
October (PRODUCER
NOTIFIED) (17th
October 2018)
This takes producers liquid standard litre
price to 29.8ppl and is tipped to be the last GB price increase of 2018 and in
the top 3 liquid prices from the league table below.
Fonterra
revises its forecast milk price down by up to 1.88ppl equivalent (17th
October 2018)
Due to higher global milk supplies,
particularly in Europe and the US, Fonterra has reduced its forecast farm gate
milk price for the current 2018/2019 year from $6.75 per kg milk solids
(25.32ppl) to $6.25 to $6.50 (23.44ppl to 24.38ppl)
The CEO of Fonterra commented “Global demand
is simply not matching current increases in supply”
GDT
clocks up its 10th consecutive fall (17th
October 2018)
Yesterday’s GDT recorded its 10th
consecutive average price fall all though this latest fall was only slight at
-0.3% with the all products average price falling from US$2901 tonne to US$2885
tonne, the lowest average price recorded since October 2016.
Notable movers were:-
Cheddar down
1.8% to average US$3404 tonne
WMP down
0.9% to average US$2729 tonne
SMP no
change US$1977 tonne
Butter +
2.4% to average US$4114 tonne
October 1st runners and riders league
table - September milk prices shown in brackets (17th
October 2018)
Liquid Manufacturing
Standard
litre Standard litre
Arla Co-op Members 31.21
(30.16) 32.47 (31.38)
Crediton Dairy 30.00
(30.00) -
Freshways 29.80
(29.59)
Wyke Farms 29.65
(29.65) 30.69 (30.69)
Barbers 29.58
(29.58) 30.68 (30.68)
South Caernarfon
Creameries 29.55 (29.55) 30.52 (30.52)
Wensleydale Creamery (Cheese) 29.50 (29.50) 30.45 (30.45)
Payne’s 29.50
(29.50) -
Meadow Foods 29.50
(29.50) -
Yew Tree Dairies 29.50 (29.50) -
Belton 29.50
(29.50) 30.25 (30.25)
Muller 29.50
(29.50) -
Dairy Crest Davidstow 29.32
(29.32) 30.40 (30.40)
Fresh Milk Company
(Lactalis) 29.00
(29.00) 30.03 (30.03)
Glanbia 28.99
(28.99) 30.00 (30.00)
First Milk Co-op
Members 28.50 (28.50) 29.47 (29.47)
Arla Direct 28.75
(28.00) -
Joseph Heler (Cheese)
CORRECTION (17th October 2018)
In the last
bulletin we incorrectly suggested that First Milk were the only buyer to stand
on for October. This was a big error as
can be seen above where 13 out of 17 stood on for October 1st.
Arla launches its UK360 programme standards with
Aldi support (17th October 2018)
Following a 6 month trial involving 79
farmers Arla have launched their UK360 programme,
which is a new set of higher standards than the basic Red Tractor Standards,
which encompass the best on farm practice for animal welfare, animal health,
people/staff development, environmental and natural resources, community
engagement as well as economic resilience and reinvestment.
Aldi is the first retailer to sign up to the
new standards and ongoing discussions are understood to be at an advanced stage
with other Arla customers. Aldi will pay a premium to
a named and selected group of Arla members as part of
the Aldi Dairy Farm Partnership in return for these farmers delivering the
higher standards at farm level.
More on this in Ian’s next Dairy Farmer
article but it’s certainly a very different approach to what has become the
norm of retailers setting the farm standards.
Note, Arlagarten
will continue to set the baseline standards for all Arla
members with UK360 linked to retailers and food service customers’ appetite to
come on board and pay a premium to those farmers who can and want to help
protect the industry and retailer brands by adopting the 360 standards.
First
Milk unveils there initiatives, including a 13th payment (17th
October 2018)
Business at First Milk continues to make
positive steps forward and today the co-op has announced three member
initiatives/changes.
1.
Capital
contribution targets will be frozen at members’ current level meaning members
who want to expand will no longer be compelled to fund increased capital
contributions.
2.
The
introduction of an annual 13th payment from April 2019.
This 13th
payment will commence from April 2019 at 0.25ppl and will be paid in April 2020
but adjusted accordingly to each member’s capital target. For example, if a member has 100% of their
capital target they will receive the full 0.25ppl. If they are at 200% they will receive 0.5ppl
(the maximum) conversely if they are 50% of target they will only receive
0.125ppl.
3.
Transparent
member share trading from December 2018 via the Asset Match platform, which
will particularly benefit retired members and be free to use.
Muller
has finished its integration with the Dairy Crest Liquid Business (17th
October 2018)
Muller has announced completion of Britain’s
largest ever dairy integration following its acquisition of the Dairy Crest
Liquid business which it claims gives it a 25% share of Britain’s 12.4 billion
litre farm gate milk business (3.1billion litres) making them number 2 to Arla who process 3.8 billion litres (31%).
The two businesses process 56% of all
Britain’s milk.
First
Milk winners of its new Responsible Farming Awards (17th
October 2018)
First Milk are upping the stakes on farm assurance
recognising their highest achieving members with awards for Animal, Environment
and People categories.
Alan Conway, Northumberland won the Animal
category for on farm improvements to animal welfare.
Collingthwaite Farm,
Nottinghamshire won the Environment category.
The Pritchard’s from Fishguard
and Maughans Farm, Cumbria were joint winners of the
People award.
FOR SALE – 1962 Fordson Super Major on
original RF60 Buff Log Book (17th
October 2018)
It’s Ian who is selling this on Ebay Item number 273504226468 – ends this Sunday – see link
below:
For Sale - 2 x Merlin Robotic Milking Cates (17th October 2018)
In excellent
working order complete with milk conductivity sensing and recording, automatic
plant washing and auto cow identification. Adapted for Jerseys, could be
converted for HF.
Fullwood Q3
vacuum pumping outfit and electric motor suitable for above.
Dry running compressed air
outfit suitable for above.
Shuttle milk sampling system
for NMR recording suitable for Fullwood or Lely
robots x 2.
Stainless steel water heater.
Milk plate coolers x 2.
Bulk milk tank 5000 litre with A.P.V valve to
allow auto milk transfer from robots.
For sale due to unforeseen circumstances
For any further details contact rm.cf.joyce@btinternet.com
1.07ppl milk price
increase for Tesco/TSDG aligned producers – from 1st November (2nd
October 2018)
This increase arises as a result of Promars
review of the annual Tesco cost tracker figures as budgeted to 31st March
2019. This increases the cost of production from 30.17ppl to 31.24ppl.
Variable costs 18.15ppl
Overhead costs 11.22ppl
Depreciation 1.87ppl
31.24ppl
0.75ppl milk price
increase for Arla direct suppliers – from October 1st (2nd
October 2018)
This takes producers’ standard liquid litre milk price to 28.75ppl and
based on a manufacturing standard litre 29.96ppl.
Muller stand on price
for a second consecutive month for November (2nd
October 2018)
Mullers 29.5ppl liquid standard litre price paid on October deliveries will
continue for all deliveries in November.
First Milk stand on
price for a second consecutive month for October 1st (2nd October 2018)
First Milk members 28.5ppl standard liquid litre price on September
deliveries and based on a manufacturing standard litre 29.47ppl will continue
in October. First Milk, according to our records, are the only GB processor to
stand on for October deliveries.
Barbers stand on price
for the third consecutive month (2nd
October 2018)
Barbers (Cheese) 30.68ppl standard manufacturing litre and 29.8ppl on a
liquid standard litre price paid on September and October deliveries will
continue for all deliveries in November to make it three months in a row.
The milk price for Barbers producers over base litres for September has
reduced by 1.34ppl to 29.84ppl.
Dairy Crest and DCD gain
top marks for milk price stability into 2019 (2nd
October 2018)
Reporting that Dairy Crest’s Davidstow milk
for cheese producer price for November will remain at 30.4ppl based on a
manufacturing standard litre and 29.32ppl on liquid would normally be of
passing interest and more or less falling into line with others.
However, this stand on floor price has been guaranteed until 1st
February 2019, which is both a surprise and very welcome for which credit
should be given to Dairy Crest and DCD for agreeing this move.
Dairy Crest increased its manufacturing standard litre milk price to
30.4ppl (liquid 29.32ppl) from 1st August then from 1st
September introduced a 0.5ppl winter supplement to take the manufacturing price
to 30.9ppl and liquid to 29.82ppl. This latest move results in Dairy Crest
Suppliers benefitting from 6 months of price stability at the enhanced
manufacturing rate of 30.9ppl.
GDT Auction Prices fall
again for the 9th Consecutive time (2nd
October 2018)
Todays GDT Auction has fallen for the 9th Consecutive time
and everyone hopes it turns the corner soon.
Total quantity sold today 41,981 tonnes to average US $2901 tonne (-1.9%)
Notable prices at today’s auction were:
Butter down 5.9% to average
US $4016 tonne
WMP down 1.2% to average US
$2753 tonne
Cheddar down 1.2% to average US
$3468 tonne
SMP down 0.3% to average US
$1982 tonne
The Outlook (2nd
October 2018)
Stand on prices are now mainstream particularly for November deliveries
unless you supply Arla who are still increasing
producer prices for October.
As stated last week wholesale markets are under pressure with
particularly the cream and butter price in decline, which AHDB report fell by
£330 (butter) and £100 (bulk cream) in September. The FCStoneMilkprices.com
UKMFE forward price curve has now recorded its 6th consecutive drop
with this month (October) having recorded a 5.24ppl drop in that 6 week period.
Against these prices SMP nudged up £30 tonne and mild cheddar prices for
September were unchanged but the direction is regrettably but firmly south.
It’s now a case that any holds/stand on milk prices for November
onwards should be considered a favourable announcement. That’s until someone breaks rank which almost
seems inevitable will be in 2018 rather than 2019.
2018 SFP Exchange rate
confirmed at 0.89281 (2nd October 2018)
This is a fraction lower (0.2%) than the 2017 rate of 0.89470 which
means the RPA payment per entitlement is likely to be very similar to last
year.
Volvo 8 Ton Timber
Harvester For Sale in Scotland with a stroke head (2nd October 2018)
Fully guarded, including bullet proof Marguard
windscreen and built by Caledonian Forestry Services Ltd only 3 years
ago. Reason for sale is because the
family have acquired a bigger capacity machine.
If interested or you require further information or photographs please
email angus@kirkside.net
or call Angus 07794 623 975.
Ian and Carole need your help to raise as
much money as possible for the chances for Children Charity Buttle
UK (www.buttleuk.org) (2nd October 2018)
Background
- Back in 2015 Ian & Carole travelled to New Zealand and joined the
Pork Pie Charity Run (www.porkpie.co.nz) in a classic Mini and raised
£6,600 for charity. In 2017 the intrepid duo “squeezed” behind the wheel
again and drove Ian’s 1963 Mini Cooper S to Rotterdam for a weekend to
raise money in the 20th and final Regis Ladies Classic Car
Tour. They scooped the Award for the team who raised the most money for two
Cancer Charities raising over £3,000.
Later this month they are off again this time to
Italy with The Italian Job www.italianjob.com
Carole & Ian are joining classic MINI
enthusiasts from all over the UK, Europe and further afield for a charity
fund-raising trip of a lifetime, following in the tyre tracks of Michael
Caine’s 1969 film, through the Swiss Alps, across Italy and even onto the
rooftop test track of the world famous Fiat factory building in Turin.
Since 1990 The Italian Job Event has already raised
over £3 million for children’s charities and this year the beneficiary will be
the Childrens charity Buttle
UK. Buttle UK
plan to use the monies raised to give 1000 children a bed to sleep in. The Charity estimate that over 400,000
children in the UK do not have a bed of their own which leads to children
lacking sleep, affecting concentration and therefore academic achievement.
It is a fantastic cause and Ian and Carole will be
grateful for any donations.
100% of your donations will go to the Charity, as
Ian & Carole are once again self funding all their own expenses, entry
fees, fuel and accommodation.
If you can dig deep and find a few spare pounds it
will all be very much appreciated. It’s not a competition who can give
the most but if you do value this FREE regular
Dairy bulletin and Ian’s monthly Dairy Farmer article (now 26 years and
still going) then please give a little to show your appreciation.
The event is not a charity challenge, but more of a
non-competitive social week with like minded classic Mini enthusiasts aiming to
have a tour at the same time as raising money for a great UK Childrens charity.
So please sponsor Ian & Carole where you can,
and don't forget you can increase the amount you donate with Gift Aid
(individuals only, not companies).
Please donate on line by clicking on: https://www.justgiving.com/fundraising/englishbulldogsontour
OR
Send a cheque(s), made payable to either:
“Buttle UK “
Ian’s target is to raise £2,500 or more
Thank you all in
advance
News
A matching scheme to boost fundraising
efforts. An anonymous donor
of Buttle UK’s has offered to match, pound for pound,
the total funds raised by the 5 most successful jobbers in this year’s rally,
up to a maximum of £30,000!!
So for example Ian
& Carole raise £2,500 and were one of the top 5 fundraising totals our
contribution to Buttle UK’s Chances for Children
campaign would actually be worth £5000! The 5 winners will be announced at the
Reunion Dinner March 2019 but for sure Ian plans to be in that top 5 with your
help.
Arla have announced a 1.09ppl milk price increase compromising of a 0.9ppl
base price increase plus 0.19ppl quarterly currency adjustment.
The resulting 1st October standard litre price is 31.21ppl and
based on the manufacturing standard litre is 32.47ppl, which, if anyone plays
milk processor Top Trumps they will struggle to beat Arla
in 2018.
The Arla UK organic milk price remains
unchanged whilst it increases in Sweden (3 Euro Cents) and Denmark (2 Euro
Cents). Arla
UK organic farmers will, however, receive the 0.19ppl currency adjustment.
For Arla’s UK organic members the standard
liquid litre price is 40.99ppl and based on the manufacturing standard litre is
42.64ppl.
This latest increase certainly puts the cat amongst the pigeons and comes
at a time when most milk purchasers were hoping Arla
would stand on possibly even or cut its price.
1.2ppl
additional forecasted 13th payment for Arla
members (25th
September 2018)
As it’s calculated a further 1.2ppl is pencilled in by Arla as a 13th payment, which whilst still to be
approved by Arla’s BOR and depends on the current
business performance continuing until March 2019, will be additional money to
be added to an already healthy looking Arla member
milk price.
0.9ppl milk
price increase for Sainsburys aligned suppliers – from 1st October (25th September 2018)
This takes producers’ standard liquid litre price to 29.39ppl but see
below for trouble at Sainsburys!
0.57ppl
increase for Marks & Spencer’s (Muller aligned) - from 1st October (25th September 2018)
This takes producers’ liquid standard litre milk price to 31.41ppl
Milk price
outlook is not good (25th September 2018)
All eyes are now focussed on Muller this weekend and whether it confirms
any price movement from November 1st.
Ian’s moles suggest a Muller price cut is very much on the cards, which
is not what Muller or any dairy farmers will want to hear. Given Muller’s 1st October liquid
standard litre price is 29.5ppl and Arla’s is
31.21ppl the gap is now an unexplainable 1.71ppl. Also note in today’s announcement Arla state “The outlook for milk price for the coming
months remains stable”, indicating the possibility of stand on or close to
stand on prices depending on market movements in the next month.
Muller farmers will be praying for a November stand on but it’s looking
challenging and if Muller drop the dam will burst as price cuts rain in for
November and December.
Anything Ian writes will not change the fundamentals, so don’t shoot the
messenger.
GDT prices continue to drop, futures have been falling for the past 5
consecutive weeks, UK production is up, German production +2.8% and imports of
cheese from Ireland in 2018 are at eye-watering record levels. Arla’s increase is
great news but stand on prices for November should not be criticised.
GDT Auction
prices continue to slide south for the 8th consecutive auction (25th September
2018)
Key movers in last Tuesday’s GDT auction were:
Cheddar down 3.5% to average US$3503 tonne
WMP down 1.8% to average US$2768 tonne
SMP down 1.1% to average US$1980 tonne
Butter down 0.1% to average US$4270 tonne
Average down 1.3% to average US2934 tonne with 39,143 tonnes sold.
This means in the last 8 GDT auctions the average price has dropped by close
to 20% to prices last seen in October 2016.
Sainsburys under attack from
its farmer suppliers (25th September 2018)
Sainsburys farmers in the North of England and Scotland
are furious with the retailer to the point several are claiming they are immediately
seeking a new milk buyer and want to exit the Sainsburys
Dairy Development Group because “its heads Sainsburys
win and tails its dairy farmers lose.”
On a practical note finding a new milk buyer in Scotland looks
challenging!
Sainsburys are half way through a series of regional
farmer meetings, which haven’t gone according to plan and parachuting any spin
doctors and head honchos in hasn’t placated some of their loyal switched on
farmers.
The problem is if cost savings of 2p are achieved Sainsburys
intend to pocket the entire 2ppl with no sharing or benefit of the rewards to
their farmers. This means efficient
farmers are victims of their own success which is unfair and unacceptable.
In addition, the Sainsburys farm units have, on
average, expanded but the fixed amount added in for family labour at 1.44 head
at the national agricultural workers pay is being constantly diluted in the ppl COP as on farm production increases. One simple solution is to change the model to
a ppl labour cost but that doesn’t suit Sainsburys because it will cost them money.
The way the Sainsburys COP model deals with
bought in feed is also under attack, particularly from its 20 or so Scottish
farmers. The cost of feed per tonne is
that charged by the Sainsburys buying groups price
for all feed, however, Scottish farmers can’t buy their feed at that price and
are not part of the group buying.
Either the Scottish farmers feed price should be factored in to the model
or alternatively consideration to a Scottish regional Sainsburys
COP will have to be considered. One Sainsburys farmer claims his actual COP is 4ppl above the
model.
The final straw has been the recognition that for years the Sainsburys COP model has costed calf milk powder and Megalac in at the feed wheat price, which Sainsburys have held their hands up and agreed to correct.
The difference in costings is now recognised by Sainsburys
as amounting to 0.9ppl, which farmers have lost.
As further proof that Sainsburys don’t really
care about their farmers COP they have decided that of the 0.9ppl deficit
farmers will be given 0.6ppl but Sainsburys will
retain 0.3ppl and, at the moment, there are no moves by Sainsburys
to back-date any of the missing money to its farmers to reflect the shoddy
calculations in previous years.
The Sainsburys farmers have had to scrutinise
the costings themselves and the end result is, after 11 years of working with
British farmers, Sainsburys appear to be on a suicide
mission to wreck all the trust they have built up.
Some Sainsburys farmers no longer trust the COP
model, no longer trust Sainsburys and generally feel
very disappointed and let down. All they
are asking for is fair treatment from the retail giant.
Back in 2015, Sainsburys took out large adverts
in The Times, Telegraph, Mail, Express and Star where the strapline was:
“At Sainsburys we support our British fresh
milk farmers, does your supermarket?”
followed by:
“We believe the farmers
who produce our milk should also make a living.”
These were fantastic supportive statements, which some of its Scottish
and North of England farmers now believe to be false in 2018.
Do Sainsburys still “want to work with (its dairy) farmers to offer long term relationships
with stable profitable prices?”
The jury is out on this question but unless Sainsburys
attitude towards its 250 or so remaining SDDG farmers changes they look set to
lose even more dissatisfied producers.
The situation is best described as “fragile”.
Dairy
Crest’s profits look good for the first 6 months (25th September
2018)
Dairy Crest have announced a trading update for the last 6 month and
anticipate profit for the period to be above the same period 12 months earlier
as well as reporting a reduction in nett debt.
Dairy Crest’s interim results will be published on November 7th.
First Milk (25th September
2018)
Have published their financial results for the year to 31st
March 2018. The key numbers are:
Members’ Capital Investment up £2.1m to £75.5m
Turnover up 22% to £252.7m (2017 - £206.5m)
Nett Bank Borrowings up 16% to £44.9m (2017 - £38.6m)
Nett Profit Down 47% to £3.2m (2017 - £6m)
Total Group Capital Reserves up 25% to 27.4m (2017 - £22m)
First Milk might still be in the bottom handful of milk purchaser’s
standard litre milk price league tables but at least they have significantly
narrowed the price gap and strengthened their position, in recent years. Significant cost, especially overhead cost,
has been stripped out under the captaincy of Shelagh Hancock and this reflects
in the numbers.
First Milk’s membership milk has halved in recent years but for sure
First Milk member moans are almost unheard of now and it’s an indisputable fact
that with no sales and marketing team, due to the long term deal struck with Ornua, their focus is on making consistently high quality
cheese with minimal downgrades and they appear to be succeeding at it.
Freshways wind up its Dairystix business (25th September 2018)
Freshways have wound up their UHT Dairystix business
directly affecting 17 employees. The Dairystix brand was launched in 2007 but by 2012 was in
administration before it was resurrected.
Freshways took the business on in 2014. Further details to follow but the numbers
rumoured will leave some creditors with a migraine.
Construction
of a 30 million litre dairy farming commences (25th
September 2018)
Construction of an eye watering 30 million litre fully integrated dairy
has started in Russia and will cost circa $633 million (£484 million) with funds
coming from a group who are recognised as the largest Vietnamese agricultural
investors.
This is the first of five farms in the pipeline with construction of all
five to commence by 2020.
The farm/unit will be fully integrated from the cow to the distribution
of dairy products and will house 50,000 cows at 5,800 litres/cow or 30,000 at
just under 10,000 litres a cow. Now
that’s what you call big!
Russia’s goal is to be self sufficient in dairy, replacing all dairy
imports, within the next 8 years, which translates to the necessity to increase
domestic production by 25%.
Dairy
Industry Woman of the Year Award (25th September 2018)
Jeanette Prince was presented with the Dairy Industry Woman of the Year
National Award at last week’s presentation dinner.
Jeanette is a Staffordshire organic farmer supplying Arla. She is also a founder member of the
Staffordshire Women’s Farming Union, Vice President of Staffordshire YFC and
has devoted many days to promoting and progressing the UK dairy industry.
The Regional Award was presented to Ceri Cryer a farmer and cheese maker
from Wiltshire who under the Brinkworth dairy brand
sells her products to local markets and at London Farmers’ Markets.
FOR
SALE- 2 Lely A4 Robots – Location Cumbria (25th September 2018)
Installed in January 2012, regularly serviced
& updated, washed out regularly since the cows were sold. Reason for the sale is the farm has been
sold.
They come with the facility to feed liquid as
well as cake, which is automatically calculated. No weigh cells but concrete
work already installed. Sold along with
computer, 130 collars, exit gates and two milk recording samplers.
For further details email ianpotter@ipaquotas.co.uk
WANTED
BY IAN (25th September 2018)
14 tonne JCB ditching bucket with circa 60mm pin fixings.
Note, not a 3 CX size this is for a proper JCB 814 digger not a Fisher
Price digger! If you know where there is
one please email ianpotter@ipaquotas.co.uk
0.85ppl
milk price rise for suppliers to Pensworth Dairy – from 1St
October (4th September 2018)
This takes producers liquid standard litre
price to 29.8ppl.
0.5ppl
milk price increase for suppliers to Wensleydale
Creamery
– 1st September (4th September 2018)
This takes members’ standard liquid litre
price to 29.5ppl and standard manufacturing litre price to 30.45ppl.
0.5ppl
milk price increase for suppliers to First Milk – from 1st
September (4th September
2018)
This takes members’ standard liquid litre
price to 28.5ppl and standard manufacturing litre price to 29.47ppl.
0.5ppl
milk price increase for suppliers to Payne’s Dairies – from 1st
September (4th September 2018)
This takes members’ standard liquid litre
price to 29.5ppl.
AMPE
and MCVE climb higher (4th September 2018)
AMPE is up +4.4% from July to 33.6ppl and
MCVE + 0.6% to 33.6ppl (see above). In addition,
AHDB Dairy report that Cream income is now worth 13.09ppl to a liquid
processor.
During August AHDB report increases in
wholesale prices for cream, butter and SMP all mainly weather driven, which is
making traders nervous, especially over possible declines in winter milk
production which all farmers are anticipating and by the time the trade realise
its happening nothing they do will reverse the decline!
AHDB are anticipating further small farm gate
milk price increases up to and including November based on the current milk
market value (a weighted average of AMPE & MCVE). That may be what the
number crunching suggests but it’s certainly not what a large number of GB milk
processors are budgeting for with most aiming to hold prices.
Arla plans to pay out its 2018 profits to its
farmers (4th September 2018)
In a welcome, if not surprise, move Arla has confirmed it proposes to pay its entire 2018
profits to its farmers recognising many face serious financial pain as a result
of the drought. The proposal will be put to the Arla
Board of Representatives at its October meeting.
If Arla’s nett
profit target of 2.8% to 3.2% of revenue is achieved the numbers indicate a
potential supplementary payment of circa £20,000 for a 1 million litre
producer, however, this needs to be split into a circa £9000 as a 13th
payment producers are already entitled to receive so the additional money paid
out will be around £11,000 per farmer.
The total payment will likely be approved in
February 2019 when Arla’s end of year results are
known.
It’s highly likely this proposal has been
instigated by the Danish and Swedish Arla farmers who
have both clout and face some serious financial additional costs as a result of
the drought.
The point to ponder is whether
Arla executives are now assuming (possibly
planning) that on October 1st, November 1st and December
1st it will be a farm gate milk price hold stand on with little, if
any, chance of further farm gate milk prices increases
Straw
exiting GB and hay going into power stations (4th September 2018)
Ian has spoken to two people who have
confirmed that significant quantities of straw have already been delivered to
Iceland, Denmark and Belgium with a further enquiry to deliver to Norway and demand
from all four countries is very strong.
In addition, one haulier is taking hay into a
power station due to the shortage of straw.
Anyone playing the straw market is unlikely to have budgeted for straw
going to Iceland in curtain sided trucks on back loads.
36%
profit slump for European giant milk processor Friesland Campina (FC) (4th
September 2018)
Friesland Campina’s half year results show a
whopping 35.6% year on year profit slump.
Friesland Campina previously announced the early
2018 closure of two processing operations in France, both of which have
severely influenced these latest half year figures. The closures were announced a year ago as
part of Friesland Campina’s wholesale transformation scheme.
Arla UK’s half years results (4th
September 2018)
Arla’s half year UK revenue
increased by 2.3% to £961million with nett profit 2.2% versus 2.1% in 2017.
Arla’s 2018 financial year
nett profit of 2.8% to 3.2% is considered achievable.
UK
secures £240million deal with China (4th September 2018)
China has agreed a five year deal to import
UK dairy products worth an estimated £240 million
Farm
Foods 40ppl offer opens up a Pandora’s Box (4th September 2018)
In the last bulletin we asked readers to
crack the milk code for the supplier of incredibly cheap milk on sale by Farm
Foods at 40ppl!
Numerous readers collected the Potter
equivalent of a Crackerjack pencil and all identified the supplier as Payne’s
Dairies.
What Ian wasn’t prepared for were details of
allegedly how Farm Foods have played out their recent October milk supply
tender.
The three incumbent suppliers to Farm Foods
today are Payne’s, Medina and Grahams Dairies (Scotland). Allegedly once Farm Foods
received new tenders from Medina and Payne’s they served notice to terminate
all three supply contracts with the suggestion that one of the big two GB
liquid processors was involved and had successfully tendered and taken them all
by storm as sole supplier to Farm Foods with a table topping price.
Whether this was 100% accurate is debatable
but for sure when three are given notice one or more is likely to bite back and
drop their prices even lower than what is rumoured to already be an eye
watering price of under 35ppl.
Reports indicate the outcome is that Medina
retains its region and Payne’s retains its region and takes Grahams region in
Scotland. So the losers, if you can call
it that, are Grahams Dairies and the winners are certainly Farm Foods.
This certainly appears to have been a
particularly aggressive tender and one processor called it a blood bath another
said it was tactical Farm Foods tendering.