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.

1.5ppl milk price increase for suppliers Yew tree Dairy (AKA Woodcocks) - from August 14^th (21^st July 2017)

This takes producers standard liquid litre price to 29ppl (www.milkprices.com)

1.0ppl milk price increase for suppliers Paynes Dairies - from August 1^st (21^st July 2017)

This takes producers standard liquid litre price to 28.45ppl (www.milkprices.com)

0.81ppl milk price increase for Arla members - from August 1^st (21^st July 2017)

This is actually a 1 Euro Cent per kg increase, which equates to 0.81ppl and results in a standard liquid litre price of 28.82ppl and a standard manufacturing litre price of 29.98ppl. Arla’s organic price is a stand on at 42.83ppl.

1ppl milk price increase for suppliers to Dairy Crest Davidstow - from September 1^st (21^st July 2017)

This 1ppl increase will be a big disappointment to 360 producers who are now firmly well off the pace. The reality is that Dairy Crest and the producer group DCD reached an agreement in April 2017 for 2 further price drops in June and July and then having assessed the market decided to agree to a price hold until 1^st October.

Dairy Crest could have held firm until 1st October and refused any price increase but the lesson for DCD to learn is the difference between a price hold and a price floor. Had DCD agreed that the July reduction would have been the last reduction then further increases would have undoubtedly have flowed because a flaw would not prevent price increases.

The situation leaves DCD and Dairy Crest with much head scratching when it comes to negotiating the 1^st October price at the end of August. The increase for 1^st October will have to be significant and if it isn’t agreed our understanding is that deadlock would mean that Dairy Crest producers could leave on 3 months notice and that would be a situation that Mark Allen and his team will not want to take a chance on.

In the latest addition of Dairy Industry Newsletter, Barry Wilson has described Dairy Crest and its price movements as “shameful”, especially given the profits in the cheese business are up 18% to almost £43million for the year to March 2017. Wilson says that operating margins at this level are both the highest in the UK cheese sector and probably in Dairy Crest’s history. For August it seems that Dairy Crest will be at the bottom of the milk price league tables and Wilson goes on to highlight that Mark Allen’s salary for 2016-17 at £1.344million with share options worth £5.2million. Wilson then closes his article with a very hard hitting statement that if he was a Davidstow supplier he would be looking elsewhere if this is how he was being treated.

It remains to be seen how tough DCD are in the next round of negotiations but for sure if Dairy Crest don’t play their cards right they could be in for a bruising.

Arla unanimously vote to move to 12 months notice period (21^st July 2017)

At a meeting this week 94% of Arla representatives voted for UK members to be given a 12 month notice period option with only 6% voting against the resolution.

First Milk price contract changes (21^st July 2017)

First Milk have decided to abandon A and B pricing following the lead of several other milk purchasers.  This decision is one of several  outcomes of a pricing review, which started in March. 

While some farmers will understandably criticise the move on the basis that B pricing now should be very high, it has to be balanced by the fact that First Milk’s B price for July is only  25ppl and off the pace.  The reason for this appears to be that First Milk don’t have any  surplus milk with all their member’s milk required for their core business contracts.  In fact when questioned First Milk claim that they are now buying milk from third parties for short term opportunities  far more often then they are selling surplus. 

The co-op believes that the one price offering will be welcomed by the majority of members, especially now that it is accompanied by a simple 0.5ppl production bonus paid on all litres if the amount produced in one month is equal or greater to the corresponding month 12 months earlier.  This is simply a statement by First Milk that they want to encourage members to deliver more milk.

Another change is that the individual transport/haulage charges have been removed from 1^st September.

First Milk have also stated that during the course of next week the expectation is that they will be announcing another  price rise.

3 new board members at Muller (21^st July 2017)

At Tuesday’s farmer forum meeting there were 8 farmers put forward for 3 positions on the Muller farmer board. Roddy Catto, as chairman and board member, lost his position as did Chris Willis. Grant Hartman was the only one of the 3 candidates to retain his position and he is now joined by John Hocknell and Stephen Foster.

4 other places taking it to a total of 7 are up for election next year. At the next meeting in August the farmer forum will need to elect a chairman, vice chairman and finance officer and the odds on favourite to take the position of chairman must surely be David Herdman who is the current vice chairman of the group and former chairman of DCD

32ppl equivalent milk price for July deliveries paid by Friesland Campina (14^th July 2017)

Having announced a July farm gate price increase of 0.5 Euro Cents per 1kg, www.milkprices.com have calculated that at current exchange rates of 1 Euro = 88.2ppl and converted to our standard liquid litre results in a price paid of 31.858ppl. This represents an increase of 12.1ppl compared to 12 months ago.

Using the same numbers the Friesland Campina organic standard liquid litre price equates to a farm gate price of 42.976ppl.

Arla members are encouraged to discuss the proposal to move to a 12 months notice period (14^th July 2017)

Arla members have been given the minimum required 10 working days notice to consider and express any views on the proposed resolution for the immediate removal of the 3 month notice to leave period to be replaced by a 12 month period as proposed and promoted by the UKAF Board.

Several Arla members have contacted Ian during the week questioning the move with some suggesting that an immediate jump from 3 months to 12 months should have been staged with a 6 month interim notice period. It was the UKAF Board who made the decision to go in one jump.

The main bone of contention appears to be the minimum short 10 working day notice period, which for some, is leading to speculation and suspicion which clearly will be a disappointment to Arla. This is especially the case given the fact that if this is voted through next Thursday (20^th July) the 12 month notice period will take effect immediately.

Some farmers believe the option for a farmer to leave a milk purchaser in 3 months keeps that purchaser sharp and focussed on the real market place. As it stands today all of the main GB milk purchasers who do not comply with the Voluntary Code are on a 12 month notice period as are some of the Code compliant purchasers. Only Muller, Dairy Crest and Parkham Farms currently operate a 3 month notice period on a price change.

Notices for Arla farmers in Denmark and Sweden vary from 4 months to 16 months depending on when the farmer submits his notice. Note, Arla’s plan is to standardise notice periods across all countries during the next 2 years.

One thing is clear, in the event a number of Arla farmers were to leave having given only 3 months notice it potentially results in the remaining members having to plug any hole with the business often having to acquire expensive spot milk, which ultimately reflects on the milk price paid to the remaining members.

Arla farmers are urged to raise any concerns and discuss the implications of the resolution with their local area representative at the earliest opportunity and ahead of Thursday’s vote.

Set of Triple Gang Mowers for sale on Ebay (14^th July 2017)

Item No. 272749726027 in excellent condition and fully serviced. Ends this Sunday (16^th) at 19:00 hours.

https://www.ebay.co.uk/sch/i.html?_nkw=272749726027&ssPageName=GSTL

1ppl milk price increase for suppliers to Belton Farm (Cheese) - from 1st August (7^th July 2017)

This takes producers’ standard manufacturing litre to 29ppl and the liquid standard litre to 28.25ppl (www.milkprices.com)

1ppl milk price increase for suppliers to Helers Cheese - from 1st August (7^th July 2017)

1ppl milk price increase for suppliers to Meadow Foods - from 1st August (PRODUCER NOTIFIED) (7^th July 2017)

This takes producers’ standard liquid litre to 28.15ppl (www.milkprices.com)

0.328ppl Muller retail price supplement to be paid on June deliveries (7^th July 2017)

NFU accuse Arla CEO of scaremongering (7^th July 2017)

Peder Tuborgh, CEO of Arla has hit the news today with his comments that "butter and cream will be very short at Christmas time" and "Buy your butter now".

Tuborgh was interviewed live by BBC Business Live and Radio 5 Live where he pointed to a reduction in milk production coupled with the move from spreads back to real butter following confirmation from scientists that eating butter is not responsible for clogging up arteries. Suddenly butter is popular.

Only last week in this bulletin Ian commented "retail butter prices have not responded to hit consumers pockets yet".

One year ago a 250 gram pack of butter cost £1.35 now it's £1.49 but it must surely be set to head towards £2 or more soon.

A powerful, but perhaps realistic, warning from the head of one of the world’s dairy giants.

The big surprise was the revelation that one or more of the interviewers was told by the NFU that Arla were scaremongering in relation to suggestions that butter and cream will be short.

According to current wholesale market prices butter and cream are ALREADY short and very soon retailers will have to pass on increases to consumers.

For the NFU to comment like this smacks of an industry where its left hand doesn’t know what its right hand is doing, achieved nothing and looks to be a case of negatively counteracting Arla's message just for the sake of it.

The division comes at a critical time when the industry needs to be joined in its thinking, especially with the Brexit negotiations.

1.5ppl milk price increase for suppliers to Grahams Dairies (Scotland) – from 1^st August (6^th July 2017)

This takes producers standard liquid litre price to 27.75ppl (www.milkprices.com)

1.5ppl milk price increase for Muller suppliers – from August 1^st (30^th June 2017)

The resulting liquid standard litre price is 27.69ppl.

Note, the current 0.3ppl June and July forecast retailer supplement will reduce and could potentially disappear which will mean a reduction in Muller’s farm gate milk price.

1ppl milk price increase for Arla directs – from 1^st July (30^th June 2017)

This takes the liquid standard litre milk price up to 26.0ppl and the manufacturing standard litre price to 27.04ppl (www.milkprices.com)

1ppl milk price increase for suppliers to Glanbia Cheese – from August 1^st (30^th June 2017)

This results in a standard manufacturing litre milk price of 29ppl and a 0.96ppl liquid equivalent price rise resulting in a standard liquid litre milk price of 28.03ppl (www.milkprices.com)

0.75ppl unconfirmed price increase for suppliers to South Caernarfon Creameries Limited – from August 1^st (30^th June 2017)

The price increase is strongly rumoured but no one from SCC was available to confirm it as correct. If it is confirmed it will result in a 29.28ppl standard manufacturing litre milk price.

0.21ppl milk price increase for Tesco (TSDG) Muller and Arla suppliers – from August 1^st (30^th June 2017)

This results in a standard liquid litre price of 29.58ppl. The increase follows a quarterly review of the cost tracker.

As markets are the liquid standard litre milk prices for both Arla and Muller non aligned should comfortably overtake the TSDG price during this quarter.

First Milk B price +1ppl but stand on for July A price (30^th June 2017)

First Milk’s member B price will increase by 1ppl to 25ppl from July 1^st whereas the A price will be stand on until 1^st August.

29.5ppl net milk price for March to June 2018! (30^th June 2017)

www.milkprices.com UK Milk Futures Equivalent (UKMFE) forward curve is indicating what they describe as “the opportunity” to lock into a net farm gate milk price of around 29.5ppl for the March to June 2018 period.  This must surely mean much head-scratching by farmers as to whether they commit a percentage of their milk at these prices to hedge their bets.

In a similar tone the current average UKMFE net price to producers stands at at 29.34ppl allowing for costs, margin and level of risk. (www.milkprices.com)

But who’s pickpocketing the money? (30^th June 2017)

NFU Scotland have issued a news release titled “Dairy Farmer Patience Wearing Thin” pointing to the fact market indicators are meteoric yet farm gate prices have failed to respond and that “the arithmetic does not add up”. 

As one industry analyst commented to Ian this morning some liquid milk purchasers need to up their game if they want to retain their milk pool and at current July and August 1^st farm gate prices its’ likely some farmers will vote with their feet and tender resignations.

AHDB Dairy butter prices are at record levels averaging £5,100 tonne (June) and hitting £5400 to £5500 tonne.  In addition, AMPE at 36.4ppl and MCVE standing at 36.9ppl are both close to doubling in value in only 12 months.

Questions are being asked as to whether current butter prices are sustainable and the answer appears to be it’s doubtful, especially given the fact retail butter prices have not responded to hit consumers pockets yet. 

The AMPE price of 36.4ppl for June should have Barbers suppliers smiling because the Barbers above base milk volume price is set at AMPE minus 2ppl = 34.4ppl, with their standard milk price remaining the top milk for cheese price in the UK (www.milkprices.com).  Let’s play Top Trumps and see who can beat that?

A big thank you to all who sponsored Ian & Carole in their classic Mini Cooper S trip to Holland in March (30^th June 2017)

Thanks to the generous sponsorship of readers of this bulletin Ian and Carole raised £3630 in aid of Orchid (fighting male cancer) and Against Breast Cancer.

In fact, they also collected the prize for raising the most money so a big thank you to all of you who generously supported the tow charities.

The total raised by the Regis Ladies Classic Group in their 20 years of annual tours is a staggering £565,000

1.65ppl (2 Euro Cents) milk price increase for Arla members – from 1^st July (23^rd June 2017)

The increase was inevitable given the seismic movements in the fat markets, which are now driving prices north with spot prices having hit 36ppl. Other milk processors are expected to follow with “useful and meaningful” price increases next week from July 1^st and those announced for August 1^st will need to be greater if they intend to be fair to farmer suppliers.

The nett Arla price increase is actually 1.44ppl allowing for the currency smoothing and re-balancing of Arla’s cash flow following the milk price support given in May and June when the UK Arla farmers board agreed to fast forward future currency smoothing benefits due from 1^st July.

The resulting liquid standard litre price is 28.03ppl with manufacturing 29.17ppl and the organic manufacturing standard litre price increases to 42.83ppl and the organic liquid standard litre price to 39.78ppl. (www.milkprices.com)

GDT down 0.8% (23^rd June 2017)

It’s the first auction decrease for three months with the average price recorded $3434.

Notable movers:

Cheddar down 3.8% to average US$4121 tonne

WMP down 3.3% to average US$3022 tonne

SMP up 1.4% to average US$2218 tonne

Butter up 2.9% to average US$5768 tonne

Dairy UK Beyond Brexit Seminar and comments from EU Commissioner, Phil Hogan (23^rd June 2017)

Wednesday’s gathering of the great and the good of the UK dairy industry certainly confirmed that Dairy UK is pulling all the stops out to ensure the UK dairy industry, at both processor and farmer level, is recognised as a key priority in the Brexit negotiations.

Commissioner Phil Hogan spoke in the evening and gave very positive signs that he wanted to work with the UK dairy industry to ensure a soft Brexit. Yes, the cynical will likely comment that Hogan will want a soft landing given his Irish roots but he had the perfect opportunity to deliver a hard hitting warning to the UK dairy industry and he chose to deliver the opposite message of wanting to work together.

Chairman of Dairy UK, David Dobbin, was very clear that trading with the EU without tariffs and barriers must continue and that now is the time for the industry to “hammer home the significance of dairy”.

Dobbin went on to highlight that the UK food and drink industry is bigger than the car and aerospace industry combined with 73,000 UK families depending on the 14 billion litres of milk output from dairy farmers.

The thinking and the messages from Dairy UK were very clear, let’s hope their efforts yield results and we don’t end up on the cliff edge in the spring of 2019. At least we now know we have a dairy organisation fighting our corner.

Yew Tree concludes its first 2 year fixed price contract (16^th June 2017)

This is certainly the UK’s first 2 year forward contracted farm gate milk price which, like Yew Tree’s other volatility smoothing initiatives, has had a good update. It has been taken up by a number of Yew Tree Dairies ingredients farmers and backed off with the physical delivery and contracts with customers, so zero exposure.

The contracts will run until July 2019, so covering two more spring flushes, and at farm level delivers is 29.028ppl less 1.7ppl haulage to nett 27.328ppl.

Yew Tree producers have contracted to supply between 5% and up to 60% of their output and this price certainly top trumps the average all prices figure for the last 2 years (24.67ppl) and 3 years (26.66ppl) (www.milkprices.com)

Production and Markets – Update (16^th June 2017)

According to Datum GB milk deliveries for week ending 3^rd June 2017 were 1.5% below those in the corresponding week a year earlier.

Worldwide there is no increase in milk production which is running more or less in parallel with that recorded in 2016.

Commodity wise all prices continue to head North with the rise in butter prices has been described as “meteoric!” All eyes will be on next week’s GDT auction with the expectation that once again all prices will increase. This market is simply a commodity and fat market driven.

Vegan groups turn sour as European Court says not to Soya Milk and others (16^th June 2017)

The European Court of Justice has declared that products advertised as milk, butter, cream, cheese and yoghurt cannot be named as such if they are purely plant based.

This means in order to use these words in advertising and marketing any milk/dairy product must be derived from animals. The court’s decision follows a German case.

It’s a bitter blow for the European Vegetarian Union and The Vegan Society and their mates, who when asked to comment were all keen to put their own spin on the decision rather than keep their heads down and lick their wounds.

0.5ppl milk price increase for members of South Caernarfon Creameries (SCC) co-operative – from 1^st July (5^th June 2017)

At a time when most, if not all, milk purchasers are at best holding prices with most reducing Wales oldest dairy co-operative, SCC, is bucking the trend and not following the pack with this 1^st July increase.

Alan Wyn Jones, MD of SCC, commented to Ian:

“Cheese by-product returns on cream and whey have continued to strengthen and the outlook on these returns remains extremely positive. On the back of these improved returns its only right we pass this onto our farmer members”

The SCC business has made significant investment in recent years and is one of the few milk purchasers in a position to attract and recruit new suppliers/members.

The increase takes producers manufacturing standard litre upto 28.53ppl and their liquid standard litre price to 27.57ppl (www.milkprices.com)

0.35ppl and 0.28ppl milk price reductions for members of First Milk – from 1^st June (5^th June 2017)

Details as follows (www.milkprices.com):

0.35ppl Midlands & East Wales (liquid standard litre price of 25.80ppl)

0.35ppl Scottish mainland (liquid standard litre price of 25.49ppl)

0.28ppl Lake District (liquid standard litre 26.48ppl and manufacturing 27.43ppl)

0.28ppl Haverfordwest (liquid standard litre 27.25ppl and manufacturing 28.20ppl)

The First Milk B price for May is 23ppl, June expected to be 24-25ppl and prediction for July 25ppl plus.

The reason given for these price cuts is as a consequence of other milk purchasers reducing their prices, which has adversely impacted on First Milk’s customer pricing mechanism.

Markets continue to head North (5^th June 2017)

Throughout May dairy markets for butter, cream and AMF have been aggressively heading up and this has continued into June and are now at their highest levels for more than 5 years.

Current spot milk prices are now at 30ppl and in Holland and Italy are 31.5ppl (note this is with 4.4% b/f)

www.milkprices.com’s UK Milk Futures Equivalent increased by an eye-watering 8ppl in May to 35.39ppl for September 2017 delivery. (Note, approximately 3 to 4ppl needs to be deducted to give a realistic farm gate milk price equivalent.)

AHDB Dairy report butter starting in early May at £3750 tonne and ending at £4800. Cream started at £1700 and reaching £2200 tonne

Open Farm Sunday – This week 11^th June (5^th June 2017)

LEAF has 350 UK farms signed up for this week’s Open Farm Sunday in this, it’s 11^th year.

As LEAF correctly state it’s a fantastic opportunity for young and old to discover first hand what it means to be a farmer.

Arla are the only UK milk processor who provide financial support and sponsor the event and more than 60 Arla member farms are opening their gates to the public this Sunday. A great effort and well done to all who make this happen.

South Caernarfon Creameries (SCC) wins the 2017 Dairy Food Provider of the Year Award (5^th June 2017)

The award was voted by members of the public and a real feather in the co-op’s cap.

0.4ppl milk price reduction for Arla members – from 1^st June (26^th May 2017)

This takes producers’ standard litre liquid milk price to 26.65ppl and 27.73pl for the standard litre manufacturing price (www.milkprices.com)

The price cut is obviously unwelcome, especially when it only applies to Arla’s circa 2,500 GB members, however, its GB members did avoid a cut as a result of the accelerated currency smoothing payment, which neutralised a May price cut.

However, the NFU (England & Wales) appear to have Arla in their sights and turning almost a blind eye to making any meaningful comment on the practices and milk price reductions of other milk purchasers, especially County Milk. See last week’s bulletin with 1ppl retrospective producer price cut.

As the biggest milk purchaser Arla should expect to receive adverse press coverage when they drop the price, however, numerous people are questioning why the NFU haven’t done a press release lambasting County Milk’s 1ppl backdated price cut which effectively waves two fingers to the Dairy Industry Voluntary Code of Best Practice and firmly takes the industry back to the dark days, pre the code.

So whilst the NFU claim “farmers are asking what’s going on” reference the Arla 0.4ppl cut Ian can confirm others are asking what’s going on with regards to the NFU applying pressure proportionally, especially when it comes to retrospective price cuts on which it has simply made a passing remark. The NFU could do much better unless it has been silenced!

MCVE & AMPE both comfortably over 30ppl (26^th May 2017)

The AMPE price for May is up 3.3p in one month to 31ppl and the corresponding MCVE price up 1.5p to 33.3ppl.

Fonterra price increase (26^th May 2017)

New Zealand dairy giant Fonterra has increased its 2016/2017 farm gate milk price by 15 cents to $6.15 per kg MS as a result of stronger world dairy commodity prices and is cautiously optimistic for the future.

EU milk out put is rising faster than budgeted (26^th May 2017)

March output is up just under 1% across the EU and the growth is predicted to increase by significantly more than the budgeted forecast increase of 0.6% for the year, especially for the second half of 2017 where anticipated growth now expected to be 2%. This would give a total 2017 increase of around 1%.

Arla’s cheese isn’t made from Monster Milk (26^th May 2017)

Arla has rattled some cages in Trumpland with a racy and controversial advertisement on US TV promoting Arla’s cheese as not being made from cows which are monsters and given added hormones.

The advert depicts a six-eyed monster with razor sharp horns and electrified fur representing a child’s impression of the hormone BST.

BST manufacturer Elanco has initiated legal action against Arla demanding the advert be pulled but as of today it’s still running and gaining more publicity everyday, which must be great news for Arla’s US cheese sales. The jury is out on whether the advert is pulled on the instruction of the authorities.

New look to Belton Cheese branding (26^th May 2017)

Shropshire farm house cheese buyer, Belton, has unveiled a new very distinctive identity under the name of Belton Farm with a strapline “Great British Cheesemakers”

1ppl back dated milk price reduction for County Milk suppliers – from May 1^st (19^th May 2017)

This means County have dropped producer prices by 3ppl in recent months and this latest price drop has come as a very big surprise to producers because for those involved at the sharp end of trading, like County, spot prices are now 26 to 27ppl having risen from around 20ppl in less than 3 weeks.

Despite all the efforts of the NFU’s and others to introduce a code of conduct it’s hardly fair to hear back dated price cuts are still considered fair.

Farmers should certainly be questioning any price drops beyond early May and for those announced for June and even July, for example Dairy Crest’s two stage price reduction, there must be grounds for farmers to insist these to be immediately rescinded to demonstrate fairness and transparency. The alternative is some purchasers risk being tagged as opportunist Robin Hoods, especially for July and/or back dated cuts.

It’s a certainty some milk purchasers have made the wrong call with recent milk price drops and should be challenged.

Cream income is stratospheric and according to AHDB Dairy is worth 10.15ppl compared to only 4.62ppl 1 year ago an increase of 120% and cheese prices are rocketing north this week. Come on don’t push through price cuts just because you can.

0.5ppl milk price drop for Grahams Dairies supplies – from June 1^st (19^th May 2017)

This takes producers standard liquid litre price to 26.25ppl (www.milkprices.com)

GDT auction results (19^th May 2017)

This weeks’ GDT auction produced a 3.2% all products average index increase, which is the 5^th consecutive increase. Out of the 8 commodities on offer 7 out of 8 recorded price increases and the average index is now the highest it’s been for 3 years.

Key movers (19^th May 2017)

Butter +11.2% to average US$5479

WMP +1.3% to average US$3312

SMP +1.0% to average US$1998

Average +3.2% to average US$3313

UK product goes into Intervention (19^th May 2017)

According to AHDB dairy UK produced SMP has gone into the EU’s Intervention store for the first time in 12 months during the first week of May with 1,132 tonnes taking total EU stocks to an eye-watering 356,000 tonnes! Do not let anyone try to tell you that SMP prices are why price cuts are needed because cream values are eclipsing that red herring.

The liquid milk merry-go-round kicks in as Morrisons do some shuffling (19^th May 2017)

Morrisons have moved to sole supplier for all their own brand liquid milk, estimated to be around 400 million litres to Arla from March 2018 for three years until 2021.

Arla already had an estimated 260 million litres and the 140 million litres which they gain from next March is at the expense of Muller and is in effect the 140 million litres Muller acquired as part of the take over of Dairy Crest’s liquid division.

Whilst Morrisons are unlikely to go to a segregated pool they are moving towards what some would call a nominated pool with specific farmers nominated with whom Morrisons will presumably want to engage in return for which additional funds will be paid to the retailer.

The loss of such a large quantity will be a blow to Muller as it would be to any processor.

More rides on the merry-go-round are still on the cards with next up the outcome of the Lidl re-shuffle followed by the big Aldi tender and in summer by the co-op group (CTRG). Nett milk movements during the 12 months ending April 2018 will undoubtedly leave some milk buyers smiling and some crying over the spilt milk.

Dairy Crest’s year end results (19^th May 2017)

Dairy Crest’s results show adjusted profit was up 5% to over £60 million (57.7m in 2015/2016) with net debt up by 9% to £249.8m.

The dividend paid to shareholders up 2% to 16.3p.

Dairy Crest shares were trading at £5.80 a fall from the £6.16 briefly recorded on Wednesday.

Ulster Farmer’s Union retaliates against Go Vegan World’s anti-dairy campaign (19^th May 2017)

UFU President Barclay Bell has no issues with the less than 1% of the population who for whatever reason have decided to go vegan, however, their organisations anti-dairy campaign targeting dairy farming systems is “one-sided and unfair”, which the President has criticised on behalf of the 99% plus of the population who enjoy eggs, meat and dairy products.

Meanwhile, in the US, an industry campaign called Undeniably Dairy has been launched to better engage with consumers with clear transparent messaging about dairy products which has and is currently twisted, distorted and misrepresented!

The campaign realises that consumers are being spoon fed what is predominantly conflicting inaccurate information often by anti-dairy groups. The same could be said in the UK, especially when it comes to facts on TB in cattle and badgers.

Fake invoices and forgery once again in the Midlands (19^th May 2017)

It’s by no means the first time middle ground family wholesaler J N Dairies has been the subject of unlawful activities (2008) lies and propaganda (2014) and its returned to their doorstep again.

No fair and honest dairy competition in the Wolverhampton and Birmingham area that’s too simple and now it’s the return of doctored documents painting “an untruthful image of your honest and ethical supplier.” When will these clowns learn this is not how the dairy industry operates in the UK?

Back in 2011 Johal Dairies and J N Dairies were locked in a multi-million pound expensive high court battle involving the theft of confidential information belonging to J N Dairies in 2008 and an alleged bribe of £40,000 plus.

The end result was that the court ordered Johal Dairies to pay J N Dairies almost £1.3 million in relation to legal costs, damages and interest on top of which they had their own costs.

Arla opens new Danish innovation centre (19^th May 2017)

As part of its aim to ensure a minimum of 10% of Arla UK’s net revenue is derived from new products Arla has officially opened its new innovation centre in Aarhus, Denmark.

The site employs 150 people some of whom will, with respect, resemble Umpa Lumpa’s working on up to 50 new ideas at any one time.

Arla in winning ways (19^th May 2017)

Arla have received international recognition having been listed under two ingredients categories in the 2017 Ingredient of the Year Nutra Ingredients Awards in Geneva, winning one category and runner up in another.

0.5ppl milk price reduction for Muller non-aligned suppliers – from 9^th June (12^th May 2017)

This reduces producers’ standard liquid litre to 26.19ppl (www.milkprices.com) excluding the retailer supplement (see below)

0.276ppl April retailer supplement for Muller non-aligned suppliers (12^th May 2017)

This will be paid to Muller’s non-aligned suppliers in addition to the standard price.

The consensus is that dairy markets have turned the corner (12^th May 2017)

Virtually all analysts are convinced that the bottom of the market was reached in April and that the UK farm gate milk price outlook for the remainder of 2017 is cautiously optimistic.

GDT auction futures and forward contract prices having stabilised are now showing signs of steadily improving for most dairy commodities. This is encouraging news in spring and bodes well for the rest of 2017.

The FC Stone/milkprices.com UK milk futures (UK MFE) price for April of 27.36ppl they believe will be the lowest for “the foreseeable future” and May has already seen the UK MFE average butter price increase by €150/tonne and SMP up a more modest €10/tonne.

The 350,000 plus tonnes of aged SMP Intervention stocks will one day be a problem. If, or rather when, the Commission accept tenders to release stock it will dampen farm gate milk price recovery. Fortunately in 2017 limited additional SMP is going into Intervention amounting to under 1,000 tonnes a week placed in store during April compared to 15,000+ tonnes/week average in April 2016.

In a press release NFU Scotland have called for stability in Scottish farmers farm gate milk prices. The press release points to a realistic farm gate milk price of 27.5ppl depending on the milks end use based on the fact that AMPE is at 27.7ppl and MCVE is at 31.8ppl. All signs are pointing north.

Dairy Industry Newsletter 20^th Annual Conference – Next Wednesday (12^th May 2017)

The Conference theme is “Riding the Dairy Market Roller Coaster Trump, Brexit and many now uncertainties”. Ian will be attendance to hear first hand what an impressive line up of speakers has to say.

2ppl milk price cut for Dairy Crest Davidstow suppliers (5^th May 2017)

Split over two months with a 1ppl reduction from 1^st June and another 1ppl from 1^st July. Accompanying the announcement was a pledge to hold the new July price for August and September.

First Milk May 1^st price reductions (5^th May 2017)

Details are as follows:

0.1ppl Midlands & East Wales (liquid standard litre price of 26.15ppl)

0.25ppl Scottish mainland (liquid standard litre price of 25.84ppl)

0.35ppl Lake District (liquid standard litre 26.76ppl and manufacturing 27.72ppl)

0.35ppl Haverfordwest

The 0.35ppl Haverfordwest liquid standard litre price will be 25.88ppl excluding the additional Tesco cheese payment, which is expected to result in a standard litre price of 27.53ppl and a manufacturing standard litre price of 28.5ppl.

Muller sign up all 1900 suppliers bar 6! (5^th May 2017)

In what can only be described as a remarkable 2^nd round PR result Muller have confirmed to Ian that only 6 farmers have not signed the new Muller contract. Out of these only 2 are what Ian describes as “The Awkward Squad” with the other four either retiring or moving away from the Muller family.

So following on from Ian’s current Dairy Farmer article the two Awkward Squad farmers are the ones with a big call and a potential problem unless they have decided their future is in not supplying Muller and they already have alternative options.

Consequently there is unlikely to be any need for differential pricing for just two farmers on the old contract and www.milkprices.com will presumably ignore and no longer refer to either of the old Muller contracts. So far as Muller is concerned it’s a housekeeping job completed.

Dairy Tech has 100 plus exhibitors already (5^th May 2017)

RABDF’s new flagship Dairy Tech event on 7^th February 2018 at Stoneleigh Park already has over 100 committed exhibitors – www.rabdf.co.uk

Scottish NFU’s Vice President calls for naming and shaming of BVD farmers who fail to take action (5^th May 2017)

It’s a bold and brave move but Gary Mitchell who is a dairy farmer and NFU Scotland Vice President has put forward the suggestion that farmers who fail to eliminate cattle persistently infected with BVD should be publically named and shamed.

According to Gary and NFU Scotland there are 382 known BVD PI animals on Scottish farms and 140 farms have two or more PI’s and one even has a staggering 24 PI animals on farm!

Gary is suggesting that if these farmers are unwilling to remove all infected animals their details should be published and Ian would support this with publication in this bulletin on a weekly basis if data protection permits it. See below for very competitive BVD tags from Potters.

No reduction in EU SMP stocks in 8^th tender (28^th April 2017)

Once again no SMP sold in the recent tender and stocks are indeed steadily rising and currently stand at 353,680 tonnes. Current market prices for SMP are precariously close to intervention levels.

Friesland Campina stand on for 3^rd time (28^th April 2017)

Arla’s biggest European competitor, Friesland Campina, has held its producer milk price for the 3^rd consecutive month at an equivalent 29.24ppl based on the milkprices.com standard liquid litre price (4% butterfat & 3.3% protein). Note, the rise in the value of sterling has wiped 1ppl of this price which would have been 30.25ppl were it not for currency movement.

MACHINERY WANTED – All must be in very good or excellent condition (28^th April 2017)

1. Around a 3 metre mower (no conditioning unit)

2. A 1500 to 2000 gallon slurry tanker c/w dribble bar

3. A 25 foot or longer bale trailer (braked)

Email ianpotter@ipaquotas.co.uk

1 Euro Cent (0.76ppl) milk price reduction for Arla members is neutralized for Arla GB members (25^th April 2017)

From next Monday May 1^st Arla has announced a further 1 Euro Cent milk price reduction but this has been neutralised in cash flow terms due to a decision by the UK Arla farmers board to bring forward future currency smoothing benefits due to members July onwards.  The nett effect is to cancel out the price cut at a time when cash flow is already tight due to peak seasonality deductions and is a welcome move by the UK farmer representatives and fingers crossed for the next Arla price move to be stand on or up.

2 Euro Cent (1.52ppl) milk price reduction for Arla Organic members is halved (25^th April 2017)

The accelerated benefit of July currency smoothing has also been applied to the organic price reduction of 2 Euro Cents, which means the net cash flow reduction will be 1 euro cent (0.76ppl) instead of 1.52ppl for a standard liquid litre and on a standard manufacturing litre the 1 euro cent reduction converts to 0.79ppl as instead of 1.58ppl both apply from May 1^st.

In a statement Arla commented that whilst the organic dairy market is reasonably stable this adjustment has been necessary in order to reflect current market returns.

0.296ppl addition for Muller non-aligned March deliveries retail supplement (14^th April 2017)

Muller’s non-aligned suppliers will receive an additional 0.296ppl on all milk delivered in March

No takers at latest Dutch Dairy Commodity auction (14^th April 2017)

According to a report in DIN, the Dutch based dairy auction’s online recorded no sales for a second 2017 auction for a total of 451 tonnes on offer. The minimum price set for SMP was £1680 tonne.

Meanwhile, SMP prices continue to fall with prices, according to AHDB Dairy, trading at €1790 tonne just €92 above Intervention levels. More SMP has gone into Intervention from Poland, Germany and Lithuania with an additional 1200 tonnes going into already record quantities in store.

Arla confirms a 12 million Euro investment in baby powder (14^th April 2017)

Arla has confirmed plans to invest 12 million Euros to produce infant milk formula at its AKAFA site in the north of Denmark. The facility is planned to be operational by August 2018 and interestingly with technology will only create an additional 2 or possibly 4 jobs.

0.32ppl milk price increase for suppliers aligned to the co-op Dairy (Muller) – From 1^st May (7^th April 2017)

This increase is for the next quarter May to July inclusive and takes producers standard liquid price to 27.9ppl. (www.milkprices.com)

Crediton Dairy stands on with its suppliers ex-farm gate milk price – until the 1st June which maintains the current standard liquid litre price at 28.5ppl. (7^th April 2017) (www.milkprices.com)

Crediton’s B litre milk price will change from May 1^st to AMPE minus 2ppl as opposed to the current AMPE minus 1ppl.

1.25ppl milk price cut for Barbers suppliers – From 1^st May (7^th April 2017)

This takes producer’s standard manufacturing/cheese litre price to 29.05ppl and 28.85ppl for a standard liquid litre (www.milkprices.com)

0.75ppl milk price cut for Pensworth suppliers (7^th April 2017)

This takes producers standard liquid litre price to 26.5ppl. (www.milkprices.com)

0.4ppl milk price cut for Meadow Foods suppliers – From 1^st May (7^th April 2017)

The reduction results in a standard liquid litre price of 27.15ppl and a standard manufacturing (cheese) litre price of 27.53ppl.

Freshways milk price cut is unknown but will be capped at a maximum 0.39ppl for May suppliers (7^th April 2017)

Freshways wrote to its producers on the 31^st March informing them of a May price cut claiming that all 5 companies which make up the Freshways current basket have reduced their price.

Ian has requested Freshways clarify which Companies have reduced the basket price because as at the date of the letters Ian believes a maximum of 2 out 5 have reduced their farmgate milk price (Arla and Paynes). Indeed the attachment with the letter appears to confirm this. The price cut will not exceed 0.396ppl.

GDT Auction average up 1.6% (7^th April 2017)

Noteable movers were:

WMP up 2.4% to average US $2924 tonne

SMP down 0.8% to average US $1913 tonne

Butter down 1.8% to average US$4751 tonne

Cheddar down 4.4% to average $3288

More SMP goes into Intervention (7^th April 2017)

It’s not encouraging news to hear that 472 tonnes of SMP from Poland has already gone into intervention stores.

Southern Irelands February milk production was down 7.8% (7^th April 2017)

Southern Irelands February production was down 22.3 million litres (-7.8%).

Award for the most money raised for UK Cancer Charities (7^th April 2017)

Ian & Carole scooped the award for being the team (English Bulldogs on Tour) which raised the most money for the two Cancer charities in last weekend’s final Regis Classic car Tour to Holland.

So a huge Thankyou to the 62 readers who donated. Note a very significant proportion of the money Ian and Carole raised was directed by readers to fighting Male Cancer.

Below is a photograph of Ian & Carole receiving their Awards with organiser Ali Green who has been key to the annual event for 20 years. Please note Ali isn’t as squashed and sandwiched between Ian and Carole as the picture perhaps indicates! Also attached is a great photograph of the duo in action in their 1963 Mini Cooper S running along the canal between traditional Dutch windmills.

Ian will confirm how much they raised when the giving page closes but as at todays date it amounts to £2,575 plus £314 Gift Aid. Total £2,889 with more money received by cheque than on line.

Ian & Carole’s giving page will remain open for any last minute bulletin reader donations.

If you haven’t sponsored then please give a little now by donating on line by clicking on: http://uk.virginmoneygiving.com/fundraiser-web/fundraiser/showFundraiserProfilePage.action?userUrl=EnglishMiniBulldogsOnTour&isTeam=true

OR

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

“Orchid”  (Fighting male cancer)

Or

“Against Breast Cancer”

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

Also a big thankyou to EDP Photo News UK and Steve Carpenter for taking the photographs and allowing us to reproduce them.

0.62ppl milk price increase for Tesco (TSDG) suppliers – from May 1^st (31^st March 2017)

This increase will apply for the next quarter May to July inclusive. The resulting liquid standard litre price is provisionally expected to be 29.37ppl.

0.33ppl milk price increase for Sainsburys (SDDG) suppliers from 1^st April (31^st March 2017)

This increase will apply for the next quarter of April to June inclusive and takes producers standard liquid litre milk price to 27.67ppl (Muller supplier) and 27.55ppl (Arla supplier) (www.milkprices.com)

1ppl milk price increase for Mullers Organic suppliers – from 1^st May (31^st March 2017)

This takes the organic suppliers standard liquid litre milk price to 40.5ppl (www.milkprices.com)

Muller stand on for April & May (31^st March 2017)

Muller’s non-aligned milk price is unchanged through the 2017 flush until at least 1^st June at 26.69ppl plus an estimated retail supplement of 0.3ppl will give an estimated paid out milk price of 27ppl.

Dairy Crest stand on for April & May (31^st March 2017)

Dairy Crest’s farm gate milk price is unchanged through the 2017 flush until at least 1^st June at 28.92ppl on the liquid standard litre price and 30ppl on the manufacturing/cheese standard litre price (www.milkprices.com)

Friesland Campina stand on for April (31^st March 2017)

Arla’s biggest European competitor, Friesland Campina, has announced a stand on milk price for April. When this is adjusted to a www.milkprices.com standard liquid litre this converts to 30.251ppl with its comparable standard litre organic price at 40.334ppl.

0.35ppl milk price cut for Paynes suppliers – from 1^st April (31^st March 2017)

This takes producers standard liquid litre milk price down 27.45ppl (www.milkprices.com)

This bulletin comes from Holland due to the fact Ian & Carole are now in Rotterdam raising money for Breast Cancer and Male Cancer.

If you value this bulletin and you haven’t sponsored then please give a little now by donating on line by clicking on: http://uk.virginmoneygiving.com/fundraiser-web/fundraiser/showFundraiserProfilePage.action?userUrl=EnglishMiniBulldogsOnTour&isTeam=true

OR

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

“Orchid”  (Fighting male cancer)

Or

“Against Breast Cancer”

Background - Back in 2015 Ian & Carole travelled to New Zealand and joined the Pork Pie Charity Run (www.porkpie.co.nz) in a classic Mini and raised £6,600 for charity.  This weekend the intrepid duo have taken to the wheel again and have driven Ian’s 1963 Mini Cooper S to Rotterdam for a weekend to raise money in the 20^th and final Regis Ladies Classic Car Tour.

100% of your donations will go to the two charities named below, as Ian & Carole are self funding all their own expenses, entry fees and accommodation.

This final 20^th Regis Classic Tour is supported by a host of companies and individuals who have donated money, prizes, auction items and services to help this group of ladies finish their 20^th annual tour with a bang.  During the past 19 years the tour has raised a staggering £524,000. 

Ian, more than anyone, fully appreciates how difficult the past two years in UK dairy farming have been.  If you can dig deep and find a few spare pounds it will all be very much appreciated.  It’s not a competition who can give the most but if you do value this regular bulletin and Ian’s monthly Dairy Farmer article (now 26 years and still going) then please give a little to show your appreciation.

The event is not a charity challenge, but more of a non-competitive social weekend with like minded classic car enthusiasts aiming to have a spring tour at the same time as raising money for two great charities.  I doubt there is anyone who is reading this bulletin who has not had at least one friend or family member affected by cancer.

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

Please donate on line by clicking on: http://uk.virginmoneygiving.com/fundraiser-web/fundraiser/showFundraiserProfilePage.action?userUrl=EnglishMiniBulldogsOnTour&isTeam=true

OR

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

“Orchid”  (Fighting male cancer)

Or

“Against Breast Cancer”

Ian’s target was to raise £1000 but already readers generosity has exceeded £2000 by cheque or by online donations.

Thank you all in advance.

1ppl milk price drop for County Milk Products Limited suppliers – from April 1^st (PRODUCER NOTIFIED) (24^th March 2017)

This is the second consecutive 1ppl price drop by County according to its farmer suppliers. However, according to one source County are exposed to the ingredients market via Yew Tree Dairy, which has certainly crashed back, especially given the fact the SMP price is now close to Intervention level. The likelihood of spring milk going into intervention stores to add to the existing 350,000 tonnes of old stock is now almost inevitable for April.

County were unavailable to confirm what their 1^st April standard liquid litre price would be following the 2ppl reduction, which we will endeavour to report next week.

0.79ppl (1 Euro Cent) milk price drop bombshell from Arla – 1^st April (24^th March 2017)

Around 2,700 Arla members/ owners  have been notified that from April 1^st their milk price will reduce by 1 Euro Cent equal to 0.79ppl.  The reduction will not apply to Arla’s UK organic suppliers although Arla’s mainland Europe organic suppliers will feel the full force of the reduction.

Of some comfort is the fact the currency smoothing mechanism will provide a 0.37ppl increase resulting in a net reduction of 0.42ppl.  The reduction reduces the 1^st April standard liquid litre price, including the currency smoothing adjustment, to 27.03ppl and for the standard manufacturing litre to 28.13ppl.

It’s a big blow to Arla members and regrettably if Arla sneeze others will catch a cold.  Pretty much everyone in the industry had expected (or prayed) for a stand on price for April and May, which with the filtering through of the currency smoothing would have seen farm gate milk price increases.  This cut will hurt.

There are strong rumours that a similar reduction is already in the pipeline for May 1^st coupled with the belief that Arla have overpaid producers for milk, especially the recent 13^th payment. If another cut happens on May 1^st Arla will struggle to deal with their farmer communications to justify a second cut.

The Arla cut could easily kick start a trend which others seize if it does it will be the final straw for a number of dairy farmers who haven’t even begun to recover from the last slump in prices.

Meanwhile, the Arla brands have been named as recording the largest growth out of the top 100 UK grocery brands achieving growth of £37m in 2016.

Arla members are already questioning whether achieving such headline grabbing brand growth is actually delivering a better milk price to the farmer owners given that in cheese some of its competitors are now paying 30ppl for milk, which is going into branded cheese.

GDT average up 1.7% (24^th March 2017)

The most notable price was the dramatic drop in SMP of 10.1%, which followed a 15.5% drop only 2 weeks ago.

The GDT average price for SMP has crashed by an eye watering 24% in just one month.

Key movers were:

WMP +2.9% to average US$1948/tonne

Cheddar +1% to average US$3406/tonne

SMP -10.1% to average US$1948/tonne

0.79ppl (1 Euro Cent) milk price drop bombshell from Arla – 1^st April (23^rd March 2017)

Around 2,700 Arla members/ owners  have been notified that from April 1^st their milk price will reduce by 1 Euro Cent equal to 0.79ppl.  The reduction will not apply to Arla’s UK organic suppliers although Arla’s mainland Europe organic suppliers will feel the full force of the reduction.

Of some comfort is the fact the currency smoothing mechanism will provide a 0.37ppl increase resulting in a net reduction of 0.42ppl.  The reduction reduces the 1^st April standard liquid litre price, including the currency smoothing adjustment, to 27.03ppl and for the standard manufacturing litre to 28.13ppl.

It’s a big blow to Arla members and regrettably if Arla sneeze others will catch a cold.  Pretty much everyone in the industry had expected (or prayed) for a stand on price for April and May, which with the filtering through of the currency smoothing would have seen farm gate milk price increases.  This cut will hurt.

There are strong rumours that a similar reduction is already in the pipeline for May 1^st coupled with the belief that Arla have overpaid producers for milk, especially the recent 13^th payment. If another cut happens on May 1^st Arla will struggle to deal with their farmer communications to justify a second cut.

The Arla cut could easily kick start a trend which others seize if it does it will be the final straw for a number of dairy farmers who haven’t even begun to recover from the last slump in prices.

Meanwhile, the Arla brands have been named as recording the largest growth out of the top 100 UK grocery brands achieving growth of £37m in 2016.

Arla members are already questioning whether achieving such headline grabbing brand growth is actually delivering a better milk price to the farmer owners given that in cheese some of its competitors are now paying 30ppl for milk, which is going into branded cheese.

SMP Intervention tenders halved as interest plummets (17^th March 2017)

The latest EU Commission SMP intervention stock tender resulted in just two bids for only 136 tonnes compared to bids for almost 20,000 tonnes in December.

The current two tender windows each month will be reduced to one and there seems minimal prospect of any product coming out of store unless the EU Commission significantly reduce their minimum price.

First Milk add to their trophy cabinet (17^th March 2017)

Last night First Milk won Nestle UK’s Supplier of the Year Award as well as a Nestle Quality Award, both collected by Mike Gallacher. Both are viewed as further ringing endorsements that the co-op and its members are on the right track with its major customer.

50 Muller suppliers to battle it out for 21 forum places (17^th March 2017)

Healthy competition is the order of the day in some of the Muller farmer forum regions with 50 candidates competing for 21 places. Ballot packs will be sent to members next week with the elected board to be insitu next month when their task will be to represent 1900 Muller suppliers. Let’s hope the 21 selected have ability to represent their area and it’s not noisy ones with confidence but little ability.

TWO DAIRY CEO’s STEP DOWN WITHIN DAYS OF EACH OTHER (15^th March 2017)

1. Mike Gallacher steps down as First Milk’s CEO – Turnaround Job Done (15^th March 2017)

Mike Gallacher is to step down as First Milk’s CEO and turnaround guru in April and into his shoes will step Shelagh Hancock.

It’s a near as damn it 2 years to the day since Gallacher was parachuted into First Milk and at the time the co-op was on life support and at best only weeks away from the life support machine being turned off.  It wasn’t quite as bad as DFOB but it was looking like a sick dog which needed putting out of its misery.  The dairy industry’s vultures were circling all eager to pick over the carcase but none wanted to be first to swoop in.  It was a badly run business and the one thing the First Milk board did get right was to re-shape, re-group and give Gallacher a free hand.

As Gallacher leaves, he hands over a very different business and whilst it will still have to operate profitably in a challenging environment it’s a fact today there are other UK dairy businesses in worse shape than First Milk.

It’s unusual to see dairy CEO’s involved in a smooth planned succession but this is one such case.  Normally it’s a sacking dressed up with lots of spin. 

Gallacher’s successor, Shelagh Hancock, has 25 years of experience having been involved with the First Milk business for almost 12 months.  She has previously worked for Glanbia, been a key figure in Milk Link until the Arla takeover and latterly Medina Dairies.

Shelagh is essentially a co-op person and will steer First Milk on the same course Gallacher has set with little, if any, need for a change in direction.  There is already at least one new opportunity on her desk for her to explore and plenty of stuff to keep her occupied.

It’s almost 2 years to the day since Gallacher took charge and he certainly can claim to have turned around the First Milk business much to the relief of its members who have seen their co-op go from life support to being discharged and sent home in less than 2 years.

Next week the two commence on a GB member meeting tour to inform members of the turnaround results, direction of the business, current milk field issues (especially the Tesco field connected to the Haverfordwest factory), farm contract developments/ideas and the opportunity to meet their new CEO.

2. Ronald Kerrs to leave Muller (15^th March 2017)

The departure of Ronald Kerrs as CEO of Muller and the arrival of Uwe Sommer doesn’t appear to have been on the cards for months and part of a smooth succession plan.

Kerrs came to Muller in 2012 initially as Head of Muller UK before taking the position of group CEO in 2015.  He has certainly made his mark so far as the UK dairy industry is concerned having been involved in the Dairy Crest liquid business takeover as well as building a new butter plant at Market Drayton.  On May 1^st Sommer steps into one of the most important dairy roles in Europe having left his role as Head of International Marketing at Lindt Chocolate.

GDT auction price crashes back 6.3% (13^th March 2017)

Tuesday’s GDT auction results were very sobering with an average all products drop of 6.3% (to average $3512 tonne) on top of the 3.2% fall only two weeks ago so heading towards a 10% fall in two weeks.

Key prices were (all in US$ not NZ$)

SMP down 15.5% to average $2118 tonne

WMP down 12.4% to average $2782 tonne

Cheddar down 4.2% to average $3435 tonne

Traders anticipated a further weakening of prices, particularly for WMP and SMP but the double digit drop came as a shock. The auction prices were the lowest recorded for over 5 months and for many New Zealand dairy farmers the price for WMP is now at or below their breakeven COP if the auction price is a good barometer.

Total tonnage traded was up 9% to 22,328 tonnes, which undoubtedly contributed to the dramatic drop, especially given the fact the quantity on offer at the same auction in previous years has declined.

0.74ppl February retail supplement for Muller non-aligned farmers (13^th March 2017)

£3.5m investment programme by Medina (13^th March 2017)

The £3.5m investment programme has already commenced at Medina’s Watsons liquid dairy facility in Hampshire, where 96 farmers supply milk to a factory employing 95 staff plus an additional 25 or so new jobs to be created during the coming 6 months as a result of the upgrade.

First Milk extend its Nestle supply contract (13^th March 2017)

First Milk has confirmed it has concluded an extension of its exclusive Nestle liquid milk contract.

The contract has been in the custody of First Milk for more than 14 years (2003) and not doubt there were numerous resident cuckoos keen to kick First Milk out given half a chance, because they appear to be raiding other nests with feathers flying as Ian writes this piece!

Arla confirm the 13^th payment @ £9000 per GB farmer member (7^th March 2017)

Arla have confirmed that its 2500 GB members will receive a 13^th payment averaging £9000 into their bank accounts this Friday.

Unfortunately, the Arla press release referred to the £31 million distribution as a “windfall” and a “cash bonus” which has certainly prompted an instant response from several Arla members.  As one said, “this choice of words (windfall & cash bonus) suggest that this is money for nothing”. 

The payment is actually a return on farmers’ investment in the co-op and the straight forward facts appear to be as follows:

Average fully paid up Arla member producing 1 million litres has 7.5ppl invested £75000.00

His average 13^th payment paid this Friday £  7300.00

Return almost 10%

Conclusion – This part of the Arla model works in terms of return on the money invested and a benefit of being a member.  That’s the simplified message and let’s hopes that.

We sincerely hope that DEFRA and AHDB ensure last year’s fiasco is not repeated. Last year in early April Ian described the joint effort involving AHDB and DEFRA as irresponsible and misleading when the February average farm gate milk price was published as rocketing up by 2.48ppl.

This was achieved because DEFRA allocated the entire £22million 13^th payment to Arla members to February’s milk price rather than spreading it over the 12 months as Arla do. It was a move which was lambasted by both Ian and the TFA.

0.25ppl milk price increase for Arla directs – from March 1^st (6^th March 2017)

This takes producers’ standard liquid litre price to 25ppl (www.milkprices.com)

0.2ppl milk price increase for First Milk’s Midlands & East Wales producers – from March 1^st (6^th March 2017)

This takes producers’ standard liquid litre price to 26.25ppl (www.milkprices.com)

Average January producer price 27.1ppl – According to AHDB (6^th March 2017)

New cheese plant on the cards for North Wales (6^th March 2017)

Ronald Akkerman (AKA The Flying Dutchman) is back on the UK dairy industries radar this time to design, build and operate a 40 million litre a year capacity state of the art cheese factory in North Wales on behalf of a group of around 20 spring grazing farmers who intend to form a co-operative

The initial plant is expected to be up and running by spring 2018 (?) with plans to expand towards 100 million litres.

The output from the plant will be focussed on domestic consumption rather than exports with all sales through Bradburys  who have an unrivalled 130 years experience in selling cheese.  Further details are anticipated in the near future.

Muller to offer futures contracts (6^th March 2017)

A Muller Ingredients Contract is to be launched to suppliers this summer to its 800 or so non-aligned farmers.

The contract will give farmers the opportunity to lock into a margin on up to a quarter (25%) of their milk production by fixing their milk price based on the ww.milkprices.com/FC Stone published prices/UK Milk Futures Equivalent (UKMFE). 

Volumes available will be limited to the physical quantities Muller can secure back to back contracts with its ingredients customers.  In other words, all Muller’s farmer’s contracts will be backed off with reciprocal contracts with customers.

ASDA launches a free range milk/Pasture Promise branded milk (6^th March 2017)

ASDA is the first of the UK’s big retail giants to launch a branded free range milk with the promise that the milk comes from herds which spend at least 180 days and nights grazing.

ASDA has launched with an initial 70,000 litres week going into more than 100 ASDA stores priced at £1.50 for 2 litres.

RABDF outlines its future focus and industry event (6^th March 2017)

Following the disappointing decision in October last year by Holstein UK when it rejected working with RABDF with a view to holding one national dairy event, RABDF has reviewed and re-grouped and today announced its plans for the future.

There will be no Livestock Event at the NEC on September 6^th 2017. Instead there will be a smaller annual Dairy Technical Event at Stoneleigh Park in February.

There is no disputing that technology is transforming our lives and changing all businesses worldwide, including dairy farming. The RABDF event will focus on new technology with technology themed seminars and speakers from across the world. The event will examine the potential of new technologies and how dairy farmers might take advantage, benefit and profit from the latest developments and innovations. RABDF’s focus is to transfer the latest technological ideas to grass roots dairy farmers with an event in central England.

In addition, RABDF will continue its influencing and lobbying role utilising its links to politicians, policy makers and the trade as well as focussing on encouraging youth into the industry. To this end a youth board will be formed and RABDF’s work with Women in Dairy initiativeand its conference will continue. There is even a rumbling that the once sold out and popular RABDF Farmer Conference might emerge from the ashes in middle England, where there is currently nothing similar available in England or Wales.

Medina declares improved financials for year ending 30^th April 2016 (6^th March 2017)

Revenue £160.9m (£156.8m 2015)

Profit £1.15m (£890,000 loss in 2015)

In addition, Medina will be utilising around 50% of its 100 million litre toll processing facility with Muller once its additional litreage to Iceland starts at the end of this month.

This world isn’t big enough for the both of us – there’s only milk that’s going to win! (6^th March 2017)

The Australian dairy industry has declared war on non-dairy alternatives to milk such as soy, almond, coconut and rice stating they should not be called milk because they do not have anything close to the nutritional health protein or vitamin benefits of animal milks.

They claim its mis-labelling and that these alternatives should be labelled and branded to ensure consumers know exactly what they are putting in their shopping baskets or what’s going into their “almond plant liquid lattes”.

It’s time there was a crack down. Come to think of it what’s all the nonsense about vegetarian sausages, vegetarian burgers and vegetarian rashers of bacon!

Studies show soy milk can destroy your thyroid (6^th March 2017)

Soy milk is recognised as coming almost exclusively from GMO which are high in pesticides and an alarming list of properties leading to claims that you simply should STOP consuming it.

In a recent study it’s claimed “soy milk causes severe health problems, including colon cancer, ulceration, gastrointestinal inflammation etc.”

WANTED BY A MATE – All must be in good condition and ready to go to work (6^th March 2017)

1. Land Rover Defender 110 2.5 TD5 pickup with or without a back or canopy cover

2. Tractor 110 to 120hp with or without a loader on. Happy to buy a loader separate

3. Good loader for above tractor

Email details to ianpotter@ipaquotas.co.uk

0.38ppl milk price increase for Arla members – from 1^st March (24^th February 2017)

This takes producers standard liquid litre milk price to 27.45ppl and their standard manufacturing/cheese litre milk price to 28.55ppl. The standard liquid litre price for Arla Tesco farmers is 28.87ppl with the Arla organic standard liquid litre holding at 41.1ppl. (www.milkprices.com)

No joy in GDT auction results (24^th February 2017)

The average all price index at Tuesday’s GDT auction recorded a 3.2% drop compared to the result achieved only two weeks earlier.

Notable movers were:

Cheddar down 5.3% to average US$3590 tonne

SMP down 3.8% to average US$2574 tonne

WMP down 3.7% to average US$3189 tonne

Muller unveils its single supplier milk contract (24^th February 2017)

Around 1900 Muller will soon receive the final version 2 of the processors supply contract and it’s clear that Muller have taken on board producer feedback from last November’s farmer meetings and revised the offering.

There is no doubt one single contract for all its suppliers is the way forward and whilst the new offering will see some farmers win and some lose it is claimed the overall package is cost neutral to the business.

The forecast accuracy tolerance has been increased from 5% to 7.5% prior to any penalty. That relaxation should be welcome news; however, Muller’s intention is for the few farmers who fall outside of the 7.5% threshold to have one to one support from Muller’s Agriculture team to help ensure all 1900 farmers are under the penalty threshold. Surprise milk volumes are certainly not an issue confirmed to Muller.

The butterfat penalty has been reduced from 0.035ppl in version 1 of the contract to 0.025ppl for every 0.01% less than 4% and identical payment of 0.025ppl for every 0.01% above 4%.

The contract notice period is only 3 months following a price change or contract variation compared to the old Dairy Crest 12 month notice period.

If a farmer wants to expand by more than 10% he simply needs to have prior (that means prior to spending any £) early engagement with Muller so both parties know when the extra milk will materialise.

Milk payments into the bank will be around the 18^th of each month and this is a midway point between the current Muller and ex-Dairy Crest payment dates.

Finally, individual farmers can utilise the online modelling software to check how the contract affects their individual production.

The new contract starts on May 1^st with the target sign up date of April 21^st.

Overall Ian has failed to find any trip wires or traps and the likelihood is most producers will sign the new contract if they feel it is fair and they want to join Muller on its ambitious UK journey and are inspired by Muller’s vision. If any Muller farmers believe Ian has overlooked any key points please email him.

Arla hunting for milk but Arla’s CEO claims rising milk supply keeps prices in check (24^th February 2017)

Arla has written to its UK members stating it requires more milk, initially from existing members. The letter has produced a very mixed response from Arla members who have contacted Ian today. In summary, most state they have not even started on the road to recovery following almost 2 years of low milk prices at below COP and have minimal appetite to ramp up production in case prices ease again.

Its certainly a confusing message from Arla with its CEO Pedar Tuborgh stating

"Milk prices are currently at a level that is sustainable for the whole business, including our farmers," he said.

And according to one report he has also stated

“a rising supply of milk on world markets is likely to rein in further gains in prices that have increased nearly 50 percent since a slump last year.”

Its certainly a mixed and confusing message from Arla HQ and Arla UK which members are trying to sieve through.

That’s an individual decision but from Arla’s point of view if they do require extra milk existing members must be offered the chance to fill the gap. Failing that Arla will presumably move to Stage 2 and open the door to new recruits to see what the appetite is.

Arla UK sales and revenue down (24^th February 2017)

Arla’s largest market, the UK, has seen its 2016 calendar year results weigh in with a 12% drop in revenue to £1.86billion (€2.2billion) down from the 2015 numbers of £2.2billion (€2.5billion).

Within the numbers Arla’s UK branded products saw sales volumes rise by an encouraging 7.6% with branded liquid milk growing by 12%.

Morrison’s Milk for Farmers accounted for 15% of sales within its competitors on the shelf and Arla’s yoghurt sales were up 116% more than double but from a standing start in 2015.

Arla Foods as a European co-op saw net profit grow by a healthy 20.7% to €356m.

NFU launches a new contract checking facility (24^th February 2017)

The NFU, in conjunction with its panel of legal firms, has launched a contract checking service for members in the hope they use the facility prior to signing a new contract.

The service comes in three stages:

· A free initial discussion with the NFU’s CallFirst Specialist Advisers’ team, available to all NFU farmer members

· An initial report produced by an NFU legal panel solicitor considering members’ requirements, reviewing the contract and explaining what it means

· A more detailed review with advice on how to renegotiate the contract terms.

The service covers areas such as milk contracts, grazing licences and tenancy agreements. It’s an opportunity for NFU members to seek professional help and guidance prior to signing on the dotted line. It’s not free but the first 50 LAS subscribers who take up the offer will be given a £100 voucher towards the fee.

At this week’s Dairy Breakout Session during question time Ian suggested that given the fact 1900 Muller farmers are about to receive a contract to sign and that the NFU Dairy Board Chairman had commented that it seemed to be a reasonable and fair contract and agreed that it demonstrated that Muller had listened to its Producers, would the NFU consider putting out a press release specific to this contract rather than having dozens or possibly 100’s of farmers individually contacting them for an opinion. The idea is understood to be under consideration and the NFU are expected to give some help to the Muller farmers with their general view of the new contract.

NFU Conference (24^th February 2017)

Brexit dominated this week’s NFU Conference and whilst those negotiating on behalf of UK agriculture will battle for our industry to receive the same level of support post Brexit as we receive today, most are bracing themselves for a haircut and a sea change in who receives help and how it’s delivered.

The Environment Secretary, Andrea Leadson, was keen to point out that

“there will be support for our vital food and farming industry after we leave the EU”

but she didn’t confirm what sort of support, how much support or for how long it would last.

With 86,000 farmers receiving BPS payments and these payments representing 50% of the average farmers’ income it’s a near certainty that such payments will not continue at this level going forward in the next decade. The CAP payments were worth £3.5billion to the UK in 2016 and will be very challenging to defend post Brexit.

The loss of these payments would trigger significant consolidation at farm level as many farms become unviable and unsustainable. There were a number of reasons to view the post Brexit dairy industry with enthusiasm and optimism, especially for those who are low cost milk producers wanting to expand because if the BPS payments are cut or even axed more land is sure to become available. Some were privately licking their lips at the prospect.

RABDF future announcement (24^th February 2017)

The RABDF have called a press briefing on Monday 6^th March to announce the future of the organisation and presumably the future for its 6^th September 2017 Livestock Event.

0.98ppl Muller non-aligned retail supplement for January (20^th February 2017)

In addition, the Muller February retail supplement prediction currently stands at 0.82ppl

Friesland Campina (FC) guaranteed farm gate milk price increases for February (20^th February 2017)

The FC price is the one most, if not all, milk purchasers monitor. Its February producer/supplier price increased by 0.5 cents per kg (0.484ppl), which converted to a UK standard liquid litre equates to 28.98ppl. The average FC producer price for the last 6 months converts to 27.26ppl (www.milkprices.com)

Dairy Crest’s 9 months trading statement – to 31^st December 2016 (20^th February 2017)

In its latest trading update the additional costs experienced by DC, particularly the increased farm gate price it paid for milk (+38%) has led to the statement that net year end debt for the business is expected to be higher than anticipated by 31^st March 2017.

DC’s share value fell 5.77 and is at that value today but was down to 565p this morning.

Muller’s new farmer representative structure is in train and the elections are set to be very competitive (20^th February 2017)

Having taken on board feedback from a nationwide series of meetings last November, Muller has launched its new farmer representative structure ahead of confirming any changes to its single contract launch.

Democratic representation appears to be what all parties want and to that end these are the nuts and bolts of the structure.

A Muller Farmer Forum of 21 supplying farmers will be elected by its 1900 or so farmer members, which will be roughly 1 per 90 farmers. This is split in proportion to the aligned v non-aligned farmers as follows:

9 non-aligned farmer forum representatives

11 aligned farmer forum representatives

1 organic farmer forum representative

21

The positions will be for a 3-year period by rotation. The forum will have complete responsibility for deciding the future representative structure with nothing ruled out and they could even consider setting up a DPO. Basically the 21 farmer members start with a clean sheet of paper.

On the subject of annual subscription to fund development, training and independent advice it will be up to the newly elected 21 forum representatives to decide on what level this should be set at, if any, although it’s clear if independent advice is required it needs to be funded. Muller has confirmed that initial start up funding will be provided by Muller until additional funds flow into the forums bank account.

Once in place this forum will elect a board of 7 MMG Board representatives to work closely with the Muller management.

For obvious reasons of continuity an interim board of 7 will be put in place and it will take 3 years before the forum can say all board members were put in place by the forum. However 3 of the existing MMG Board members will immediately by rotation stand down in June of this year followed by 2 in 2018 and 2 in 2019.

The eventual outcome should be much better communication from grass roots farmers to senior management.

It’s time for Muller farmers to put up (or shut up) and those interested in standing need to throw their names in to the hat by March 3^rd for a nomination form to be returned by 13^th March and by early April the forum members should be in place. Whilst Muller is tight lipped over the number of nominations they have already received they have confirmed that there will be elections in several regions, which is a healthy prospect and bodes well for the future.

Code of Conduct with advance notice of interest rate changes needed for Bankers (spelt with a B) (20^TH February 2017)

The UK dairy industry has committed a lot of effort and energy into ensuring all milk purchasers abide by a Voluntary Code and give advance notice of price movements and move away from discretionary milk pricing.

The same does not appear to apply to our bankers following the recent decision by Investec Bank to retrospectively cut its deposit interest rates. In fact, in their terms and conditions it states “Interest rates may, at our discretion, change.”

And we all thought the banking world has cleaned its act up.

.5ppl milk increase for Arla directs – from 1^st February (3^rd February 2017)

This takes producers standard litre price to 24.75ppl. These producers appear to be the poor relations but at the end of the day they were never likely to be anything other having taken the decision to remain outside of the co-op’s membership.

1ppl milk price increase for Pattemores suppliers – from 1^st February (3^rd February 2017)

This takes producers standard liquid litre price to 27.5ppl. (www.milkprices.com)

1ppl milk price increase for Pensworth suppliers – from 1^st March (3^rd February 2017)

This takes producers liquid standard liquid litres price to 27.25ppl. (www.milkprices.com)

0.85ppl to 0.95ppl A milk price increase for First Milk Members – from 1^st February (3^rd February 2017)

Details as follow:

Midlands & East Wales Pools + 0.95ppl   26.05ppl liquid standard litre

            Haverfordwest                      + 0.90ppl   28.23ppl liquid standard litre & 29.16ppl manufacturing  

            Lake District                         + 0.90ppl   27.11ppl liquid standard litre   & 28.04 ppl manufacturing

            Scottish Mainland                 + 0.85ppl   26.09ppl liquid standard litres

The figures in brackets are the www.milkprices.com standard liquid and manufacturing litre prices.  Note the Haverfordwest standard litre price includes the estimated 1ppl Tesco group cheese payment.

Stand on milk prices for March 1^st (3^rd February 2017)

Muller (26.69ppl)

Crediton Dairy (28.5ppl)

With volumes increasing almost daily, cream prices back almost 25% in just over a month, the weakening of butter prices and SMP prices combining all of these with a half decent Spring its likely March 1^st increases will be the last for a while. Most farmers will be praying the surge in production is curtailed because the way these markets are heading the next price move could easily be South. Current spot prices for milk are around 26ppl and hovering and if any producer is not already on 30ppl it’s a near certainty they won’t be for many months to come.

Milk production is still down (3^rd February 2017)

Whilst daily milk production is estimated to be down 3.8% compared with 12 months ago at around 32 million litres a day (source AHDB) milk is now starting to flow and impact on forecast deliveries and on European commodity buyers appetite to purchase.

Welcome pay-out for First Milk members (3^rd February 2017)

After a difficult and challenging two years First Milk has announced that its monthly milk payments to members will revert to “normal terms” meaning members receive 6 weeks milk money during February.

The delayed payments for January deliveries for which part would have been part paid in February and part in March will now all be paid in full in February.  Sorting the payments has cost First Milk £6 million in total.

The deferred payment started in January 2015 when First Milk had to use farmer’s money to manage cash flow and paid 50% on the 24^th of the month following supply and 50% on the 10^th of the month after.

It’s another encouraging sign as to how the Co-ops fortunes have improved and CEO Mike Gallacher has commented that this “draws a clear line under the turnaround process for First Milk”. Job done – not really but its now down to the mundane day to day stuff.

Arla to invest £37.5 in the UK (3^rd February 2017)

Arla is to invest a further £37.5 million (€44 million) in its 13 UK sites/logistics in 2017 representing a 50% increase compared to its 2016 commitment. The figure is part of a £285 million global Arla investment.

The goal for Arla is to “move more milk from bulk into brands and improve the profitability of the farmer owners”

1.25ppl milk price increase for Grahams Dairies (Scotland) suppliers – from February 1^st (27^th January 2017)

This takes producers’ standard liquid litre price to 26.75ppl (www.milkprices.com)

1.1ppl milk price increase for Freshways suppliers – from February 1^st (27^th January 2017)

This takes producers’ standard liquid litre price to 27.5ppl (www.milkprices.com)

0.76ppl (1 Euro Cent) milk price increase for Arla members – from February 1^st (27^th January 2017)

This takes producers standard liquid litre price to 27.07ppl (non-aligned) and 28.49ppl (Tesco aligned). The standard manufacturing litre price will move up to 28.11ppl (www.milkprices.com)

Lack of SMP sales from intervention stores is concerning (27^th January 2017)

Everyone admires a strong seller, especially when it’s someone like the European Commission. However, their recent third tender involving 7,500 tonnes once again resulted in no sales of intervention SMP and it looks as if they could have completely mis-read the market.

During three tenders the Commission have only succeeded in selling 40 tonnes out of a total public stock of more than 351,000 tonnes.

Ian has been informed that there is a shelf life for the SMP and that significant quantities will have to be sold shortly and if that combines with a levelling off in SMP prices, or even a dip, the Commission could quickly turn from being a strong seller to an emergency seller, which will result in most ex-farm gate milk prices catching a chill, including those in the UK.

Not to mention that its not impossible that there could be calls for further intervention this spring if the market suddenly dives.

Dairy markets have passed 12 o’clock with spot prices down to 26 to 27ppl (27^th January 2017)

Following a period of rapid upward movement in dairy trading prices, spot milk prices and futures contract prices its clear commodity prices are at best levelling off and potentially about to head south. Spot milk, which is only a barometer with relatively small quantities traded is down from 40/41p to 26/27ppl.

Dairy commodity prices have eased as on farm deliveries show signs of increasing not to mention the firming of currency and the fact cream is struggling to find homes.

Freshways have confirmed a rumour that one or more of its producers under notice to leave them on February 1^st has, at the 11^th hour, contacted Freshways in a bid to rescind his (their) notice within days of ceasing to supply the firm.

It will be very interesting to follow whether farm gate milk prices continue to increase in coming months. Several milk purchasers gave reasons why there was a lag in prices moving up so will the same lag apply to prices levelling off or coming down? A levelling off and period of stability for all involved will be no bad thing at this stage, especially if that stability comes with a farm gate milk price around 28 to 30ppl. The biggest fear is that we get an early spring with oceans of milk, which will exert serious pressure on farm gate milk prices. Where this market will end up is anyone’s guess but on today’s evidence it’s easily passed 12 o’clock and looking like it could be about to head south. You have been warned.

Changes at Muller (27^th January 2017)

Lyndsay Chapman has stood down from her roll as Agriculture Director of Muller by mutual agreement. Lyndsay joined Muller from Dairy Crest a year ago when Muller acquired Dairy Crest’s liquid division.

Rob Hutchinson has taken over the position with immediate effect.

1.5ppl milk price increase for suppliers to Paynes Dairies – from 1^st February (20^th January 2017)

1ppl milk price increase for suppliers to Meadow Foods – from 1^st February (20^th January 2017)

This takes producers’ liquid standard litre price to 27.55ppl (www.milkprices.com)

New MD at Medina (20^th January 2017)

After one year out of the UK dairy industry’s front line Mike Sheldon, former MD of Dairy Crest Dairies is back, this time as MD of Medina Dairy.

Sheldon was a casualty of the Muller acquisition of Dairy Crest’s liquid business and the move to Medina looks a perfect fit for both parties. His 22 years of experience with Dairy Crest is likely to bring new ideas to the Medina board meetings. He was instrumental in Dairy Crest’s adoption of a DPO and the Dairy Crest formula contract both of which have been axed by Muller.

Meadow results are impressive (20^th January 2017)

Meadow Foods Limited have published their annual report and financial statements for the year ended 31^st Mach 2016 and the financials are impressive in a year when the majority of Meadow’s 550 supplying farmers and most non-aligned producers were unable to cover cost of production having to eat into any available cash reserves.

Given the worldwide collapse in dairy product values there is no surprise in the fact that Meadow’s turnover was down 40% from £376million to £228million, however, profit before tax was only down 15% from £14.2million to £12million (£22,000 per Meadow supplier).

However, Meadow’s profit margin increased from 3.8% to 5% which is some achievement to maintain your margin in a collapsing market.

The dividend pay-out to shareholders of £3million means MD Simon Chantler for the second consecutive year or more appears to be the best paid person in the UK dairy industry with a total pay-out for the year of £2.3million slightly down on the previous years packet by £20,000. No one could confuse him with the nursery rhyme character “Simple Simon”.

These results no doubt encouraged Paine & Partners to make their significant investment in Meadow in September 2016.

Details will come out in future published accounts; however, based on these numbers one knowledgeable bean counter is speculating the total value of the Meadow business at the time of the Paine & Partners deal could have been in the region of £100million.

Simple cost effective farm accounts package wanted (20^th January 2017)

An unusual request, however, if any readers have a fairly simple farm accounts package, which is good value for money, could you please email us with the name and version. Thanks, Ian

2ppl milk price increase for suppliers to Helers Cheese – from February 1^st (13^th January 2017)

This takes producers’ manufacturing standard litre to 27.33ppl

1ppl milk price increase for suppliers to Belton Cheese – from February 1^st (13^th January 2017)

This takes producers’ manufacturing standard litre price to 28ppl and their liquid standard litre price to 27.25ppl (www.milkprices.com)

1.6ppl milk price increase for suppliers to Wensleydale Creamery – from 1^st January (PRODUCER NOTIFIED) (13^th January 2017)

Iceland, Medina, Buckleys and FFA (13^th January 2017)

There were a couple of inaccuracies in last week’s story connected to the decision by Iceland to switch litreage from Arla to Medina from 1st April 2017

The actual literage involved is 35 million into Iceland, London and not the 100 million litres Ian was told from two sources. This means from April 1^st Medina’s total literage contracted to Iceland increases to 60 million.

Secondly, Medina, along with several other milk purchasers who use basket pricing, have seen  their suppliers find it extremely difficult to cope with the one month time lag before farm gate prices have moved up.  Consequently Medina injected more money into supplying farmers’ pockets, including Buckleys farmers.  Note, the same time lag benefitted farmers when prices dropped much slower.  Medina have confirmed that like others they are reviewing their basket pricing.

The basket price for December deliveries to Buckleys was 21.42ppl to which Medina added a further 1ppl support to give 22.42ppl.

For January it will be 23.48ppl plus 1ppl to total 24.48 with the February basket already at 25.77pp and hopefully rising.

In a nut shell the claim made to Ian that Buckleys paid 20ppl or less for December deliveries and by default one of the lowest farm gate milk prices in the UK was inaccurate. In addition none of the Milk for the enlarged contract will come from Buckleys Suppliers and will come Medinas Southern sources.

We apologise for this inaccuracy and hope this clarifies the position and correct numbers.

Note, this clarification and apology does not impact on David Handley’s planned meeting with Iceland

Iceland, Medina, Buckleys and FFA (11^th January 2017)

There were a couple of inaccuracies in last week’s story connected to the decision by Iceland to switch litreage from Arla to Medina from 1st April 2017

The actual litreage involved is 35 million into Iceland, London and not the 100 million litres Ian was told from two sources. This means from April 1^st Medina’s total litreage contracted to Iceland increases to 60 million.

Secondly, Medina, along with several other milk purchasers who use basket pricing, have seen  their suppliers find it extremely difficult to cope with the one month time lag before farm gate prices have moved up.  Consequently Medina injected more money into supplying farmers’ pockets, including Buckleys farmers.  Note, the same time lag benefitted farmers when prices dropped much slower.  Medina have confirmed that like others they are reviewing their basket pricing.

The basket price for December deliveries to Buckleys was 21.42ppl to which Medina added a further 1ppl support to give 22.42ppl.

For January it will be 23.48ppl plus 1ppl to total 24.48 with the February basket already at 25.77pp and hopefully rising.

In a nut shell the claim made to Ian that Buckleys paid 20ppl or less for December deliveries and by default one of the lowest farm gate milk prices in the UK was inaccurate. In addition none of the Milk for the enlarged contract will come from Buckleys Suppliers and will come Medinas Southern sources.

We apologise for this inaccuracy and hope this clarifies the position and correct numbers.

Note, this clarification and apology does not impact on David Handley’s planned meeting with Iceland.

2ppl milk price increase for First Milk members – from 1^st January (6^th January 2017)

This takes producer’s liquid standard litre price to:-

1. 27.33ppl Haverfordwest Creamery (including the Tesco Cheese supplement) and 28.25ppl on a manufacturing standard litre.

2. 26.21ppl Lake District Creamery and 27.13ppl on a manufacturing standard litre

3. 25.24ppl for Mainland Scotland

4. 25.10 Midlands and East Wales

1.5ppl milk price increase for Crediton Dairy suppliers – from 1^st February (6^th January 2017)

This takes producers liquid standard litre price to 28.5ppl for a non aligned contract and extremely close to that paid by Tesco/TSDG

1.5ppl milk price increase for Pattemores – from 1st January

This takes producer’s liquid standard litre price to 26.5ppl (www.milkprices.com) (6^th January 2017)

1.5ppl milk price increase for Yew Tree Dairies liquid contracted suppliers – from 1st February (6^th January 2017)

This takes producer’s’ liquid standard litre price to 27.5ppl (www.milkprices.com)

In addition, Yew Tree Dairies December B price has been confirmed at 27.32ppl.

1.5ppl milk price increase for Arla Directs – from 1st January (6^th January 2017)

This takes producers liquid standard litre price to 23.25ppl www.milkprices.com

1.25ppl milk price increase for Muller non-aligned suppliers from 1^st February (6^th January 2017)

This takes producer’s standard liquid litre price to 26.69ppl (www.milkprices.com) excluding an estimated 0.82ppl February retail supplement.

1.25ppl milk price increase for Pensworth suppliers – from 1st February (6^th January 2017)

This takes producers liquid standard litre price to 26.25ppl – www.milkprices.com with the indication that the company anticipates a similar increase a month later if anticipated and current trading conditions continue.

1ppl milk price increase for Glanbia Cheese suppliers – from 1^st February (6^th January 2017)

This takes producer’s manufacturing standard litres to 28ppl www.milkprices.com

1.65ppl milk price increase for Wyke Farms producers – from 1^st January (PRODUCER NOTIFIED) (6^th January 2017)

GDT auction prices soften by 3.99% but….. (6^th January 2017)

This week’s GDT auction results saw prices ease by 3.99% to average$3463, with the fall triggered by a significant fall in WMP prices.

Key movers were:

WMP down 7.7% to average $3294 tonne

Butter up 0.5% to average $4308 tonne

Cheddar up 1.4% to average $3894 tonne

SMP up 2.3%to average $2660 tonne

Despite the fall many bean counters and economists continue to firmly back a positive outlook for 2017 and remain upbeat.

Oxford Farming Conference accused of snubbing British potato growers (6^th January 2017)

Whilst Ian did not attend this weeks conference the key point relayed to him from the day’s events related to the lunch menu and nothing from the coach load of ministers, MPs, SNPs and industry bigwigs’ who took the stage.

Instead of offering delegates a lunch with a humble British baked potato (or similar) the Conference caterers were alarmingly permitted to offer couscous, which has its origins in Israel with pasta shaped rice grains you simply add water to.

The offering might be healthy but if the caterers had wanted something you add water to they should have put out a real British potato product and offered the delegates and earth people Smash – “For Mash Get Smash”

The aliens and earth people catering at The Oxford Real Farming Conference were left smirking at this gaffe knowing they served British potatoes to British farming delegates at their Conference. Come on Oxford you could have done better.

1.51ppl milk price increase for Arla members – from January 1^st (22^nd December 2016)

This takes producers standard liquid litre price to 26.31ppl

1.5ppl milk price increase for suppliers to Paynes Dairies - from 1^st January (22^nd December 2016)

Only 40 tonnes (0.18%) out of 22,150 tonnes of SMP sells (22^nd December 2016)

A pitiful 40 tonnes of Intervention SMP have been sold of which 20 tonnes were sold in the UK at a minimum EU price of €2151 tonne (£1810) or more. A second tender period is now open.

0.75ppl milk price increase for Arla Organic suppliers – from January 1^st (22^nd December 2016)

This takes producers standard liquid litre price to 41.1ppl

Pattemores correction (22^nd December 2016)

Our late reporting of the 1ppl milk price increase for suppliers to Pattemores was actually on top of an additional 0.75ppl increase so the total 1^st December increase amounts to 1.75ppl. Apologies for this missive and many thanks to one of our regular readers for spotting the error.

Christmas Dairy Pantomime Fun (22^nd December 2016)

A very talented and well briefed 12 year old has produced a series of GB dairy industry pantomime cards, which should bring a smile to many of you and perhaps even to most of the characters featured.

To view the range click on: www.dairypantomimes.yolasite.com

1.5ppl milk price increase for suppliers to Paynes Dairies - from 1^st January (19^th December 2016)

Pattemores correction (19^th December 2016)

Our late reporting of the 1ppl milk price increase for suppliers to Pattemores was on top of an additional 0.75ppl increase so the total 1^st December increase amounts to 1.75ppl. Apologies for this missive and many thanks to one of our regular readers for spotting the error.

2ppl forecast milk price increase for First Milk members – from January 1^st (16^th December 2016)

No longer are First Milk waiting for the likes of Arla to declare before they announce price increases. At the moment it’s only a forecast but the likelihood will be for it to be confirmed before the New Year.

1ppl milk price increase for supplies to Pattemores – from 1^st December (16^th December 2016)

This takes producers’ standard litre to 25ppl.

We were notified of this increase on the 30^th November and apologise for missing it from previous bulletins.

First Milk’s half year results are encouraging (16^th December 2016)

In the space of 20 months under the captaincy of Mike Gallacher, First Milk has seen a dramatic turn around in its fortunes having moved from a position of how many weeks will it continue before it’s the next DFOB, Westbury or Amelca to ranking its member milk prices alongside and indeed in some instances ahead of its main competitors e.g. Arla and Muller.

Its six month trading results to 30^th September released this week include the following:

Operating profits up to £9.2 million (compared to £1.2m 2015)

Profits before tax were up to £6.8 million (compared to a loss of £2.4m in 2015)

Bank debt had fallen to £26.1 million (vs. £46.1m in the prior year)

Once appointed, Gallacher immediately got his surgical instruments out and sold First Milk’s loss making side lines and subsidiaries including Glenfield Dairy, CNP Professional and its stake in Westbury Dairies to focus on making quality cheese. That’s what First Milk’s future depends on because the big hit items have been dealt with and it’s down to the day to day work in which any cheesemaker with a batch of down graded cheese costs serious money. Having said that, in times of shortages, like today, rejects in the cheese world will be scarcer. According to First Milk and others, the quality of cheese First Milk are producing is consistently high and long may this continue.

According to First Milk in the period since Gallacher took the reins to cut out the dead wood and loss making areas his programme has delivered £33m improvement in business performance including a £2.3m reduction in its wage bill.

RPA claim 68% (£822 million) of SFO already paid (16^th December 2016)

According to the RPA in the first 10 banking days of December it paid 59,000 English farmers a total of £822 million with the aim of paying 90% of eligible claims (this word eligible leaves some wriggle room) by 30^th December.

Direct Milk DPO (Muller) formula contracts end at 31ppl plus (16^th December 2016)

Having operated since April 2013 the Direct Milk DPO formula contracts adopted by some Muller non-aligned come to an end on January 31^st at between 31.378ppl and 31.188ppl following a January 1^st 1.298ppl increase.

Following a decision by Muller to serve 12 months notice on producers to end the formula options as soon as they acquired the Dairy Crest liquid business almost a year ago.

Over the period of almost four years the formula has paid producers on average 29.03ppl based on a liquid standard litre which represents an uplift of 2.5ppl over the equivalent non-aligned average price of 26.55ppl.

More importantly the January formula price is within only 0.3 to 0.2ppl of the current AMPE price of 31.5ppl.

It’s a blow to non-aligned who signed up to it because it was an option they had rather than having to rely on discretionary pricing? New ideas, opportunities and alternatives for Muller non-aligned are sure to emerge in 2017.

From 1^st February those on the contracts will revert to the Muller standard litre price of 25.44 (January price) plus any retail supplement.

GDT auction prices up 3.5% with WMP up 4.9% (9^th December 2016)

Tuesday’s GDT auction results produced more positive moves. Key movers were:

All products average up 3.5%

WMP +4.9% to average US$3593/tonne

Cheddar +2.2% to average US$3752/tonne

Butter +1.7% to average US$4262/tonne

SMP +1.4% to average US$2570/tonne

2.15ppl milk price increase for suppliers to Meadow Foods – from 1^st January (9^th December 2016)

This takes producers’ standard litre price to 26.55ppl.

2ppl milk price increase for suppliers to Grahams Dairies – from 1^st January (9^th December 2016)

This takes producer’s standard liquid litre to 25.5ppl on all litres delivered having abandoned the A&B pricing (see below). In addition Graham’s supplier receive a retailer supplement.

2ppl milk price increase for suppliers to Belton Cheese – from 1^st January (9^th December 2016)

This results in a standard manufacturing litre milk price of 27ppl and standard liquid litre 26.25ppl (www.milkprices.com)

1ppl milk price increase for suppliers to Joseph Heler Cheese – from 1^st January (9^th December 2016)

Spot milk prices soften (9^th December 2016)

The 41ppl spot price has now softened to 37 to 38p and in some cases a shade lower as we approach the Christmas period.

Grahams Dairies abandon A&B pricing and return to pool pricing (9^th December 2016)

Having operated A&B pricing since February 2015 following recent consultation with its farmer suppliers Grahams have abandoned A&B pricing from December 1^st in favour of a return to the traditional pool pricing.

Nick Holt Martyn sums up the situation in two sentences (9^th December 2016)

In The Dairy Group’s latest release headed “Farmgate Price Is Lagging Too Far Behind the Market” – Nick Holt Martyn wrote the following, which requires no further comment:

“On a monthly basis the gap between markets and the farmgate is as wide as at any time. With markets getting to 32ppl a recovery to 28ppl is now overdue ………. Failure to pass on market returns is doing serious damage to farmers businesses and will set back farmer/processor relationships.”

AHDB Dairy apologise for their major mess up (9^th December 2016)

Following widespread publicity and criticism AHDB Dairy have issued an apology following their unjustified criticism of Morrisons Milk For Farmers:

“Milk for Farmers

Published 2 December 16

Recent AHDB analysis on Morrisons’ Milk for Farmers range, which was used in an article in The Grocer, may have given the impression that AHDB was critical of efforts by Morrisons and Arla to improve returns to dairy farmers.

AHDB would like to apologise if this was the case, and would like to state it welcomes any retailer initiative that benefits farmers and aids consumer choice. AHDB’s usual internal checks and balances were not followed on this analysis due to an internal error.  This in no way reflects on the journalistic standards of the Grocer and we apologise for any misunderstanding.”

Whether the matter is closed and filed depends on the outcome of further meetings involving Morrisons, Arla and the Arla AMBA Board all of whom intend to hold AHDB to account and it will be a miracle if the above apology is the end of the matter.

More cheap milk (9^th December 2016)

Around 60 plus Bestway Cash & Carry outlets have Country Life Milk supplied by Muller on offer at 79p for 2 litres in semi-skimmed and whole.

Cows and Catastrophes – The Flights and Fancies of a Cornish Dairy Farmer by Brindley Hosken (9^th December 2016)

It’s the story of one dairy farmer’s 35 years of milking cows but it certainly doesn’t feature my old friends, Doom & Gloom, and does have some witty farmer humour and is well worth reading.

In 2010 Brindley took the heart breaking decision to sell his herd and in the book he talks through the family emotions of that decision as well was the effects of TB. When asked, would he start dairy farming again? “I’d rather stick pins in my eyes.”

It’s a worthy stocking filler and the print is fairly large, £9.95 from Old Pond Publishing.

http://www.oldpond.com/cows-and-catastrophes.html

British Cheesemakers turn up trumps with Chelsea Pensioners (9^th December 2016)

The Annual Ceremony of the Christmas Cheeses at the Royal Chelsea Hospital for Ian signals the start of Christmas celebrations. It’s a very special event the Dairy Council has been involved with for more than 50 years and its roots date back to 1692.

Full marks to all our UK cheesemakers who provided a record 250kg of cheese for this Wednesday’s event.

Also full marks to The Dairy Council for involving the Military Wives Choir, and babies, to ring in the start of the festive season for the pensioners.

4ppl milk price increase for suppliers to Dairy Crest Davidstow (2^nd December 2016)

The 4ppl is split as follows:

2ppl on January 1^st

2ppl on February 1^st

The increases result in the following standard litre prices: (www.milkprices.com)

1^st January         liquid standard litre price 26.92ppl and on the manufacturing standard litre price 28ppl

1^st February       liquid standard litre price 28.92ppl and on the manufacturing standard litre price 30ppl

2.5ppl milk price increase for Muller non-aligned - from 1^st January (2^nd December 2016)

This takes producers’ liquid standard litre price to 25.44ppl, excluding the retail supplement, which is expected to reduce to 1.1ppl. (www.milkprices.com)

Another 2.5ppl milk price increase for suppliers to South Caernarfon Creameries - from 1^st January (2^nd December 2016)

This takes producers’ manufacturing standard litre price to 28.03ppl (www.milkprices.com)

2.5 & 2ppl milk price increase for First Milk members - from December 1^st (2^nd December 2016)

The increases are as follows:

2.5ppl increase for First Milk’s Midlands & East Wales contracted producers from 1^st December

2ppl increase for First Milk’s other pools from 1^st December

The increases result in the following standard litre prices:

Haverfordwest  25.17ppl (including the Tesco Cheese Group payment of 0.84ppl)

Lake District/Aspatria    24.21ppl

Scottish Mainland 23.24ppl

Midlands & East Wales 23.10ppl

All B litres will be paid at 25ppl for December.

1.71ppl milk price increase for suppliers to Glanbia cheese - from 1^st January (2^nd December 2016)

This takes producers’ standard manufacturing litre price to 27ppl and the liquid standard litre price to 26.11ppl (www.milkprices.com)

1.5ppl milk price increase for liquid contracted suppliers to Yew Tree Dairies - from 1^st January (2^nd December 2016)

This takes producers liquid standard litre price to 26ppl (www.milkprices.com)

1ppl milk price increase for Arla Direct – from 1^st December (2^nd December 2016)

This takes producers’ liquid standard litre price to 21.75ppl

Mirror Mirror on the Wall, who is the fairest of them all? (2^nd December 2016)

Here is a snap shot of several key liquid standard litre prices as gathered together by us at the 1^st December. Note, that’s money in the bank in mid January!

Barbers 26.7ppl

First Milk Haverfordwest  25.17ppl for 90% of the milk with additional B litres paid at 25ppl

(including the Tesco Cheese Group payment of 0.84ppl)

Freshways 25.05ppl

Lactalis/The Fresh Milk Company 25.0ppl

Dairy Crest Davidstow 24.92ppl

Paynes 24.8ppl

Arla members 24.63ppl

Yew Tree Dairies Liquid 24.5ppl

Glanbia 24.46ppl

Meadow Foods 24.4ppl

First Milk Lake District/Aspatria    24.21ppl for 90% of the milk with additional B litres paid at 25ppl  

Grahams Dairies 23.5ppl excluding the retailer supplement

First Milk Scottish Mainland 23.24ppl for 90% of the milk with additional B litres paid at 25ppl  

First Milk Midlands & East Wales 23.10ppl for 90% of the milk with additional B litres paid at 25ppl  

Muller 22.94ppl excluding the retailer supplement (see above)

Arla Direct 21.75ppl

Muller pause for thought on new contract and representation (2^nd December 2016)

Muller have now completed their first 2016 nationwide series of meetings and have received some thought provoking feedback on its proposed new milk contract and farmer representation particularly from its non aligned farmers.

The turnout has been around 1,000 of the 1900 farmers supplying the Company and some of the views have been described by Muller as strong and for sure Muller are now more in touch with the views of their suppliers.  Consequently they have taken note and have decided to delay introducing the new contract until into the New Year with the expectation that farmers will sign from February onwards. Some non aligned clearly wanted Muller to pull back but at least a pause and reflect means changes might be factored into the final version.

There are still numerous important questions to be answered and addressed both with the proposed new contract detail and the new representation structure which will hopefully become clearer during this month.

Undoubtedly one of the issues Muller has faced has been the timing of the two changes given the fact the non aligned Muller farmers are rather frustrated and aggrieved at the slow pace of upward movement in their milk price which for December is a standard litre price of under 23ppl (22.94ppl) excluding retail winter supplement payment estimated to be 1.4ppl.

Muller is the official milk of the British Athletics Team (2^nd December 2016)

In addition to its role as an official supporter of the British Athletics Team it is also the official milk for the team

Very cheap milk 2 litres for 75p! (2^nd December 2016)

From Dhamecha Cash & Carry outlets in London and the Midlands with this promotion declared as running until at least the end of January. Milk packaged and suppled by Muller.

Improve Rural Broadband by making ISP's more accountable for poor Download Speed (2^nd December 2016)

Rural Broadband speeds in Rural areas  are unacceptable. There is no incentive for Internet Service Providers to improve performance - (they get paid the full monthly fee whatever the download speed) - they are not accountable and need government intervention to improve.

In many rural areas rural business, farms, pubs, shops and private homes endure download speeds of less than >1mbps. In this day and age in our digital world this is disadvantaging rural business and communities. Our children are set school homework on-line and cannot access broadband to research it. Our businesses cannot operate

Click this link to sign the petition which was kick started by Ben Watts of Kite Consultancy:

https://petition.parliament.uk/petitions/173803/sponsors/Rh41NvlGPOLxt7AUScX

1.49ppl (2 Euro Cents) milk price rise for Arla members – from 1^st December (25^th November 2016)

This takes producers standard litre price to 24.63ppl.

The price increase, whilst welcome, will be significantly below what many had hoped for and to that end disappointing to remain one of the lowest in the UK.

In an unusual move Arla have declared that they anticipate similar upward price improvement for January 1^st. Such forward projections are unheard of and indicate that negotiators have made their point that prices have to rise and clear signals sent to farmer members.

1.49ppl (2 Euro Cents) milk price rise for Arla Organic members - from December 1^st (25^th November 2016)

This takes producers’ organic standard litre price to 40.18ppl.

3ppl milk price increase for suppliers to Freshways – from 27^th November (25^th November 2016)

This takes producers’ standard liquid litre price to 25.05ppl.

However, the plan is that any Freshways producers who have served notice to leave and supply another processor (mainly Yew Tree Dairies AKA Woodcocks) will not receive the 3ppl and will remain on the old Freshways basket price contract assuming they don’t rescind their notice. Clearly during 2017 and at the earliest opportunity Freshways intends to abandon a farm gate milk price set by a basket of competitors some of whom today are dragging their feet big time!

This approach is nothing new and was taken by First Milk in 2010 when then Chairman Bill Mustoe stated “we should recognise the value of committed volume and therefore future price increases will only apply to members who are not under resignation”.

At that time there was lots of talk about discrimination, unfair trading practices and it being unreasonable but according to Ian’s notes nothing came of it and to be fair Mustoe had a point reference loyalty and commitment.

The fact those who rescind their notice will be offered the extra money is considered a bribe by at least one Freshways producer who is under notice. Needless to say he is furious.

2.5ppl milk price increase for suppliers to The Fresh Milk Company (Lactalis) – from 1^st January (25^th November 2016)

This takes producers’ standard manufacturing litre price to 28.47ppl. (www.milkprices.com)

28.47ppl guaranteed minimum 2017 farm gate milk price from The Fresh Milk Company (Lactalis) (25^th November 2016)

Lactalis have nailed their colours to the 2017 farm gate milk price most having underwritten the minimum milk price the company will pay producers at 28.47ppl based on a manufacturing standard litre.

If prices head further North, producers will benefit and at least the move provides some welcome stability for the full 12 month period. On a liquid standard litre price the equivalent guarantee is 27.5ppl. The move has no doubt been triggered by the resignation of several FMC producers who are heading to supply Yew Tree Dairy (AKA Woodcocks).

2.5ppl milk price increase for members of Dale Farm plus a 2ppl winter bonus (25^th November 2016)

Dale Farms 2.5ppl increase is backdated to include October deliveries.

The additional 2ppl winter bonus will be paid over the 3 months of October, November and December.

2.25ppl milk price increase for suppliers to Pensworth Dairy (Southampton) – from January 1^st (25^th November 2016)

2ppl milk price increase for suppliers to Wyke Farms – from 1^st December (PRODUCER NOTIFIED) (25^th November 2016)

This takes producers’ standard manufacturing litre to 27.95ppl (www.milkprices.com)

1ppl milk price increase for suppliers to Crediton Dairy – from January 1^st (25^th November 2016)

This takes producers’ standard liquid litre to 27ppl. (www.milkprices.com)

GB milk deliveries down 10.1% (25^th November 2016)

Latest data in Dairy Market Weekly indicates in the 2 weeks to 12^th November GB milk deliveries were down 10.1%.

Intervention store sales to start next month (25^th November 2016)

The European Commission intends to commence the offloading some of its 335,000 tonne record SMP intervention stock with an initial 22,150 tonnes which is likely to cool upward market movements.

The plan is for tendering for the 22,150 tonnes to start on the 13^th December.

Muller faces frothing in its non-aligned milk pool plus Muller makes cost savings a major focus as losses reach £106 million (25^th November 2016)

Two headlines from two different articles in The Grocer Magazine, which numerous Muller non-aligned and many others claim are linked. Muller lost £97.8m with its UK & Ireland business in 2014 and in 2015 those losses have increased to £106million.

Note, the additional losses cannot be attributable to the acquisition of Dairy Crest’s liquid business which didn’t complete until only 5 days from the year end on 26^th December 2015.

Many are now pointing the finger to the suspicion that Theo Muller understandably wants a return on his investment and has sharpened his teeth.

There will be limited scope for Muller’s much loved retailer aligned contracts to reverse the losses given they are effectively toll processors for the supermarkets.

So that leaves the poor non-aligned farmers fearing they will be the weakest link and the ugly sister who will face further downward pressure including significant contract changes currently on the table.

Some farmers are claiming that Muller producers will stand up and be counted and have their say but history suggests they will huff and puff but they are unlikely to stop a determined Muller army of generals and puppets.

Muller Milk Group (MMG) Farmer Board member prosecuted (25^th November 2016)

According to an article in the Carmarthen Journal, Grant Hartman, who is one of 7 MMG Farmer Board members has been prosecuted, fined and given a conditional discharge for 18 months for moving cattle whilst the farm was under TB restrictions.

Farmers milk to be sold by ASDA from Dale Farm (25^th November 2016)

ASDA is the first supermarket to sell branded farmers milk giving consumers the option to pay an extra 25p per 4 pint carton with all the additional money going directly to 1300 dairy farmer members of Dale Farm.

The new milk went on sale in 16 ASDA stores on Monday of this week in both whole and semi skimmed.

How long will it be before AHDB’s market intelligence plus any other industry vermin put pen to paper criticising and belittling this latest initiative. Heaven knows AHDB have caused unnecessary carnage with their criticism of the Morrison Milk for Farmers, which has now negatively attracted the attention of The Telegraph and The Express and The Times.

Arla launches branded organic milk (25^th November 2016)

Arla UK has launched a new brand Arla Organic Farm Milk, which is un-homogenised so customers will see the cream line at the top of the carton/bottle.

EU report talks of victims and unfair trading practices (25^th November 2016)

Ian doesn’t go big on reports originating from the European Commission, however, the one released this week by its Agriculture Markets Task Force titled “Improving Market Outcomes – Enhancing the position of farmers in the supply chain is worth a mention”

A large number of GB farmers currently facing new contracts and/or significant variations in their contractual terms as well as those on low milk prices should try to find time to read the report or at least the opening 4 page Executive Summary.

It looks at the realities of the new post milk quota world, which is labelled as a “more market-orientated” CAP. It goes on to flag up and confirm the well known fact “there is a concern that farmers …… are becoming the main shock absorber in the supply chains as regards market risks such as price volatility or prolonged periods of low prices”.

A number of non-aligned liquid producers would say they are the last domino in the pack and first to fall over.

The report also highlights what it calls “the fear factor” farmers face if they wish to complain about a milk purchaser and the suggestion that victims of unfair trading practices (dairy farmers) should be able to lodge anonymous complaints. If that happens Ian won’t receive all the juicy information because it will be directed to the Commission!

To see the report and its Executive Summary click on : https://ec.europa.eu/agriculture/agri-markets-task-force/improving-markets-outcomes_en.pdf

2ppl milk price increase for suppliers to Grahams Dairies (Scotland) – from 1^st December (18^th November 2016)

2ppl milk price increase for suppliers to Paynes Dairies – from 1^st December (18^th November 2016)

This takes producers standard liquid litre price to 24.80ppl (www.milkprices.com)

Muller under fire from its non-aligned suppliers (18^th November 2016)

Ian has been somewhat alarmed to receive a large number of emails this week from Muller non-aligned farmers who were very keen to report back from 4 of the first 5 regional producer meetings.  Rarely, if ever, has Ian received so much feedback, in fact. Given the fact there are several more meetings during the next 10 days Ian has decided to wait to see what comes in next week, and will discuss the comments and Muller’s proposals in the next bulletin, so please continue to send in your comments.

The meetings have certainly welded opinion in the Muller non-aligned producers and several have subsequently hit the keyboard. Literally. Several will now have big holes where the letters M,U,L,E and R once were.

The Muller staff and board members present at the meetings have certainly been given some very direct messages. The general view from the emails received is that the non-aligned see the contract changes as being nothing more than a price cut, heaping further pain and unfairness upon them. 

Ian will also comment on the proposed new producer representation structure and whether it is a step forward, particularly with reference to the non-aligned producers representation within the group of 21 and whether they will be represented, which the board of this group will select.

The Grocer Magazine on-line has summed up the situation with a very forthright article, written by Kevin White, with the headline “Muller facing frothing in its non-aligned milk pool”. The article points towards Muller pushing more of its own risk on to its 800 non-aligned farmers with the new contract. With Muller purchasing 30% of Britain’s milk this is a big issue and there will be many column inches written on the subject over the coming weeks and months.

GDT auction up 4.5% (18^th November 2016)

Tuesday’s auction produced another set of encouraging results with the overall product index up 4.5% compared to that recorded two weeks ago. All products delivered increased in value, however, note the volume on offer was down 13.8% to 23,902 tonnes to that traded two weeks earlier.

The reduction is mainly attributable to Fonterra’s confirmation that milk volumes have plummeted during October (-14% and November)

Notable movers

Cheddar +11% to average $3697 tonne

SMP +9.8% to average $2562 tonne

WMP +3.2% to average $3423 tonne

Ian Potter, Grahams Dairies and the A & B deduction scheme (18^th November 2016)

During the past two of weeks I have commented on the A & B contracts, in particular in relation to processors who make milk price deductions to producers who, for various reasons, fail to deliver their full A litre allocation in a particular month. With the decision by Freshways to abandon A litre deductions the focus moved north of the Border to Grahams Dairies, in Scotland. In late October I was quoted in The Scottish Farmer saying that Graham’s suppliers were given no notice of the A litre deductions. Grahams has asked me to clarify that it did give notice that there could be A litre deductions when they introduced the scheme in 2014 and the fact that A deductions were on the cards was also mentioned in a letter to Producers dated 17^th August.  I accept this point and have offered my apologies to the company for inferring otherwise.

My comment regarding the lack of notice centred on the information that Graham’s suppliers were not notified that A litre deductions were on the cards for October deliveries until a letter was posted in mid October. However I have now been told that there will be no October deductions. This is excellent news for Grahams suppliers and a very positive step forward.

I also stated that the Grahams B Price was cut to 7ppl which was what Grahams told me it would be in July 2015. However having made enquiries I am now informed that the lowest price paid was actually 10ppl.

As part of Grahams robust defence of the business in the face of negative publicity I was provided with milk pricing figures from the company. The figures stated that the net average paid out to its farmers (including A and B prices) from October 2015 to September 2016 was 23.61ppl compared to its main Scottish competitors, Arla, Muller and First Milk who, according to the numbers I was given, ranged between 22.77ppl and 17.47ppl. I duly had these other figures checked by independent dairy analyst Chris Walkland, who has confirmed that the Grahams figure is accurate and the Arla and Muller figures, while not an exact match to his, are close enough. He did not analyse the First Milk figure.

Thus Grahams have, overall, paid what appears to be the highest 12 month average nett pay-out to dairy farmers in Scotland   even with the B scheme. Graham’s claim that the A & B scheme has succeeded in protecting their farmers’ milk price does, therefore, have merit.

However I believe that, despite this, the A & B scheme has not been well communicated by any of the companies who adopted it, including Grahams, and that the scheme has too many negatives attached to it. This is especially the case when compared to the simplicity of other companies who pay a single price for ALL of the litres, even if their headline price is not be as high as the A price would be. The effectiveness of the A & B deduction scheme can also easily be disproportionate across different farmers, with major unintended negative consequences on their businesses, again not helping the image of the scheme.

A & B contracts were believed to be ground-breaking when they were first conceived in 2014 but back then no one envisaged the current scenario whereby A litre deductions of 7 to 8ppl or more could be applied. A lot of time and effort went into the development of the new contracts but I believe that it is time to evaluate the pros and cons and either refine them significantly or revert to alternative mechanisms. The risk of bad press and farmer discontent on an A or B price deduction outweighs the value. Grahams have today confirmed to Ian that they are reviewing their A and B contracts on a one to one basis with producers to canvass their thoughts which is a positive time consuming move by the company which will give farmers the opportunity to have their say.

The bottom line is Grahams, like all other milk purchasers, have to balance supplies against sales and in the space of 14 months the spot price has varied from 10p to 41p making balancing extremely challenging. For Grahams the variation for them in that period has been from 20% (2 million litres) of milk above the A volumes (AKA B milk) to now, where production is 8% (1 Million litres plus) below A volumes.

It is a priority for the industry that a long-term solution to these swings must be found. But it is my view that the A & B system requires further reform if it is to have a role in that going forward.

Dairy farmers in Northern Ireland vent their anger (18^th November 2016)

An estimated 250 or so dairy farmers in Northern Ireland have had enough and have agreed to strike. Part of their frustration is the lack of upward movement on farm gate milk prices in addition to anger at the stances taken by Dairy UK in connection with its decision to cease engagement with the Ulster Farmers’ Union.

The group stated “After the news this week that Dairy UK (NI) have blocked future engagement with the UIster Farmers’ Union over their criticism of the failure of co-ops to pass on better milk market returns to farmers, the contempt and arrogance that milk co-ops now have for their producer members is totally unacceptable and should result in co-op farmer board members requesting their co-ops withhold levies for now.”

Strong words but the only surprise is perhaps that it has taken this long to boil over.

30ppl for Direct Milk DPO (Ex-Dairy Crest liquid non-aligned) (11^th November 2016)

In what is the penultimate monthly price calculation before Muller bin the mechanism and the DPO on 31^st January 2017 producers will receive a standard litre price of 30ppl following a December 1^st increase of 1.272ppl. The details are:

Simplified & Core Formula (29.89p)

Core Formula (30.08p)

In comparison the standard non-aligned liquid December milk price for Direct Milk DPO members is 22.675ppl.

These formula prices are the highest on record since November 2014.

2.25ppl milk price increase for Meadow Foods suppliers – from 1^st December (11^th November 2016)

This takes producers standard liquid litre price to 24.40ppl (www.milkprices.com). The Meadow Foods B price for November has been confirmed at 32ppl.

1.78ppl milk price increase for Dairy Crest Davidstow suppliers – From 1^st December (11^th November 2016)

This takes producers standard manufacturing litre price to 26ppl www.milkprices.com

1.5ppl milk price increase for Yew Tree contracted liquid suppliers – from 1^st December (11^th November 2016)

This takes producers’ standard liquid litre to 24.5ppl (www.milkprices.com)

0.75ppl milk price increase for Arla Direct suppliers – from 1^st November (11^th November 2016)

This takes producers’ standard liquid litre price to 20.75ppl (www.milkprices.com)

Friesland Campina (FC) milk price for November deliveries @ 28.85ppl (11^th November 2016)

According to numbers crunched by Steve Bradley, the latest 3.75 Euro Cents per kg price increase from FC for November results in a www.milkprices.com standard litre equivalent of 28.85ppl.

Dairy Crest profits up 19% (11^th November 2016)

Dairy Crest’s half year adjusted profit before tax to 30^th September 2016 is up 19% to £19.1 million compared to £16 million in the same period a year earlier.

Ornua Foods profits up 34% (11^th November 2016)

Ornua Foods Ingredients (UK) (which includes the Adams of leek family and was and previously known as the Irish Dairy Board) have declared a 2015 operating profit up 34% to £1.85 million.

6ppl milk price rise takes Barbers price to over 30ppl (4^th November 2016)

Cheese maker Barbers have announced a thumping market-moving 6ppl milk price rise to its farmers, split into three increases as follows:

2.5ppl - 1^st December

2.0ppl - 1^st January

1.5ppl - 1^st February

The increases will take the Barbers standard litre price to 30.30ppl on 1^st February for its 130 farmer suppliers.

3.6ppl milk price increases for Freshways suppliers (4^th November 2016)

This is split into 2 parts:

The original 1.5ppl increase for October has been lifted to a 2ppl increase from October 1^st

The original 1.1 ppl increase for November has been lifted to 1.6ppl from November 1^st

In addition, a proposal will be put to Freshways customers that one of the farmer representatives be allowed to attend future meetings and negotiations.

2ppl milk price increase for suppliers to Belton Cheese - from 1^st December (4^th November 2016)

2ppl milk price increase for Muller suppliers - from December 1^st (4^th November 2016)

2ppl milk price increase for suppliers to Helers Cheese - from December 1^st (4^th November 2016)

2ppl milk price increase for Muller Direct (ex-Dairy Crest) suppliers - from December 1^st (4^th November 2016)

This takes producers standard liquid litre price to 22.93ppl (www.milkprices.com)

First Milk’s A litre milk price increases for November confirmed (4^th November 2016)

From 1^st November First Milk’s A price increases will be as follows:

Midlands plus 1.41ppl

Haverfordwest & Lake District plus 1.33ppl

Scotland plus 1.2ppl

1.25 ppl increase for suppliers to Pensworth Dairies - from December 1^st (4^th November 2016)

1ppl milk price increase for suppliers to South Caernarfon Creameries - from December 1^st (4^th November 2016)

1ppl milk price increase for suppliers to Glanbia Cheese – from December 1^st(4^th November 2016)

WMP GDT auction average jumps by 20% in 2 weeks (4^th November 2016)

The world’s barometer of demand for dairy products, the GDT auction, has clocked up an eye watering 19.8% average for WMP to average US$3317 tonne.

SMP average was up 6.5% to average US$2329 tonne and the overall all products average for this week’s auction was up 11.4%. Let’s hope it’s a sustainable upward trend and not a spike.

Freshways abandon A litre undersupply penalties leaving Grahams exposed (4^th November 2016)

Freshways and its farmer representatives have agreed that under the present circumstances all A litre under supply penalties will be cancelled and they have backdated this to 1^st October, which has been extremely well received by its 180 or so farmer suppliers and its customers. Note, this is not a temporary amendment to the contract but a permanent change.

Freshways have recognised that when the A & B contract was introduced a situation whereby some farmers could suffer huge financial penalties was never planned or envisaged. The move to scrap it has sent a clear message to Freshways suppliers that the firm is listening to farmers and keen to retain their supply by supporting them. Good on Freshways.

According to our records this leaves Grahams Dairies of Scotland as the only UK milkprices.com listed milk purchaser who, from October 1^st, is penalising/deducting significant amounts of money from any of its farmers who fail to fulfil their A litres by what is currently an eye watering several pence per litre figure. There is a real possibility that there will be more on this story, as the issue is sure to run and run with a lot of questions being asked by Grahams suppliers, competitors who wish to seize on the controversy and potentially try to mop-up any disaffected suppliers, and by customers who are keen to see their processors treat their farmers fairly and well.

Our roving reporter is in Sicily, so this is a briefer report than usual & when he returns normal service will be resumed with some hard hitting facts etc (4^th November 2016)

1.5ppl milk price increase for suppliers to Paynes Dairies – from November 1^st (26^th October 2016)

This takes producers’ liquid standard litre price to 22.8ppl (www.milkprices.com)

1ppl milk price increase for suppliers to Dairy Partners Limited (Wales) – from December 1^st (26^th October 2016)

This takes producers’ standard manufacturing litre to 25.7ppl (www.milkprices.com)

1ppl minimum price increase for all First Milk members – from November 1^st (26^th October 2016)

First Milk have announced they will pay a minimum 1ppl increase on it’s A litres to all its non-aligned producers from November 1^st.

Its B milk price will increase by 5ppl to 25ppl for all pools. First Milk’s A price for November will be finalised and announced within the next 7 days.

Graham’s producers claim the goalposts have been moved (26^th October 2016)

Graham’s Dairies Scotland were last featured in this newsletter when they dramatically dropped their B milk price to only 7.5ppl and in doing so sending a very clear message to its suppliers that it simply did not want any B litres. Farmers instantly responded by culling cows, cutting feed and cutting milk production. In the past week, some have claimed that they also signed up to the EU milk reduction scheme, which started on 1^st October. And now another shock has come because Graham’s producers have received a bombshell letter - AFTER the 1^st October! - informing them that FROM October 1^st any producer who failed to fill their A litres would be financially penalised!

For some it appears to be the final straw, who are still getting A litres at 22p, which is below their cost of production. Some were furious and arranged a get together to meet fellow suppliers and to send a clear message to the Graham family as to how they feel about the treatment they are receiving.

Freshways are struggling with angry loyal producers (26^th October 2016)

According to numerous emails Ian has received, Freshways also have significant numbers of dissatisfied suppliers, many of whom claim to have already handed in their notice. In summary, most, if not all, claim they are not being treated fairly and are being held to ransom by a combination of their milk buyer and their contract.

Most claim they are selling A litres at below COP, however, Freshways will not allow them to cut their losses and exit the industry with dignity, instead insisting they must give a minimum of nine months notice.

So irrespective of whether it’s ill health, poor profitability, old age, or simply that the farmers have had enough of what they call exploitation, its producers cannot stop milking. No longer, apparently, can the Freshways farmer decide when he can sell his cows and even a TB breakdown is not a valid reason to exit dairy farming. And yet Freshways can serve notice when they like, as happened a few months ago!

In addition, along with Graham’s Dairies (see above), Freshways are one of only two dairies we know who penalise farmers for failing to fulfil their A litres.

One claimed that when his A price penalty was added to his A milk price he is still receiving 18ppl for October deliveries.

It’s clear that Freshways are approaching a crisis and that they will not retain their current 180+ suppliers and could find it very challenging to attract new replacement producers.

Non-aligned aggrieved producers – What can they do? (26^th October 2016)

The discontent among non-aligned farmers is growing significantly. But what can they do about their position? In simple terms they can bite the bullet and resign and that’s possibly the only language some processors will understand. They shouldn’t pay lip service to their neighbour threatening to resign if things don’t improve, they should resign themselves, and resign now!

If you feel you are being exploited and/or treated unfairly by your milk buyer, take charge of your own destiny and do something about it. Please don’t let your milk purchaser demoralise you and your family any more. Don’t let them cripple your business further and under no circumstances let them promise you jam tomorrow.

If the trust has gone and the relationship broken down, change buyers or get out - even if it means you have to sell your milk for a slightly lower price for the time being to a milk purchaser who you trust and thinks is fair.

It’s jaw dropping that individual, hard working, honest dairy farmers who are considered the backbone of the countryside cannot chose whether they exit the industry. Even some of those who opted for the EU milk reduction programme now find that the money is simply going to their milk purchaser in the form of A litre penalties, which is surely not as the EU Commission planned and from a moral and ethical point of view has to be questioned.

We are in yet another crisis and as I have said before, don’t fall for promises of jam tomorrow or little tweaks to your contract, because it’s gone beyond that with some buyers.

It’s demoralising and it’s exploitation. If some milk purchasers are now concerned over their future milk supply then I have no sympathy. They have made their bed and need to be made to lie in it.

One farmer has even informed me that his milk purchaser suggested that his single farm payment would soon be in the bank suggesting that that would be his saviour. Little did he realise that all of that money is already spoken for.

It’s time the Government got stuck into the tactics of some GB milk buyers and looked in to their contracts in detail. Whether it’s a job for the Groceries Code Adjudicator or for someone else is one for the future but some producers need urgent help to ensure fair play. And that requires a referee in one form or another.

Australia’s milk production continues to plummet (26^th October 2016)

Australia’s milk production is plummeting and was down 10.2% in both July and September with August down 9.2%. Meanwhile, UK milk production is now running at around 8.2% below the same time last year.

Meg wins in a man’s world (26^th October 2016)

Congratulations to Meg Elliott for winning the British Farming Award’s award of Auctioneer of the Year 2016, and many thanks to all those who voted for her. Auctioneering was largely a man’s world, once, but Meg has broken the mold and all credit to her.

30ppl October milk price Yew Tree Dairies (AKA Woodcocks) (17^th October 2016)

Yew Tree has confirmed suppliers on its ingredients contract will receive at least 28ppl for September deliveries and 30ppl plus for October milk.

4ppl total milk price increase for suppliers to The Fresh Milk Company (AKA Lactalis) from 1^st November & 1^st December (17^th October 2016)

The precise reasons behind The FMC’s seismic price increases could be debated but the fact is its producers should be pleased with the latest announcement.

The total November 1^st increase has been increased to 2ppl with an additional 2ppl from December 1^st. This is the 6^th consecutive monthly increase amounting to 8.5ppl since July.

The business is optimistic for further 2017 farm gate milk price increases assuming returns for its cheese continue to improve.

The increases result in the following manufacturing standard litre prices (www.milkprices.com)

23.8ppl November & 25.88ppl December

24.37ppl November & 26.46ppl December under FMC’s profile option

2ppl milk price increase for South Caernarfon Creameries Limited suppliers – from November 1^st (17^th October 2016)

They still require new suppliers to join their co-op. This takes producers’ standard manufacturing litre price to 24.53ppl (www.milkprices.com)

2ppl milk price increase for Barbers suppliers – from November 1^st (17^th October 2016)

This takes producers’ manufacturing standard litre price to 25.04 (www.milkprices.com)

1.366ppl milk price increase for Muller Direct formula contracted milk – from November 1^st (17^th October 2016)

This results in a liquid standard litre price of 28.616ppl (simplified formula contract) and 28.808ppl (core formula contract). The formula has delivered 4.237ppl in the past 4 months and with only two months left until Muller axe both contracts it looks like the contracted price could finish up at 30ppl or more which will be them going out on a high!

1.25ppl + 0.25ppl milk price increase for suppliers to Joseph Heler Cheese – from 1^st November (17^th October 2016)

The increase is 1.25ppl which will be boosted by an additional 0.25ppl for producers who submit a monthly milk price production forecast by the 15^th of each month.

1ppl milk price increase for Meadow Foods suppliers – from November 1^st (17^th October 2016)

This takes producers’ standard liquid litre to 22.15ppl (www.milkprices.com). In addition, Meadow’s September B litre milk price will be 26ppl and for October will be 30ppl.

1ppl milk price increase for 105 Dairy Partners suppliers (Newcastle Emlyn) – from November 1^st (17^th October 2016)

This comes on the back of a 3ppl October increase

1ppl milk price increase for Pensworth Dairies suppliers – from November 1^st (17^th October 2016)

This takes producers’ standard liquid litre price to 21.5ppl (www.milkprices.com)

1ppl milk price increase for suppliers to Grahams Dairies – from November 1^st (PRODUCER NOTIFIED) (17^th October 2016)

This takes producers’ liquid standard litre price to 21.5ppl (www.milkprices.com)

Sooty & Sweep are under attack from their non-aligned poor relations (17^th October 2016)

A group of enterprising and active Muller non-aligned farmers have kick started a campaign based on the fact Sooty and his three friends on the MMG Board, all on aligned contracts, are failing to represent their interests and appear to only be accountable to Muller.

Clearly they do not intend to sit back and take what’s gratefully thrown their way. Those wanting to join the group are asked to email mullernonaligned@gmail.com

As one industry leader commented to Ian “This is a smart move by Muller non-aligned who are taking their own initiative due to the complete absence of consultation and/or leadership from Sooty & Friends.”

Minimal co-operation from Holstein UK (17^th October 2016)

Negotiations to merge the RABDF’s Livestock Event and UK Dairy Day into one National Dairy Event (identical to the one RABDF ditched) have sadly ended in no resolution after 15 months of discussions.

The fact two of our dairy organisations have failed to agree on a way forward to hold one national event is damming. As one industry leader emailed to Ian, “what hope is there for the UK dairy sector when even out own internal organisations are unable to co-operate!”

From the evidence presented to Ian, Holstein UK’s board slammed the door shut in RABDF’s face last Tuesday. Statements made by Holstein UK as to the reasons they have terminated discussions are rather limp and at best good excuses.

For example, it’s a bit rich for Holstein UK’s CEO Richard Jones to detail one of the main reasons for Holstein UK pulling out being concerns about RABDF’s financial position given Holstein UK’s former CEO was found guilty of pocketing £240,000 of its funds and sentenced to 2 years in prison.

The RABDF’s planned September Event is likely to need life support but it will be exhibitors who have the final say as to which event, if either, succeeds. Will they support the RABDF at the NEC or will they support the aggressive upstarts in Holstein UK? It seems inevitable we will only have one September Dairy Show and to that end Holstein UK may be successful but it’s a very sad state of affairs the two organisations couldn’t agree.

Nick Everington exits as RABDF CEO with no retirement party (17^th October 2016)

There was no surprise at the announcement that Nick Everington had left his position as CEO of RABDF after 15 years, however, the notice to members was jaw dropping and contained more spin than a child’s spinning top.

According to RABDF, Mr Everington has retired but the announcement allegedly came some time after he had left his desk for the last time. Few, if any, will believe this is retirement and most will be convinced that his determination to move the very successful Dairy Event to a July Livestock Event date, which spectacularly bombed, is the main reason for his sudden “retirement”.

Had RABDF stuck with a National Dairy Event in September there is little doubt former events co-ordinator, Richard Evans, would not have gone to Holstein UK to set up a rival Dairy Day.

One area Nick Everington can claim to eclipse Holstein UK on is the matter of show fixing. Everington was shoulder to shoulder with the Great Yorkshire Show on the matter whereas Holstein UK appear to bow to pressures from breeders with serious financial interests in showing and insisting on the ability to fix and cheat at shows both home and abroad.

The image of the UK dairy industry will be seriously damaged one day if Holstein UK continue to turn a blind eye to fixing and fail to police their own show rules.

Ridiculously Cheap Milk (17^th October 2016)

Spa shop on Cowpen Road, Blyth has 2 litres of Paynes Dairies milk for 50p, yes 25ppl and get this they expect the promotion to run for 6 months!

1.5ppl milk price increase to Muller non-aligned suppliers – from 1^st November (30^th September 2016)

This takes producers’ standard litre liquid price to 20.94ppl. The November retailer supplement is estimated to be 2ppl taking the total non-aligned price to an estimated 23ppl.

1.25ppl milk price increase for suppliers to Belton Cheese – from 1^st November (30^th September 2016)

This takes producers’ standard manufacturing litre price to 23ppl.

1.25ppl milk price increase for suppliers to Glanbia Cheese – from 1^st November (30^th September 2016)

This takes producers’ standard manufacturing litre price to 24.29ppl.

1ppl milk price increase for Arla Directs – from October 1^st (30^th September 2016)

This takes producers’ liquid standard litre price to 20ppl

1ppl milk price increase for suppliers to The Fresh Milk Company (Lactalis) – from 1^st November PRODUCER NOTIFIED (30^th September 2016)

This takes producers’ standard manufacturing litre price to 22.77ppl.

Clock this AMPE = 28.5p & MCVE = 32.4p (30^th September 2016)

According to the latest figures from AHDB MCVE stands at 32.4ppl and AMPE at 28.5ppl.

This means the MCVE value is up 60% (12.1ppl) in 12 months and AMPE is up 67% (11.5ppl).

40% less dairy farmers in Western Europe by 2026 (30^th September 2016)

One of the outcomes presented at the recent IFCN Conference in Holland predicts the next 10 years will result in 40% of Western European dairy farmers exiting the industry.

In addition, ICFN predict an increase of 25% in the global demand for dairy products in the same 10 year period, which means an annual demand increase of 2.3%.

European milk reduction scheme almost 100% taken (30^th September 2016)

The Commissions surprise move to introduce a milk reduction scheme paying farmers 12ppl for reducing milk production between October 1^st and 31^st December has seen a 98.9% uptake for the first periods allocation.

In total 52,000 farmers applied, including almost 13,000 from France, 10,000 from Germany, with the UK coming in 3^rd place with applications for 112 million litres from 1,800 farmers, which represents 10% of the total EU uptake.

Of the total 1,800 UK farmer applications, 154 came from Scotland.

It is now clear that some milk purchasers have left it too late to reverse the fall in winter milk production, currently running at 7.7% down on the same period a year ago, and with spot prices almost at 40ppl few will have any sympathy with processors who have completely mis-read the market signals.

Meeting Notice (30^th September 2016)

Speaker David Handley on the GB Dairy Industry

Date Tuesday next (4^th October)

Venue Hadlow College Boardroom, Nr Tonbridge, Kent

Time 12 noon

2ppl milk price rise for First Milk non-aligned members – from October 1^st (23^rd September 2016)

This is First Milk’s largest single monthly milk price increase in 9 years (November 2007). The 2ppl increase comprises of 1ppl from customers/the market mechanism and a further 1ppl as part of the internal performance supplement.

2ppl milk price rise for suppliers to Paynes Dairies (AKA Charlie Payne) – from October 1^st (23^rd September 2016)

In addition, Paynes have re-opened their recruitment doors.

This takes producers standard litre price to 21.2ppl (www.milkprices.com)

1.6ppl milk price increase for all Arla members – from October 1^st (23^rd September 2016)

The increase comprises of 1.5ppl (2 Euro Cents) milk price increase plus a further 0.1ppl from the currency adjustment. The increase applies to all members, including those supplying the organic pool.

This takes producer non-aligned standard litre price to 21.65ppl.

This takes producer organic standard litre price to 37.2ppl.

1.5ppl milk price increase to Dairy Crest Davidstow suppliers split over two months (23^rd September 2016)

The split is:

1ppl from October 1^st to give a manufacturing standard litre price of 23.72ppl

0.5ppl from November 1^st to give a manufacturing standard litre price of 24.22ppl (www.milkprices.com)

28.61ppl for Tesco aligned producers – from November 1^st (23^rd September 2016)

Tesco’s half yearly review sees a small reduction of 0.1ppl with a new standard litre price of 28.61ppl, which should put a smile on all of the producers who are involved.

GDT auction runs out of steam (23^rd September 2016)

This week’s auction was tipped top continue its recent price increase rally with some analysts predicting the key product WMP would lift by a further 10 to 11%.

As it was, the WMP price was almost stand on and SMP was up 3% and the overall all products price index up 1.7%, which is the highest level since March 2015.

Notable movers were:

Butter +3.6% to average US$3892 tonne

SMP +3.0% to average US$2293 tonne

Cheddar +2.2% to average US$3518 tonne

WMP -0.2% to average US$2782 tonne

Fonterra increases its forecast farm gate milk price (23^rd September 2016)

Fonterra has announced a 50 cents forecast farm gate milk price to $5.25 per kg of milk solids. This is welcome news, especially given the breakeven figure for New Zealand farmers is currently publicised as $5.05 per kg.

Muller pledge an additional £100 million investment in 18 months as part of its 2020 vision (23^rd September 2016)

Muller has confirmed it plans to invest an additional £100m in its UK facilities, innovation and marketing.

In a statement Muller comment:

“What underpins all of this is our desire to increase consumption of valued added dairy products, which are made in Britain from milk produced by British farmers.”

It’s part of Mullers’ 2020 vison plan to unlock an additional £700m of potential category growth in the UK dairy sector by 2020.

To put the £100m into perspective it’s more money than Muller paid for Dairy Crest’s liquid business. The area of product innovation is perhaps one of the most exciting areas Muller plan to invest in with the aim of bringing to shelves new ways for consumers to consume our British dairy products.

12.23ppl to cut milk production (16^th September 2016)

Details of the European Union’s dairy package have been publicised, in particular, the €150 (£127 million) incentive for producers to cut production at a rate of 12.23ppl.

It’s very tight for producers to apply for the first window, which closes on Wednesday next, 21^st September at 11am, and will be for a 3 month reduction period 1^st October to 31^st December 2016 with other windows to follow until the money is fully subscribed. According to Dairy Market Weekly, any farmer who applies for the first reduction period may also apply for the fourth period assuming there is still money in the pot.

With many producers facing an October milk price of under 20ppl if they do qualify it looks like a case of less = more. Less milk = less work = less invoices = less pain and more money.

The total £12.7 million fund has a maximum subscription literage of 1.04 billion litres across all member states.

Applications are via the RPA website https://www.gov.uk/guidance/milk-production-reduction-scheme-how-to-apply

Spot milk at 37ppl and rising but Arla say no to 5ppl winter premium (16^th September 2016)

There are really only two forces in the current extremely hot GB spot milk market. The two buyers who are hoovering up virtually all available spot milk are Muller and Arla.

Both deny they have any short or medium term supply problems yet both are buying up spot milk like it was the last in the world.

To farmers supplying either of them at 19ppl to 20ppl this will be a big disappointment to learn that both processors find it economical to fill any shortfall with spot milk as opposed to paying a higher winter milk price to encourage existing suppliers to churn out more milk.

Spot milk is currently around 37ppl and tipped to hit 40ppl by the end of September.

So far as Arla members are concerned it is now confirmed that its farmer BOR put forward a proposal in July for the co-op to pay a 5ppl winter supplement on the additional litres a farmer delivered over and above the litres delivered in the corresponding month last year.

This was done in the full knowledge Arla were on course for a winter milk supply shortage. Guess what? The idea was thrown out by the Arla board on the basis one country’s producers could not be seen to receive such an incentive and that it was better to deal with supply problems via high prices in the spot market.

As several Arla members are calling for national pricing convinced the one size fits all with a single Arla farm gate milk price is unsustainable.

Yew Tree Dairy (AKA Woodcocks) launch their farmers milk futures trading (16^th September 2016)

Ian has been involved in discussions concerning the benefits of dairy futures contracts since 2009 and it’s taken until this week for a farmer futures trading contract to be made available.

Out of a crisis usually comes some good and solutions and there can be no doubt that the Woodcock families dairy farming experience , the fact they have milked cows and their close relationship with many farmers who have turned to Woodcocks to save their dairy farming business has spurred them to look for alternatives.  Remember when many farmers were dumped by their existing milk purchaser and had nowhere to go, Woodcocks pledge was to offer a home for their milk.

That’s part of the Woodcock family offer.  They have alternative outlets for milk from retail to commodity and ingredient outlets and now its supplying farmers have the option to lock into a margin and trade a percentage of their milk on futures. The bulk of the work to get to this stage has come from a team  effort involving Stephen Bradley of www.milkprices.com ,  FC Stone and  Carl Woodcock.

This week farmer suppliers listened to presentations from both Stephen and Carl and the opportunity for farmers to trade and lock into a margin  is expected to commence in early October.

The meetings were well attended particularly the one in Ayr which was standing room only and Stephen Bradley commented that it brought back memories of the huge interest generated when the DCD  Formula contracts were launched

Some farmers may be large enough to take out single contracts however it is expected that the majority of Yew Tree suppliers will see Woodcocks group farmers together into squadrons in order to fill futures contracts.  All contracts will be backed off at farm level in order to protect a farm margin it is recommended a futures feed contract is taken out.

Farmers decide what percentage of their milk they forward sell and it’s clear that doing nothing and making your dairy business suffer the pain of recent months is a huge gamble but trading futures and locking into a margin is a safety belt. For some this way of doing business could potentially be a life line.

Now it’s a case of ensuring the Yew Tree farmers who are keen to trade are futures ready and that’s in hand.  We believe it will work and the likelihood is that other processors will be forced to offer similar schemes to help insulate their farmers from some of the price volatility extremes.

It’s a big project but the Woodcock family are never phased by the size of the project and only focus on the outcomes.  All eyes will be watching how their famers get on as we move into 2017 with what is a new, exciting and different way to lock into a margin for future months/years.

In the US, dairy farmers have to use these risk management tools to justify expansion and investment and to demonstrate they are globally competitive.

Vote for the female who takes control of farmers for breakfast (16^th September 2016)

When I was livestock auctioneer I worked with a young girl called Meg Elliott. When she stood on the pig rostrum with me she told me she wanted to become a livestock auctioneer – I was sceptical and curious as to how she would get on in what was a man’s world.

During the past 25 years she has gained, particularly dairy farmers’ trust and respect. She is an inspiration to other women to step onto the rostrum with a gavel and to take charge of an auction.

So it came as no surprise to me when I heard Meg was one of five auctioneers shortlisted for the Auctioneer of the Year Award.

I hope as many of my readers of this free weekly dairy bulletin will spend 30 seconds and click on this link and simply tick the box to vote. The top vote is Meg Elliott and with your help that’s where she will be when voting closes at the end of this month.

Please vote now because in Ian’s eyes she is not only the number 1 British female livestock auctioneer, she is now on course to top trump four men and rise to the very top of her profession by winning this award.

Click now on http://mth2016voting.questionpro.com

Paine & Partners buy a significant share of Meadow Foods (12^th September 2016)

A significant share of Meadow Foods is now owned by US private equity firm Paine & Partners, who have purchased the 35% shareholding owned by the Pickering family plus part of the Chantler family’s 65% shareholding. The deal has taken around 12 months to conclude following an initial approach to Simon Chantler from Paine’s.

For the staff, management and executives at Meadow Foods it’s business as usual with all staff retained under the same managerial control. For the Meadow Foods farmer suppliers it’s also business as usual.

For the business it will be a major game changer because Meadow Foods are now catapulted into the big boys playground when it comes to acquisitions and expansion given the capital backing and fire power Paine & Partners bring to the table.

It will be interesting to see where the new business makes its first big move but for sure Meadow Foods and Paine & Partners are going to figure in the UK and European dairy news frequently from now on as the business grows and possibly at a rate few had previously contemplated.

The challenge for Paine & Partners, Meadow staff and executives will be to try to maintain the personal one to one family relationship Meadow have cultivated with their 550 producers, whilst embarking on its ambitious expansion plans. In addition to continue to pay a leading ex-farm gate milk price to retain existing loyal suppliers and attract new recruits and not give the impression that the new private equity investors want more than a fair return on their capital at the expense of farmer suppliers.

Paine & Partners website www.painepartners.com is agriculturally impressive and claims current assets of $2.7 billion (£2 billion) having been set up only 9 years ago. They are certainly a very professional and ambitious operation and the only question is where will their next UK dairy acquisition be.

Meadow currently handle around 650-700 million litres, (including Selky Vale), of GB milk each year and are the 4^th largest UK owned dairy processor.

The only way is up as GDT auction results show (12^th September 2016)

All eight product categories on this week’s today’s GDT auction showed gains compared to the result achieved only 2 weeks ago, particularly SMP, which shot up by a staggering 10% and butter top trumped it at 14.9%.

The overall all products average was up 7.7% to average US$2920.

Notable movers (12^th September 2016)

Butter + 14.9% to average US $3764 tonne

SMP + 10% to average US $2070 tonne

Cheddar + 9% to average US $3436 tonne

WMP + 3.7% to average US $2793 tonne

The quantity of product sold was 36,748 tonnes similar to that sold at the previous auction. However, the number of successful bidders was up 10% and the number of bidders who bid was up 12.5% to 199.

2ppl milk price increases for suppliers to Barbers Cheese (12^th September 2016)

Split into two stages +1ppl 1^st September

+1pp 1^st October

The total 2ppl increase takes producers’ manufacturing standard litre price up to 22.98ppl by October 1^st (21.95ppl September 1^st) (www.milkprices.com)

1.15ppl milk price increase for suppliers to Meadow Foods – from October 1^st (12^th September 2016)

In addition, Meadow have confirmed their September B price will be 26ppl and that the October B price will be at least 27ppl and likely to be more.

1.247ppl for Muller Direct (Dairy Crest) DPO liquid formula contracted suppliers – from October 1^st (12^th September 2016)

The increase comes predominantly from the continual upward movement in cream prices.

This takes producers’ standard liquid price under this contract to 27.33ppl (www.milkprices.com)

The only way is up as GDT auction results show (6^th September 2016)

All eight product categories on today’s GDT auction showed gains compared to the result achieved only 2 weeks ago, particularly SMP, which shot up by a staggering 10% and butter top trumped it at 14.9%.

The overall all products average was up 7.7% to average US$2920.

Notable movers:

Butter + 14.9% to average US $3764 tonne

SMP + 10% to average US $2070 tonne

Cheddar + 9% to average US $3436 tonne

WMP + 3.7% to average US $2793 tonne

The quantity of product sold was 36,748 tonnes similar to that sold at the previous auction. However, the number of successful bidders was up 10% and the number of bidders who bid was up 12.5% to 199.

2.5ppl milk price increase for Glanbia Cheese suppliers – from October 1^st (5^th September 2016)

This takes producers’ manufacturing standard litre price to 23.04ppl (www.milkprices.com)

2ppl milk price increase for suppliers to Wyke Farms – from September 1^st (5^th September 2016)

This takes producers’ manufacturing standard litre price to 23.07ppl

1ppl milk price increase fro supplies to Pattemores – from September 1^st (5^th September 2016)

Including re-instatement of the West Country premium the new liquid standard litre price from 1^st September is 20.25ppl.

2.25ppl milk price increase for suppliers to South Caernarfon Creameries Limited (SCC) (5^th September 2016)

In the last bulletin we referred to a 2.5ppl milk price increase from SCC as 0.5ppl from September 1^st plus 2ppl October 1^st. The 0.5ppl September 1^st increase is on top of the previous 1.75ppl increase announced at the end of July taking producers’ total September increase to 2.25ppl.

This takes producers’ manufacturing standard litre price to 22.53ppl.

0.85ppl milk price increase for suppliers to Pensworth Dairy – from 1^st October (5^th September 2016)

This takes producers’ liquid standard litre price to 20.5ppl

1ppl milk price increases for Arla Direct suppliers – from 1^st September (5^th September 2016)

This takes producers’ standard litre price to 19ppl.

1ppl average milk price increase for Muller non-aligned suppliers – from October 1^st (5^th September 2016)

The 1ppl follows the identical Arla increase announced a few days earlier but paid to non-aligned farmers a month later.

The actuals are 0.9ppl increase for Muller non-aligned and 1.189ppl for the former Dairy Crest non-aligned now badged Direct Milk.

This takes producers’ liquid standard litre prices on the 1^st October to:

Muller Milk Group 19.56ppl (www.milkprices.com)

Direct Milk 19.19ppl (www.milkprices.com)

The Muller price increase press release left those who read it and understood it close to speechless. Amongst the all time gems was the line from the Chairman of the Muller Milk Group (MMG) farmer board, Roddy Catto.

“Nevertheless, this has been extremely painful and challenging period for Muller suppliers.”

Now come on Mr Catto you are on a Tesco aligned contract and the other 3 out of 3 fellow MMG board members are also on aligned contracts. I don’t think anyone reading your statement will believe any of you on aligned contracts have found 2015/16 extremely painful. The quote should have stated for Muller non-aligned suppliers.

0.5ppl milk price increase for Wensleydale Creameries (Hawes) suppliers – from 1^st September (PRODUCER NOTIFIED) (5^th September 2016)

This takes producers’ manufacturing standard litre prices to 21.20ppl (www.milkprices.com)

First Milk’s September milk price increases – Round 2 (5^th September 2016)

Within only 3 working days of announcing its September milk price increases co-op First Milk announced further increases.

The revised increases are as follows:

Milk pool	Sept price increase (ppl)	Sept business performance supplement (ppl)	Total Sept price increase (ppl)	Sept A price (ppl)	Sept B price (ppl)
Scottish Mainland	1.04	0.25	1.29	18.02	20.00
Lake District	1.42	0.25	1.67	18.88	20.00
Midlands & East Wales	0.75	0.25	1.00	17.19	20.00
Haverfordwest (includes Tesco supplement)	1.42	0.25	1.67	19.91	20.00

Who’s having all the cream? (5^th September 2016)

Spot milk prices are now 35ppl and rising with most traders anticipating 40ppl in the near future.

In this week’s Provision Trade Federation, Chris Walkland highlights some astonishing facts on cream, which prompted Ian’s headline.

The cream price is almost twice what it was in May and currently stands at around £1.70 and it’s still heading north. This means to a processor cream is worth 8.5ppl to 9ppl the highest amount since December 2013.

AHDB point to the fact that “for liquid processors, fat as a by-product has increased in value by around 4ppl since April. This improvement is cream returns is not currently flowing through into farm gate prices for those supplying the liquid market.”

However, if that wasn’t enough the killer statistic is that “normally” the ratio between the cream income and farmers milk cheques is 25% of the milk price received at farm gate level. Now it’s 45% for the non-aligned.

Farmers and their so-called negotiators would have to be stupid not to realise who is banking all of this extra cream income.

2.5ppl milk price increase for suppliers to South Caernarfon Creameries Ltd (SCC) (26^th August 2016)

The increase is split into two parts:

0.5ppl from 1^st September

2.0ppl from 1^st October

Note SCC continue to recruit new producers in Mid and North Wales

1.5ppl milk price increase for suppliers to Joseph Heler cheese – from October 1st (26^th August 2016)

1ppl First milk price increase for Arla members – from 1^st September (26^th August 2016)

The actual Arla increase across all members is 1.25 Euro Cents, which converts to 1ppl and takes the standard liquid litre price to 20.05ppl (www.milkprices.com)

Whilst a welcome increase the quantum will be a disappointment to many Arla members who simply cannot come anywhere close to balancing the books at 20ppl. As Ian’s school report stated “Could do better”

1ppl milk price increase for suppliers to Belton Cheese – from 1^st October (26^th August 2016)

This takes suppliers manufacturing standard litre price to 21.75ppl (www.milkprices.com)

Various milk prices increases for First Milk Members - from September 1st (26^th August 2016)

The increases vary from 0.77ppl to 1.25ppl and note the additional 0.25ppl business supplement.

Milk pool	Sept price increase (ppl)	Sept business performance supplement (ppl)	Total Sept price increase (ppl)	Sept A price (ppl)	Sept B price (ppl)	Price rise since June for combined A&B (ppl)
Scottish Mainland	0.75	0.25	1.00	17.73	20.00	2.36
Lake District	1.00	0.25	1.25	18.46	20.00	2.94
Midlands & East Wales	0.52	0.25	0.77	16.96	20.00	2.15
Haverfordwest	1.00	0.25	1.25	19.52^1	20.00	3.10

¹ Note the Haverfordwest increase includes the Tesco cheese group payment estimated at 0.94ppl for September

7.5ppl milk price increase for suppliers to Dairy Partners (Cymru Wales) Limited – in four months (26^th August 2016)

Dairy Partners increases to its 100 or so suppliers are now confirmed as follows:

July 1^st +1.5ppl

August 1^st +1.5ppl

September 1^st +1.5ppl

October 1^st +3.0ppl

Total +7.5ppl

Longley Farm Dairies (26^th August 2016)

Often under the radar but Longley Farm Dairies from Holmfirth, Yorkshire operate an A & B system with their producers and it appears to be operated in a more producer friendly and fairer way than is the case with one or two other processors.

Both Longley’s A & B prices are currently 26.5ppl and that was the same in July.

Both prices are for a standard litre and not for the Jersey milk they take it, which attracts a significant constituent premium. One of its producers described it simply as fair pricing for all parties where there is total trust.

1ppl milk price increase for suppliers to Meadow Foods – from September 1^st (19^th August 2016)

The takes producers’ A litres (80% of deliveries) standard liquid litre price to 20ppl

Meadow Foods August B price will be 22ppl. Note, only 3 months ago the Meadow B price was only 11.25ppl (see below).

1ppl milk price rise for suppliers to The Fresh Milk Company (AKA Lactalis) – from 1^st October PRODUCER NOTIFIED (19^th August 2016)

This take producers’ manufacturing standard litre price to 21.73pl (www.milkprices.com)

Whole milk powder auction price rockets up 19% in 2 weeks (19^th August 2016)

This week’s GDT auction produced some eye-wateringly cheery results. The all products average jumped a whopping 12.7% (US$295) to average US$2731/tonne and this increase comes on the back of a 6.6% increase only 2 weeks ago. This is the highest average price since October and is up 45% compared to that recorded 12 months ago.

Analysts in New Zealand are now suggesting markets are heading towards delivering an average break even price for New Zealand farmers at near NZ$5.

All products lifted in price and notable movers were:

WMP +18.9% to average US$2695/tonne

Butter +14.1% to average US$3274/tonne

Cheddar +8.9% to average US$3157/tonne

SMP +3.0% to average US$2028/tonne

The quantity sold was up at 37,766 tonnes and more important was the fact 177 bidders participated of which 119 purchased.

Woodcocks (Yew Tree Dairy) and Freshways targeting a 1.5ppl October milk prices increase (19^th August 2016)

Yew Tree Dairies have announced to their suppliers that they expect a 1^st October farm gate price increase of 1.5ppl or close to it.

Freshways have declared a minimum 1.5ppl farm gate A milk price increase for October. Note, Freshways July B price was 25.21ppl and for August Freshways anticipate its B price could be knocking on the door at 30p. In comparison Meadow Foods B price for July was 17.5ppl and its August B price has been announced at only 22pl. So comparing the two B prices the difference for July and August is likely to be 7.5ppl.

However, headline grabbing B prices don’t relieve the pain of low A prices and a number of Freshways producers are grumpy.

“The smaller guys are certainly no longer waiting for the big players!” – quote from www.milkprices.com

Some middle ground milk processors claim to be pushing customers for immediate price increases and frequently they are quickly kicked back with words like but Arla and Muller haven’t increased farm gate prices yet. Well come next Wednesday Arla are expected to take the lead on Muller with a member price increase for September following which Muller will have to follow.

Milk supply is dropping worldwide and has tipped the supply and demand balance upside down in a matter of months and processors need to realise it will only continue to fall irrespective of any delayed upward movement in ex-farm gate milk prices. Some have overcooked it and robbed producers blind.

Is this all fair or is there evidence of tactical moves? (19^th August 2016)

Some processors are claiming they work on basket prices, which include the likes of Muller and Arla and until they move their farm gate milk prices up they can’t move theirs up. It’s what is called hanging on the shirt tail. Muller know that their refusal to lift prices in September catches out a number of their smaller competitors because their farmers are screaming for more money and customers are resisting until the likes of Muller move on price.

On top of that some liquid processors are guilty of packing milk for customers at ridiculously low prices. They were desperate to retain volume so they dropped their trousers and pants to keep existing customers and to smash and grab new ones at unsustainably low prices.

The problem here is they did it using a milk into powder price of 14p so the odd penny more and they thought they were slightly better off.

But those cheap contracts are still running and they could cripple the processor alternatively the processor cripples their farmer suppliers with low or non-existent milk price increases. Either way the farmer pays for the fact some processors have completely mis-read the market and are now under serious pain just as their farmers are. The worry is whether all processors can weather the storm and still retain their milk field. Notices to leave some buyers milk should now be flooding in because they understand that language. Sadly, it will be a miracle if all survive and some farmers need to remember processors who didn’t and don’t play fair.

July retail supplementary payment is 2.894ppl (19^th August 2016)

The Muller payment for July deliveries is slightly down from the previous months 3ppl to 2.894ppl.

Holstein UK’s Chief Executive pocketed £240,000 of Society funds (19^th August 2016)

The RABDF is clearly not the only one with some challenging financial issues to get to grips with, now the future of its (once) cash cow the Livestock / Dairy Event is in doubt.

During his tenure Holstein UK’s former Chief Executive Greg Watson managed to illegally trouser a cool £240,000 from the organisation, and he might have got away with it if it wasn’t for the determination of the then board and its chairman John Edge.

They ensured justice was done and in Greg Watson has been sentenced to two years in prison and ordered to repay the money. Let’s hope the organisation and its trustees have learned their lesson and that proper independent accountability of activities prevails going forward.

This has to rank as one of the biggest financial scandals any UK dairy organisation has allowed to happen.

State of the art Cheddar processing and packing facility (19^th August 2016)

Dale Farm – the successful farmer owned processing arm of United Dairy Farmers officially opened its £7million expansion of its cheese processing and packing facility in Co. Tyrone, Northern Ireland, creating 60 additional jobs.

1ppl milk price increase for suppliers to Pensworth Dairies – from 1^st September (12^th August 2016)

1.172ppl milk price increase for Muller Direct liquid Milk DPO formula contracts – from 1^st September (12^th August 2016)

The increase applies to the ex Dairy Crest formula suppliers and is the largest price increase the formula has delivered and takes both standard litre prices to over 26ppl and is the second consecutive monthly increase.

The main influence has been the significant lift in bulk cream prices which are up by almost 75% since April worth 3.37ppl on the milk price. Sadly for the farmers involved come the 1^st February 2017 the formula pricing mechanism will be axed by Muller.

The new liquid core formula standard litre price will be 26.2ppl compared to the comparable 1^st September no aligned standard litre price of only 18ppl (www.milkprices.com).

0.5ppl milk price increase for suppliers to Pattesmores – from 1^st August (PRODUCER NOTIFIED) (12^th August 2016)

Muller defends their corner & attempt to dig themselves out of a PR grave (12^th August 2016)

CEO of Muller UK Ronald Ker’s has responded to mounting criticism on his firms refusal to move non aligned farm gate milk prices up with a letter to his producers. It states the case for the defence and in bold letters once again claims he is building Britain’s Biggest and Best Dairy Business.

The letter is clear that Muller prices will not go up until “we actually realise these higher returns within our business”. Clearly Muller haven’t achieved that for August or September which is a worry and some believe this is because Muller have forward sold quantities of milk which now look vey cheap and could be holding prices back.

Where the letter is silent is with reference to the question asked by Michael Oakes, NFU Dairy Board Chairman last week which was for Muller to explain why farmers have received some of the extra cream money (see above).

However analyst and journalist Chris Walkland has commented he does not blame Muller for not moving the price up in September. He points the finger to the incredible lack of lobbying of milk buyers like Muller sooner which if it had happened might have persuaded Muller to move its non aligned price for September 1^st. The evidence points to a very limited number of complaints about the Muller no aligned milk price from its own farmers.

To be fair the letter does make some valid points several of which were mentioned in this bulletin last week in addition there are a couple of irritating ones. No matter what the defence is the reality is that heading into winter on a farm gate milk price of 18 to 18.6ppl is painful, unstainable, disappointing and will not promote additional production.

Finally the letter should ideally have gone out at the end of July with the announcement that milk prices for Muller non aligned were frozen. At the same time it could have addressed where the extra cream returns money Muller has received has gone.

Arla Farmer Milk Brand broke the 1 million litre barrier in two weeks (12^th August 2016)

Arla’s farmer’s milk sales in Asda stores have broken the 1 million litre barrier in just over two weeks since its launch at the Great Yorkshire Show. An extra 25p from each 4 pints sold will be paid to Arla members, so that’s an extra £250,000 to kick start.

Cheap Milk (12^th August 2016)

Booker cash and carry in Cardiff is selling Muller Wiseman milk 8 litres for £2.35 and this incredible offer runs for 2 months until the 4^th October. That’s 29.4ppl!

2ppl milk price increase for Glanbia Cheese suppliers – from 1^st September (5^th August 2016)

This takes producers’ standard manufacturing litre to 20.54ppl (www.milkprices.com)

2ppl milk price increase for Arla Direct Suppliers – from August 1^st (5^th August 2016)

This takes producers’ standard liquid litre to 18ppl (www.milkprices.com)

1.55ppl plus milk price increase for suppliers to Paynes Dairies Limited – from August 1^st (5^th August 2016)

This takes producers’ standard liquid litre price to 19.2ppl (www.milkprices.com)

The increase comes in two parts with 1ppl on the basic milk price, in addition producers no longer face the balancing charge deduction, which is equivalent to an additional 0.55ppl so total increase of 1.55ppl. On top of that the promise that if Paynes ongoing discussions with customers deliver results there could be a further backdated increase on top of the 1ppl. However, the reality is that with Muller holding until at least October 1^st those discussion will be extra challenging.

1ppl milk price increase for suppliers to Dairy Crest Davidstow – from 1^st September (5^th August 2016)

This takes producers’ standard manufacturing litre to 22.72ppl (www.milkprices.com)

First Milk milk price increases including 5ppl on B litres (5^th August 2016)

First Milk has increased the price it pays for B litres by 5ppl to 20ppl for August.

In addition, the following A price increases have been announced by the co-op, spread across August and September.

August/September Increase 1^st September Standard Litre

Haverfordwest 1.25p 18.74p

Lake District 1.25p 17.71p

Scotland 0.70p 17.08p

North of England 0.70p 16.90p

Midlands 0.50p 16.34p

First Milk  are not moving mountains but each and every snippet of news is encouraging for  a large group of co op farmers who just over a year ago feared the Co op would be the next DFOB, Amelca or United Milk.

The   B price above the standard litre A price is exactly how A and B should operate with the two ratcheting up and the B price sending a clear signal to members that more milk is required by First Milk.

It wont be enough for some but it will provide encouragement and optimism for many especially in the full knowledge that First Milk are no longer paying a milk price they cant afford just to keep up with other milk purchasers as happened under the previous management.

WMP auction prices jump 10% (5^th August 2016)

Tuesday’s GDT auction saw WMP prices increase by 10% compared to a fortnight ago and the overall average all products price was up 6.6% to average US$2436, which was significantly more than analysts anticipated.

Key movers were:

WMP averaged US$2265 tonne +9.9%

Butter averaged US$2871 tonne +6.6%

SMP averaged US$1965 tonne +2.1%

Cheddar averaged US$2889 tonne -0.8%

AMPE & MCVE rocket up (5^th August 2016)

AHDB’s AMPE & MCVE values for July have rocketed up and in one month AMPE has increased by 24% (to 23.4ppl from 18.9ppl) and MCVE is up by 20% (to 23.5ppl from 19.6ppl)

Muller under attack for announcing no price increase before October 1^st (5^th August 2016)

This week’s dairy news and chatter has been dominated by Muller’s announcement its non aligned suppliers will not see any increase until at least October 1^st. There was talk of a possible mid September rise, however, Muller have subsequently ruled this out.

The announcement attracted widespread criticism, particularly from NFU Dairy Board Chairman Michael Oakes who certainly sharpened his teeth and let go with both barrels in a press release.

His language was unusually strong for an NFU press release but his frustration was understandable.

In the NFU’s release Michael Oakes refers to Muller’s 3ppl retailer premium with a hint that Muller could be using this as a reason not to increase producer prices in September. He commented:

“Müller’s non-aligned suppliers will no doubt be dumbfounded by Müller’s decision to hold. The decision is an insult to its suppliers and is completely out of line with recent positive market movements which are bringing some confidence to the industry at last.

I’m sincerely hoping that Müller isn’t hiding behind the retail supplements paid by Lidl, Aldi and Morrisons, rather than reacting to the market realities we are seeing in cream incomes, wholesale prices and volume reductions. Cream incomes to a liquid retailer have increased by a whopping 77% since Müller last increased its base price and current daily deliveries of milk are down 10.2% on this time last year. This stand on milk price also makes a mockery of the support retailers gave, and continue to give, dairy farmers in minimum farm gate pricing.”

Similar comments came from Graeme Kilpatrick Chairman of NFUS with:

“I can think of no justifiable reason why Muller has chosen to ignore the market and leave their non-aligned suppliers languishing with an unsustainable milk price. I sincerely hope that Muller isn’t hiding behind this retailer supplement and using it as an excuse for not lifting prices now.”

Farmers for Action are equally ignited and protests are on the radar (see below)

The Muller Milk Group Chairman and former board have come under attack with the group collectively described as impotent as well as Muller messengers rather than negotiators. In addition the fact it doesn’t affect most of the Muller farmer board because they are on retailer aligned contracts has not gone unnoticed.

Did this group prepare their case for an increase if so why did they agree to the stand on or were they simply told that’s the position? They claim to represent 1200 plus farmers and will know that Muller have pocketed money on the cream price alone.

Muller have certainly received additional income, particularly from cream and questions are being asked whether they have retained it or given part or all of it away to retail customers rather than passing it back to farmers.

To be  balanced it has to be remembered that like Arla Muller have paid one price for every litre and not introduced A and B pricing with which comes the opportunity to create chaos in the liquid market  by playing smash and grab with competitors customers using B milk bought for as little as   6 or 7ppl. Muller have had to defend those predatory prices and retain customers.  In reality they cut prices slower and by smaller amounts than they could have and that’s perhaps one explanation as to why upward price movements aren’t coming as quickly as some producers desperately need it to.

The move leaves Muller non-aligned farmers on only a 18.66ppl standard litre price and the ex-Dairy Crest producers on only 18ppl. Note, when Muller do decide to move up on milk prices they will equalise both the Muller Milk Group (18.66ppl) and Direct Milk (ex-DC 18ppl) milk prices, which is undoubtedly a factor in their equations and decision to hold producer prices.

The NFU’s release concluded with “Müller is throwing its support to the British team at this year’s Olympics and it’s about time it showed similar support to its non-aligned farmers who deserve improved milk prices.”

All eyes now point towards Arla and whether their member milk price increases for September 1^st. If it does increase by a useful amount it won’t help Muller in its bid to be both the biggest and best GB milk processor. If Arla don’t move the NFU will have to sharpen their teeth for the second time in a month.

Farmers for Action go back out on the picket lines this Sunday (5^th August 2016)

Predominantly in response to the Muller stand on price announcement FFA are planning direct action. For details log onto www.farmersforaction.org latest news.

A demonstration will take place this Sunday 10^th at Market Drayton at 8pm according to FFA’s website posting today.

5000 entries from 31 countries means Nantwich the biggest in the world (5^th August 2016)

The Nantwich Cheese Show continues to grow and it is without doubt the biggest cheese show in the world where this year 5000 cheeses came from 31 countries with 53% of the entries from UK processors.

Champion UK cheese went to Arla Foods’ Taw Valley Creamery Double Gloucester.

The Tesco Red Leicester Trophy was awarded to First Mill’s Haverfordwest Creamery, which is good news given Haverfordwest’s close relationship with Ornva Foods (AKA Adams) and Tesco. It means Tesco are buying the champion cheese.

Haverfordwest also won the best Extra Mature Cheddar against a class of almost 100 entries.

2008 1.4 Petrol Manual Mini One in Pepper White with Black Stripes (5^th August 2016)