Pressure is mounting on retailers who have started to offer to buy milk from processors at an increased price but it is unclear how much this will impact on the price paid by processors to farmers.
ASDA has committed to paying 28p/litre to their milk supplier Arla although because Arla is a co-operative I believe the increase in price will be pooled across all 13,500 farmer members throughout Europe, not just British farmers which would dilute the benefit of this rise here in the UK.
NFU president Meurig Raymond said: “The NFU has been lobbying tirelessly for Asda to recognise the plight of the dairy industry so we are pleased that Asda has moved to support farmers in their hour of need.
“It is clear from Asda that this commitment is to support the UK dairy industry at a time of crisis. It is now important that Arla ensures this is delivered to British farmers on the ground, with immediate effect.
Aldi and Lidl have also made new commitments to pay processors 28p/litre while Morrisons will pay 26p/litre for milk before processing costs.
The Morrisons move followed the retailer’s previous announcement that it was preparing to launch this new brand giving customers the option to pay an extra 10p/litre more for it on the basis the extra 10p/litre would go back to the farm.
Again the detail as to how these new pricing plans will work is not entirely clear. But it is certain that the pressure put on retailers by farmers taking direct action and by talks behind the scenes between farming leaders in the NFU and other organisations is having some effect on the liquid milk market at least.
However, liquid milk is only one part of the dairy market. About half the milk produced in this country is processed into other products such as butter and cheese and farmers supplying milk to cheese processors for example will be unaffected by these developments.
So there is much more work to be done to help our dairy farmers across all sectors but there is no magic bullet which can insulate UK dairy farmers from the disastrously low world dairy commodity markets which are showing no sign of improvement.
James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk
A property blog written and authored by our specialist blogging team, discussing all and any matter relating to the residential, rural and commercial property markets.
Showing posts with label co-op First Milk. Show all posts
Showing posts with label co-op First Milk. Show all posts
Wednesday, 2 September 2015
Friday, 17 April 2015
Was it an administrative error?
The farmer-owned dairy co-op First Milk hit yet more trouble last Friday as their milk suppliers failed to receive their monthly cheque as expected.
First Milk blame this on an administrative error but there are continued fears about the organisation’s financial stability which must be arousing fear among the 1,200 farmers who supply milk to the co-op.
Since the turn of the year First Milk has been rocked by a number of problems that started in January when they announced a delay in paying the monthly milk cheque by two weeks.
This sent shock waves through their membership. Then in February First Milk announced a change in the way farmers would be paid for their milk by introducing an “A and B pricing contract”.
Instead of paying farmers a single price for all the milk they produce, farmers from April 1 would receive a fixed price for the “A” milk; approximately 80 per cent of their produce and a second variable price for the “B” milk.
The “B” price is being set to reflect the short-term prices such as those on the spot and milk powder markets. This clearly introduces uncertainty for First Milk members who will not know what price they will be receiving for their milk at the end of the month.
Then in March First Milk announced its milk price for April would likely end up being around 20p/litre which is well below the cost of production.
This makes one wonder how long dairy farmers can continue to supply milk at this price, especially as other dairy farmers are being paid significantly more by other milk buyers.
In this context some farmers on the best contracts are still being paid more than 30p/litre, an incredible 10p per litre more than most First Milk producers are getting for doing more or less the same job.
Why don’t farmers change contracts? Well the answer is that it is not easy to change contracts and for some there will be no choice at all. Many of the beleaguered First Milk suppliers will have to hang on in hope of better prices to come or cease dairy farming altogether.
So with the milk price at around 20p per litre, First Milk producers are facing a difficult choice and their confidence in the management of the organisation will have not grown when their monthly milk cheque failed to hit their bank accounts last Friday.
James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk
First Milk blame this on an administrative error but there are continued fears about the organisation’s financial stability which must be arousing fear among the 1,200 farmers who supply milk to the co-op.
Since the turn of the year First Milk has been rocked by a number of problems that started in January when they announced a delay in paying the monthly milk cheque by two weeks.
This sent shock waves through their membership. Then in February First Milk announced a change in the way farmers would be paid for their milk by introducing an “A and B pricing contract”.
Instead of paying farmers a single price for all the milk they produce, farmers from April 1 would receive a fixed price for the “A” milk; approximately 80 per cent of their produce and a second variable price for the “B” milk.
The “B” price is being set to reflect the short-term prices such as those on the spot and milk powder markets. This clearly introduces uncertainty for First Milk members who will not know what price they will be receiving for their milk at the end of the month.
Then in March First Milk announced its milk price for April would likely end up being around 20p/litre which is well below the cost of production.
This makes one wonder how long dairy farmers can continue to supply milk at this price, especially as other dairy farmers are being paid significantly more by other milk buyers.
In this context some farmers on the best contracts are still being paid more than 30p/litre, an incredible 10p per litre more than most First Milk producers are getting for doing more or less the same job.
Why don’t farmers change contracts? Well the answer is that it is not easy to change contracts and for some there will be no choice at all. Many of the beleaguered First Milk suppliers will have to hang on in hope of better prices to come or cease dairy farming altogether.
So with the milk price at around 20p per litre, First Milk producers are facing a difficult choice and their confidence in the management of the organisation will have not grown when their monthly milk cheque failed to hit their bank accounts last Friday.
James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk
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