Dairy Industry news and features

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 ian@ipaquotas.co.uk or call 01335 324594

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  If you are changing from a Partnership to a Limited Company or you want to create a capital loss and need to transfer the quota contact the office for further information sales@ipaquotas.co.uk or 01335 324594

 

CULL COWS WANTED

 

IPA is sourcing all classes of cull cows (and bulls) including plainer types direct from the parlour. TB restricted and slightly lame cows will be accepted (subject to documentation).

Click Here for more information

 

 

1.25ppl milk price drop from First Milk back dated to January 1st (5th January 2009)

 

4.1ppl price cut from United Dairy Farmers for November milk (2nd January 2009) – This cuts its base price to 20.4ppl.

 

2ppl price cut from Saputo (cheese) (2nd January 2009) – from 1st January 2009.

 

0.7ppl price cut from Wyke Farms (cheese) (2nd January 2009) – From 1st January 2009, however, as milkprices.com points out its standard litre price is still a healthy 26.8ppl and it is the first cut Wyke have announced for more than 2 years.

 

2ppl price cut from Arla – from 5th January 2009 (2nd January 2009) – The first of the progressive big guns to cut their milk price is Arla with a 2ppl cut which they claim is directly linked to the fall in commodity values.  Arla producers will be focussing on the desparate need to ensure no further cuts appear this side of April.

 

So what about the other big guns? (2nd January 2009) – Wisemans, Dairy Crest and Milk Link all appear to be cautiously optimistic that they are in a position to hold their current price throughout January despite the fact Arla have almost granted them a licence to cut by 2ppl.  If and when any of them are forced to cut their price it is to be hoped the Arla 2ppl will provide a cap in the price drops and that by delaying others will not declare they have to cut deeper than 2ppl thereby triggering a downward spiral.  The pressure is certainly on.

 

Paynes Dairies secure new 14 million litre customer (2nd January 2009) – Charlie Payne and his team will commence a contract with local customer Heron Foods of Hull on Monday (5th).  The contract is currently with Dairy Crest and the move was triggered on Heron’s requirement for a more local supplier and improved service levels.  The contract accounts for 14 million litres per annum.

 

Soya meal and wheat prices nudge up (2nd January 2009) – During the festive period soya prices have jumped to £273/tonne partly due to a rally on crude oil and concerns over drought conditions in Argentina and Brazil.  Similarly, £100/tonne wheat seems to have vanished and is now trading for £111 and rising.

 

Dairy boss faces death penalty (2nd January 2009) – According to DIN the former head of China’s Sanlu Dairy has pleaded guilty to several charges which may result in the death penalty.  The charges relate to tainted milk in May 2008.

 

 

The £ sinks to new record low  (19th December 2008)  The £ stood at 1.06 against the Euro today, a record low.  OPEC has agreed to cut production by 5% of world supply and amazingly this news triggered a 10% fall in the price of crude oil to $40 a barrel.  Unemployment in the UK has hit a 10-year high at 1.86 million.

 

2.64ppl price increase from Dairy Farmers of Britain  (19th December 2008)  The back-dating of the recent 2ppl producer price cut by DFB has been the topic of much debate around the kitchen table and at its 60+ producer meetings, but no mention has been made of the 2.64ppl (12p/gallon) increase DFB imposed on selected liquid customers from 22nd November.  The increase was due to increased costs, including energy. In a letter DFB commented “As a farmer owned co-operative, Dairy Farmers of Britain are working to deliver a sustainable milk price to its farmer members.”  Perhaps someone should put some aviation fuel in that delivery cart because it appears to be going backwards.

 

A funeral, a wedding and wanted – an active bed partner!  (19th December 2008)  Locally both DFB and Meadow had meetings at The Bluebell at Tissington, near Ashbourne this week, with Ian attending both. There was nothing to smile about at Monday’s DFB member meeting where up to 3 generations from the same family listened to DFB’s restructuring plans before they have to answer the question: “Do I stay or do I go?”  It was the human cost of the drained faces which struck a cord with Ian. Some farmers reached boiling point, with current DFB Vice Chairman David Wilkinson being on the receiving end. He decided he had better listen or else he’d be in for another black eye, to match the (accidentally inflicted) shiner he already sported.

Caretaker Chairman Lord John Granchester, who came over as being genuinely concerned for members’ future and apologetic for letting them down, guaranteed that “on his watch” there would be no more back-dating of price cuts for DFB members. So roll on the 1st of each month. It was clear from what Lord John said in his presentation that he would like to find a bed partner for DFB, and a willing one. Not easy. David Wilkinson said that DFB could buy milk cheaper on the spot market than it was currently paying members, which prompted one farmer to say “well let those who want to go, go”. This immediately received a hearty round of applause. David then gave a DFB guarantee “If the market (general UK) drops by 1 to 1.5ppl DFB will not follow.  We will absorb the first market place drop unless it’s a big drop of say 4ppl.”  Somehow those present were skeptical of this guarantee but let’s wait and see.

Some 48 hours later and Meadow Foods were in the same room on a low key recruitment drive in front of numerous milk buyers farmers, which, whilst predominantly DFB, included those from Milk Direct, Jacksons and an odd Arla man.  Paul Deakin of Meadow talked about their open and honest communication and gave those exploring the options for new milk buyers a few pointers to consider e.g. How good is their management team?  Do they have a proven track record?  Are they financially strong and do I trust them? DFB men shouldn’t have too much trouble answering these.  From activity after the meeting Meadow had plenty of interested farmers looking to examine their contract and First Milk have been over-whelmed with the enquiries they have had from their various meetings in the North and Midlands.

 

UK imports record levels of Irish cheese  (19th December 2008)  Latest figures confirm that in the first 9 months of this year the UK imported 30% more Cheddar than in the same period in 2007, with imports this year totaling 99,000 tonnes of which 76,000 tonnes came from Southern Ireland. (source DIN)

 

Dairy Crest share reached £2 plus  (19th December 2008)  Dairy Crest shares rose 10p on Thursday but have fallen back and were today trading at £196.25

 

Wisemans attempted to stabilise share price at £3.00 plus  (19th December 2008) The Wiseman family have been out with their shopping basket this week having purchased 200,000 of their own shares for cancellation at an average price of £3.06.  Today Wiseman shares were trading lower at £297.75

Wyke Farms  to cut milk price 0.7ppl from January 2009

 

0.7ppl back-dated milk price drop from Fayrefields Foods  (19th December 2008)  from 1st December

 

Auction results continue to head South averaging only 16.63ppl (18th December 2008)

There was certainly no Christmas cheer at todays Northern Ireland milk auction which saw only 30 million litres offered on a 1 month contract which achieved only 16.63ppl.

 

In the same auction a year ago the price achieved was 23.56ppl for a whopping 92 million litres which at that time shocked everyone having achieved an average of 29.58ppl in November 2007.

 

So in the past 3 months the prices have headed South as follows:

 

September 25.1ppl (33 million)

October 18.03ppl (48 million)

November 17.3ppl (17 million)

December 16.63ppl (30 million)

 

It’s a good job the milk from Northern Ireland is not Red Tractor farm assured yet!

 

The £ sinks to new low  (12th December 2008)

The £ stood at 1.11 to the € today the lowest level against a basket of currencies since 1981.  Meanwhile, Soya meal has dropped and crude oil continues to slide.

 

There is growing evidence appearing on Ian’s desk that both co-op and plc cheese processors are gearing up for farm gate milk price cuts for 1st January with all of them sitting and waiting for the other to make the first move but none prepared to dish out the bad news this side of Christmas.  Meanwhile, in the big world of liquid or to be specific Wiseman and Arla there is evidence that both will hold their prices at least for January.

 

Irish dioxins scare halts imports of milk from Northern Ireland  (12th December 2008)

- The dioxins scare in Ireland, which this week involved cattle, has spilled over to the dairy industry.  Meadow terminated all contracts from Northern Ireland and we believe Wisemans no longer import from the Province.

 

Meadow shadowing DFB member meetings  (12th December 2008)

It’s open sport in the world of milk recruitment with Meadow shooting about all over the place in a bid to sign up an additional 100 million litres in their milk fields to take their total direct supply base to around 500 million.  Next week will see DFB and Meadow go almost head to head locally to our office with The Bluebell at Tissington the venue for a DFB meeting on Monday (15th) and Meadow on Wednesday (17th).

 

Fresh & Lo offer at 25p/litre flushes out Tesco as cheats (12th December 2008)

Ian decided that farmers picketing at Tesco’s or Wisemans to highlight their concerns over Tesco selling Wisemans Fresh & Lo milk at 2 litres for 50p was too much like hard work and there was an easier, smarter option. So Ian, some farmers and middle ground and doorstep delivery people all ordered Wisemans Fresh & Lo milk in bulk from www.tesco.com, with the maximum 99 x 2 litres (198 litres) bought for £49.50 plus £3.50 delivery, to be delivered on Wednesday evening.  The order was placed at 9pm on Monday evening and credit card details taken.  At 7pm on Wednesday the store manager contacted Mrs Potter asking if she had made a mistake and actually intended to order 9 x 2 litres.  He then asked what she was using it for, to which she answered: “for tea and biscuits with friends at the weekend” (Anyone who knows Ian knows he only has enough friends to cater for 1.9 litres if they all drank pints, not 198). So at 9pm the little man from Tesco duly arrived at our house to be met by Ian.  Tesco were about to unload the milk when he spotted that the invoice stated £104.94, not £49.50. A 212% increase, therefore.

After a couple of calls the milk was duly returned to the depot, leaving Ian to take the matter up with “Jade” in Tesco Customer Services. Now, Ian has never seen or met Jade but she certainly wouldn’t get a job dealing with IPA or NFSCo Customers. First she disputed that we had ordered on the 8th because her screen told her the offer finished on the 7th at 11.59pm.  Ian duly emailed her the order and she confessed there had been a mistake.  However, she then stated that “when you order online although you have a confirmed order at an agreed price Tesco process the amount they take from your credit card at the time they load the van”.  So Ian ordered at 50p but when Tesco loaded the van the price was £1.06 and it was this increased amount Tesco debited.

All in all then, Tesco got its little knickers in a knot over its 50p for 2 litre deal, but at least the offer was pulled, and very quickly indeed. Ian would like to think he played his part in this and hopes that Tesco will realise selling milk at such low prices does it no good. Next time it runs such an offer - get on-line first, then the picket line!

 

Arla profit warning (12th December 2008)

Arla has down graded its expectations for its 2008 profits from 900 million Dutch Krona to between 600-700 million Dutch Krona.  According to a Danish press cutting the co-op is threatened by huge losses due to stock market and derivative trading and that Arla Foods UK has experienced the greatest losses in respect of pension fund payments “which have been built up in such a way as to turn them into economic dynamite.”  At least one analyst believes the pension fund issue with Arla UK is potentially very serious.

 

Apologies re milk auction date (12th December 2008)

Last week we incorrectly referred to Northern Ireland’s milk auction taking place on Thursday of this week.  It actually takes place next Thursday 18th results will be posted on our website.

 

Semex Conference – January 11th -13th Glasgow (12th December 2008)

The title of the Conference is “Changing Channels” for further details www.semex.co.uk

14March/May in calf Holstein Heifers.  Good heifers in calf to Pedigree Hereford Bull offers.

Location Derbyshire.  Contact Joanne at the office  This is the finish of a complete dispersal

 

 

Farmers buy Tesco milk to sell back to Tesco at a profit  (9th December 2008)

Tesco’s latest "super value" promotion sees Wisemans Fresh & Lo milk on offer at an eyebrow raising 50p for 2 litres, or 25p litre.  The offer is tempting thrifty farmers to buy the milk in full knowledge that Tesco currently pay its famers 28.75ppl.  Tesco contracted farmers can buy up to 99 two litre packs on line at www.tesco.com and have the milk delivered straight to the bulk tank. Assuming there is no charge for disposing of the packaging they net 3.75ppl, which is more profit per litre than most of them make from the milk from their own cows.  At least one farmer has purchased the maximum 198 litres and intends to pour it into the milk tank and urges all farmers to do the same. This way dairy farmers will defeat Tesco’s drive to reduce prices and live off the beaten track.  The deal is sure to lose Sir Terry and his team even more money, while at the same time failing to generate any footfall at all through the stores, which is what the aim of the offer is.

Ian has purchased the full 99 litres himself, as well, and hopes all farmers will do the same. If you do, then please email your confirmed order or till receipt to ianpotter@ipaquotas.co.uk and Ian will feature the total on the website each day.

 

Farmers For Action are ready for action but are you, the farmers, ready  (9th December 2008)

David Handly and his team at FFA (www.farmersforaction.org) are receiving calls expecting them to take action against Tesco’s promotion of Fresh & Lo offer at 25p litre.  David asked us to post the following notice on our website “FFA believe there is a need to show Tesco how strongly farmers feel about their milk being under valued and discounted below cost. But FFA are only prepared to take action if farmers are united and enthusiastic in joining us.  The big question is how many farmers are prepared to do something, as opposed to sitting back and watching?"  David will gauge support according to how many emails he receives at davidhandley@farmersforaction.org or by text to 07711 194947.  No emails no action!

And if you are not taking any action at least buy as much discounted Fresh & Lo and email your order confirmation to David and Ian to show you have played your part.

 

 

Wisemans Fresh & Lo reduced to 50p for 2 litres in Tesco stores (5th December2008)

This time Tesco have just gone one step to far with its latest offer of Fresh & Lo at a ridiculous 50p for 2 litres which is half the price of its previously discounted rate of 99p. In a matter of weeks we have seen Tesco lead the charge reducing 2 litres of Branded milk to less than farmers are paid for the milk.  Farmers have even suggested buying up all the 50p milk and pouring it back into the tank and selling it back to Tesco at 28.75ppl.

Without doubt their promotion must prompt an instant reaction from farmers before all other retailers attempt to follow Tesco’s lead.  Perhaps the best idea is for every farmer to ensure every litre of Fresh & Lo at 25p is purchased.  With approaching 2 million litres day of liquid milk coming from Northern Ireland and a slug of it ending up in Wisemans factories is it time for action?

We spoke to Martin Bell a lifelong doorstep man who was not only concerned for his own round but also for hard pressed Dairy Farmers and asked one simple question “why do Tesco continue to pick on milk, is it a soft target?”  

 

All Eyes on Next weeks Milk Auction (5th December2008)

Prices having plummeted to average only 17.3ppl at last months milk auction in Northern Ireland there will be huge

interest in the next auction (18th).  Results will be posted on our website during Thursday afternoon.  There is talk

of world commodity prices bottoming out and stabilising so all fingers will be crossed for the Auction.

 

DFB under attack as they try to steady the ship (5th December2008)

DFB have held their first two meetings in Cumbria, which are part of a very comprehensive set of around 50 meetings aimed at reaching all members.  Pleas for the management to be given more time are not being well received.

Meanwhile the DFB legal team has issued a circular letter to at least six other milk buyers which is accused of being impersonal and does not state who should be contacted or who the author is.

At least Dairy Co have told the DFB story as it is in its latest Datum bulletin.  Dairy Co comment-  This will see the

annual average price for November on the DFB liquid contract at 23.26ppl which is about 3ppl below the majority of

liquid contracts.

The cuts are worth around £24million year to DFB, assuming they maintain their current volume.

DFB has had an avalanche of notices since the announcement last week but the reality is if those who have served

notice expect that in 12 months time they will be supplying DFB they are in fantasy land.  In fact we would go as far as to

say DFB will be forced to do a deal with one or more of its divisions in less than 12 weeks.

 

Dairy Crest Shares continue to head South (5th December2008)

Despite the intervention of 6 of Dairy Crest’s Directors into the share market to bolster its share price at around £2 share

city confidence is far from positive with Dairy Crest shares hitting an all time low of £1.67 this week before recovering

slightly to reach £1.73 today.  Todays price represents a fall of 77% from their peak of £7.40 on the 31st July 2007.

 

NFU in the firing line with selective press releases (5th December2008)

Late on the day Dairy Farmers of Britain issued a trading update together with a 2ppl backdated milk price cut worth

almost £24million to its faithful producers came an NFU press release headed “NFU getting in the festive mood” claiming

the NFU is spreading some seasonal cheer!  The NFU’s legal team together with our office are certainly not in the festive mood having been overwhelmed with DFB members seeking legal advice and clarification as to where they stand and what action they can take.  Equally it has not gone unnoticed that the NFU saw the necessity to issue one of the most damning press releases criticising Dairy Crest. In particular the NFU sights were aimed at Arthur Reeves and Mark Allen, for cutting their organic price by 4ppl worth on estimated £2.5million but the NFU have yet to issue a press release criticising the mismanagement of DFB.  This is hardly a consistent approach and looks like a further personal attack from the NFU on Mark Allen.                      

 

First Milk launch 3 month notice, no capital contributions direct supply contract (5th December2008)

First Milk has commenced an aggressive recruitment campaign with a brand new contract which will appeal to a number of farmers especially

disappointed DFB members who still believe in co-ops and want to research what First Milk have to offer. First milk are

initially seeking producers in North Wales, The Midlands, North West and North East with key tempting features

including only 3 months notice, no capital contributions, no joining fee and a simple payment scheme which gives a

1million litre standard litre price (4% B/F and 3.3% protein) of 26.3ppl. This offer joins current offers from Arla, Wiseman and Meadow Foods all of whom are selectively picking off producers. Wisemans report exceptional interest from potential new members as do Meadow Foods, Arla and Charlie Payne.

 

Christmas Cheese Ceremony with the Chelsea Pensioners (5th December2008)

This week Ian attended the 49th Ceremony of the British Christmas Cheeses organised by the Dairy Council at the Royal

Hospital, Chelsea.  The event kick starts the build up to the Christmas celebrations in the impressive setting of the Grand

Hall amongst esteemed military men whose stories make you feel very proud and humble and whose average age is 84

years old.

Chairman of the Dairy Council Barry Nicholls (retired Milk Link Chief Executive) presided over the cutting of the

Ceremonial cheese with one of the more senior pensioners Bob Costley age 95 who Ian had the pleasure of sitting next

to at lunch.  It was a fantastic display of British cheeses from Cornwall to the Isle of Arran and Snowdonia to

Northumberland.  One notable absentee was the NFU of England and Wales.

 

First Milk Break new ground with on line interview (5th December2008)

Whilst DFB are drowning in dirty water over its communications (note no DFB weekly gospel of good news this

week presumably because they had no good news) First Milk has released an on line video containing interviews at last

month’s AGM conference with its chairman Richard Greenhalgh, vice chairman Robert Shearlow and chief executive

Peter Humphreys.  To listen to the interviews log onto   http://www.moviespring.com/firstmilk/

 

Single Farm Payment money flows into Scotland and Wales on first Day  (5th December2008)

Close to 14,000 famers in Scotland received their 2008 single farm payment money on Monday 1st December

worth more than £200 million with a declared target that at least 95% (20,200 farmers) will have received £427million by

the 31st December.  The Scottish secretary for Rural Affairs Richard Lockhead commented “ This Government is pulling

out all the stops “ and “prompt payment will help ensure our producers are in a strong position going into the year ahead”.

 

The Welsh Assembly. (5th December2008)

Succeeded in paying £183million on the 1st December to 82.5% of Welsh Farmers with the aim to pay as many of the others as possible by Christmas

Meanwhile in England no payments have been made and the RPA will not commit to a start date but they hope to pay a

Significant number of farmers by the end of the March 2009.  It’s the price farmers pay for a complicated system. 

 

5 February/March in calf Holstein Heifers.  Good heifers in calf to Pedigree Hereford Bull £1000 each ono location Ashbourne, Derbyshire.  Contact Joanne at the office  email joanne@ipaquotas.co.uk  Tel 01335 324594  

 

 

Black Friday as 2ppl drop makes DFB the first UK milk buyer to drop its milk price (28th November 2008)

- DFB members will be mourning more bad news today as the co-op announced a back-dated price cut of a whopping 2ppl from 1st November.  This means DFB were the last major milk purchaser in the UK to raise its price to 25p and it is now the first to drop its price below 25ppl to 23.5ppl for a standard litre.  DFB suppliers were told in the first week of November 2007 they would receive a 1.5ppl price increase to take effect from 1st December 2007, which would take their standard litre price to 25p.  Now they have been told on the 28th November that they will have a back-dated 2ppl decrease covering the whole of November’s milk.  Last to the table and first to finish and their 25ppl milk price didn’t even last for 12 months.  It comes at a time when other cheese processors are battling to hold prices.  Let’s hope it’s not a case of if DFB sneezes everyone catches a cold?

 

 

DFB axes almost 33% of its workforce as almost 700 jobs go and 2 ex-ACC factories close (28th November 2008)

 – The co-op has also announced major surgery with the closure of both its Fole (246 jobs) and Portsmouth (186 jobs) dairies in February, both of which process liquid milk, plus other depots. This will be a huge disappointment to DFB members, whose 2ppl cut goes to pay for some of this, but an even bigger disappointment to almost 700 members of staff who went into work today to learn that they will lose their jobs and that the factories they have worked so hard for are to close.  It’s the worst Christmas message they could possibly receive.  A number of jobs will go from DFB’s Nantwich and Blaydon offices and will be at senior management level.  The Union for Shop Distributive and Allied Workers has today demanded urgent talks with the co-op.  The remaining farmer members, will be looking for some positive confidence boosting news soon because it is sure to be rock bottom now.

 

Where has it all gone wrong for DFB? (28th November 2008)

Some members suggest the problems started when John Loftus came onto the scene with his plans and that he is getting away scot-free as one of the architects of the current position.  Others are pointing the finger at the effectiveness of John Loftus’ successor Stephen Yates, who has been in the position for more than two years. However, the purchase of ACC’s liquid milk business and factories in August 2004 for a mouth watering £75million and subsequent investment of £34million in the plants to meet the expectations of both management producers and Tesco is where things really started to go wrong.  It was common knowledge that ACC had a for sale board outside the business.  Robert Wiseman and Dairy Crest at the time commented they were not prepared to pay even a third of the £75millon DFB paid. Alan Hinton and ACC have laughed all the way to the bank. At the time Robert reportedly commented that if he did buy the factories he would close them all down and it is known that on a tour of the ACC factories he didn’t even get out of his car at one site.

Having paid the money over DFB almost instantly closed LLangadog, followed by Whitby, Cardiff and now Fole and Portsmouth. 

In August ‘08, when he spoke to Andrew Cooksey and Mark Strickland about DFB’s annual results. Ian specifically commented that the co-op had significant surplus liquid processing capacity compounded by the recent loss of 50million litres of the CTRG contract to Wisemans.  Ian stated “you will have to close at least one factory”. The response was “we will mothball before we shut capacity down”.  Three months later and two factories are to be closed.

 

Does anyone believe DFB’s “Gospel of Good News?” (28th November 2008)

Recent member communication smacks of insulting the intelligence of farmer members.  I quote David Johnson of Warrington: “Whilst there are always risks in a free market, they’re skilfully managed by professionals” and “With an excellent team in place I can see things getting even better” .He was in the know then!  Then we see the latest issue of Talking Points, DFB’s glossy monthly version of The Gospel of Good News, where Lancashire farmer John Alpes says “The decision to join DFB from the beginning didn’t tax him at all.”  Ian bets it is taxing him now. Talking Points also had a lead article which opened with the claim that “Green issues continue to top the agenda in the dairy industry”. They certainly do – but only on how green (as in sick) DFB members must be feeling now.

 

Is this the beginning of a new era for DFB or the beginning of the end? (28th November 2008)

One reader commented today “As a DFB member you feel heads we lose, tails we lose.”  However, Ian believes that today’s announcement that DFB will be split into separate liquid and cheese operations is directly linked to a confidence -boosting recovery plan. This could see the two divisions sold to larger operations, which if successful, should restore some member and employee value and confidence. However, with its liquid dairies reduced to Lincoln, Bridgend and Blaydon it must surely signal the end of DFB’s love affair with its flagship contract, Tesco’s Localchoice.  Ian sees that as a positive because other than DFB trumpeting the fact they have a liquid contract with Tesco the deal is haemorrhaging money at a ridiculous rate each month, as it has done since 2007.

 

And now some plaudits (28th November 2008)

Credit must be given to DFB’s caretaker chairman John Granchester who has wasted no time in taking decisive action in sharpening his surgical instruments and using them. He has not ignored the problems and correctly decided it’s best to take the pain and the medicine now. From Ian’s point of view he has also triggered a complete turnaround in DFB’s communications and his openness and honesty should be welcomed. He won’t be popular with DFB members for the price cut, and, yes, he has been on the Board for several years, so, like other Board members, shares in the responsibility of where DFB is now, but at least he is doing something radical to address the problems.  Let’s hope that now the Board is free of Rob Knight and has some new blood in it that it succeeds in cutting the DFB cancer out.

 

David slays Goliath as Arla are thrashed in their court battle against David Barnes & Co (28th November 2008)

All too often grass roots dairy farmers are intimidated into submission by big powerful businesses and farmers have neither the time, enthusiasm, fire power or funds to defend themselves against the giants. Now we can report a real life David and Goliath story as Judge Evans - Lombe delivered his verdict following a High Court hearing two weeks ago which saw the mighty Arla take on David Barnes & Co. Whilst the Bearded Wonder fell victim to Arla’s lawyer’s fury a couple of years ago when he resisted threats of huge court fees, which all proved to be a lot of Browne Jacobson huffing and puffing, Barnes was taken all the way and must be given full credit for staying the course and winning.  Ian will be dissecting what the outcome means for dairy farmers and processors in his December Dairy Farmer article. In the mean time, three cheers to David and his team for standing up to Arla. Interestingly back in early November 2007 it was Arla who made the high court challenge very public by issuing a press release. Now the verdict has been given they are reluctant to say anything: their joint statement comments that “all parties regard the matter as closed and will not be making any further comment”. They might not, but Ian will for the greater good and benefit of all.

 

But how did Arla let an old man like Peter Walker go so far? (28th November 2008)

The question which Arla suppliers and all the industry should be asking is why Peter Walker, a retired Arla employee on a pension and bus pass, was allowed to take this case so far, racking up what must be at least a £500,000 bill for Arla when at the outset Arla advisors conceded their changes of success were around 25%. Perhaps with the High Court being so close to the Tower of London a visit to the Tower should have been made.

 

Will Arla producers be expected to pay the £500,000 bill? (28th November 2008)

Ian estimates that the costs will be around £500,000, based on a case that he was potentially involved with on milk quotas.  The worry for Arla Milk Partnership suppliers is that, with or without their knowledge and consent, they will foot the bill for the spectacular failure. If this happens it will be viewed as a final dose of medicine from the not remotely missed Mr Walker to his producers.

 

What are the consequences for the industry (28th November 2008)

This is the area Ian will be commenting on in his next Dairy Farmer article but the outcome of this case will have every milk purchaser in the country studying the detail knowing that any producer who is unhappy with their milk purchaser could attempt to follow in the footsteps of Barnes & Willes, which will have one or two of the currently less popular milk buyers bricking themselves.  The consequences are huge for those milk buyers who are unpopular, foolish, arrogant or fail to pay a fair market related milk price as the temptation for farmers will be to leave as soon as the milk cheque is been paid, regardless of notice.

 

Promar not tooled up to deal with Tesco costings (28th November 2008)

As predicted in this bulletin in September, Promar have insufficient staff to cope with the influx of farmers wanting to join the Tesco cost tracker and have written to dozens of farmers promising to be in touch “in the next few months”.  However, all farmers involved will receive the 0.5ppl bonus, which we hope is automatic.

 

Shock as NFU accuse Dairy Crest of mis-management  (28th November 2008)

A press release from The English & Welsh NFU headed “Farmers left to pick up the cost of Dairy Crest mis-management” left readers in no doubt what it thought over DC’s 4ppl 1st December organic milk price reduction, which, incidentally, came out more than a week after the announcement. The release firmly kicked Mark Allen and Arthur Reeves in the goolies, using phrases like “an embarrassing lack of strategy” and “a huge lack of foresight”. One interpretation is that the NFU’s unnecessary intervention amounts to a personal attack on Arthur Reeves and Mark Allen (can’t be anything to do with Dairy UK, surely?) and all eyes are now focussed on the NFU press office to see if they issue similar critical press releases.  It isn’t as if Dairy Crest haven’t enough problems to deal with e.g. collapsing share price, general milk supply problems, plant closures, loss of prime cheese contracts, redundancies, etc, etc.

 

More imported cattle brining Blue Tongue to UK (25th November 2008)

Once again imported animals from France are brining Blue Tongue in to the UK clearly failing any pre movement tests. This time it appears 9 cattle arrived at a farm near Garstang, Lancashire last week and 6 have been culled today of which 5 at least carried Blue Tongue.

 

David slays Goliath as Arla are thrashed in their court battle against David Barnes & Co (24th November 2008)

All too often grass roots dairy farmers are intimidated into submission by big powerful businesses and farmers have neither the time, enthusiasm, fire power or funds to defend themselves against the giants. Now we can report a real life David and Goliath story as Judge Evans - Lombe delivered his verdict following a High Court hearing two weeks ago which saw the mighty Arla take on David Barnes & Co.

 

Whilst the Bearded Wonder fell victim to Arlas lawyers (Browne Jacobson) fury a couple of years ago when he resisted threats of huge court fees which all proved to be a lot of Browne Jacobson huffing and puffing Barnes was taken all the way and must be given full credit for staying the course and winning.

 

Ian will be disecting what the outcome means for Dairy Farmers and processors in his December Dairy Farmer article. In the mean time cheers to David and his team for standing up to Arla. Interestingly back in early November 2007 it was Arla who made the High Court challenge very public by issuing a press release. Now the verdict has been given their joint statement reads, “all parties regard the matter as closed and will not be making any further comment”. You might not want to comment but Ian will for the greater good and benefit of all.

 

But how did Arla let an Old man like Peter Walker go so far? (24th November 2008)

The question which Arla suppliers and all the industry should be asking is why Peter Walker, a retired Arla employee on a pension and bus pass, was allowed to take this case so far racking up what must be at least a £500,000 bill for Arla when at the outset Arla advisors conceded their changes of success were around 25%. Perhaps with the High Court being so close to the Tower of London a visit to the tower should have been made.

 

Will Arla producers be expected to foot the bill? (24th November 2008)

The worry for Arla milk partnership suppliers is that with or without their knowledge and or consent they will foot the bill for the spectacular failure. If this happens it will be viewed as a final dose of medicine from the dearly loved Dr Walker to his producers.

 

 

What are the consequences for the industry (24th November 2008)

This is the area Ian will be commenting on in his next Dairy Farmer article but the outcome of this case will have every milk purchaser in the country studying the detail once the judgement is made public all of them will realise that any producer who is unhappy with their milk purchaser could attempt to follow in the footsteps of Barnes & Willes which will have one or two of the currently less popular milk buyers bricking themselves. Only time will tell whether any farmers are keen enough to follow their lead.

 

So it’s a warning in flashing red lights for those milk buyers who are unpopular, foolish, arrogant or fail to pay a fair market related milk price.

 

Northern Ireland's Milk auction continues to plunge south with an average of 17.3ppl.  (21st November 2008)

The news from United's monthly milk auction plunged to new depths but certainly reflects the current low value of milk if it is destined for butter and SMP. Thursdays auction saw only 17 million litres on offer compared to 48 million a month earlier, but still prices fell from their shocking October average of 18.03ppl to 17.3ppl so even a 65% drop in the volume offered failed to arrest prices. However the price is higher than some of the more gloomier pundits were predicting. Given the time of year this is especially worrying and prices are actually below intervention prices.

 

Only 12 months ago the same auction saw 39 million litres sold for an average of 29.58ppl.  According to DIN the Irish Dairy Board has cut its butter price to the lowest seen for more than 20 years and at a price of euro 2,050 tonne is half the record price set a year ago. Similarly its SMP price is the lowest for 15 years.   

 

Paynes announce what is likely to be the final milk price increase of 2008 (21st November 2008)

Just when we assumed all milk price increases for 2008 had finished, up pops Yorkshire's answer to Santa Claus in the form of the jolly face of Charlie Payne with the announcement of a backdated increase achieved from a combination of volume related bonus and sensible SCC deductions. As a result a typical 1 million litre Payne supplier from November 1st will receive 27.4ppl which is certainly a top end price without the costly hurdles having to be jumped with other retail contracts.

 

The changes, whilst benefitting all Paynes farmers, with everyone a winner, are clearly targeted at the larger producers and will immediately stop in their tracks those farmers who are thinking of defecting . The most appropriate comparison for the new changes is Arla's standard contract scc and volume bonuses.

 

Comparing the scc adjustments there is a huge gap between Arla and Paynes, especially in the 301 plus bracket where 301-350 sees Arla deduct 3ppl (Paynes – 1ppl) and 351-400 Arla deduct a whopping 5ppl (Paynes – 1.5ppl). Bonuses Arla 8001 – 1200litres 1.90ppl (Paynes 1.80ppl)

 

Dairy Crest shares crash below £2.00 (21st November 2008)

Dairy Crest share prices continued to fall this week as some city analysts have declared the shares “should be avoided”. The price today is £1.93p, with the weekly low being £192.75p.

It has also been delivering the bad news to its organic producers this week. Their price is coming down  4ppl due to over supply because demand is falling during the credit crunch.  

 

Milk link takes DC cheese scalp (21st November 2008)

The volumes of cheese Waitrose sells may not be as high as for other retailers, but its quality badge will be second to none. But this week Milklink announced in its trading update that it had won the contract to supply Waitrose from October 2009, with the cheese to be made at Taw Valley. Given Davidstow's quality pedigree it is a big scalp for the co-op to win.

As if to rub it in to DFB members it has also posted positive half year figures again with group profit before tax (before interest paid to members and exception non-cash costs) increasing by 24% to c.£9.3m and group turnover increasing by 18% to £278m.

 

CUMBERLAND & DUMFRIESSHIRE FARMERS’ MART PLC. Monday 1st December Christmas Show & Sale of Dairy Cattle at 1pm To include:  Dispersal of 20 Freshly Pedigree Calved Cow & Heifers, 20 Dry Cows Calving Jan/Feb to AA/Nor Red,  8 BW Bulling Heifers (12mo)from BQ Farms, Thornhill. Also from various local farms, 6 Freshly Calved Ayrshire Heifers & Cows, 10 Freshly Calved Fri/Hol Heifers, All from TB Free area. More Dairy Cattle Required. For Further information please see their website nearer the sale date.  E-MAIL- Dumfries@auctionmarts.co.uk WEBSITE - www.cdfarmersmart.co.uk

 

 

It all goes sour as Dairy Crest shares tumble to all time low of£2.07today.(14thNovember 2008)

The city reacted sharply to Dairy Crest’s profits warning and its shares fell from a close of £3.30 last Friday by37% to open at £2.07 today reducing its value from £439m to only £274m. Mark Allen’s difficulties chairing Dairy UK pail into insignificance and take a back seat when you run a business which sees £165m wiped off its value in 7 days. His reign at Dairy Crest could be under serious threat unless share value is restored and if the solution is to cut ex-farm gate milk prices DC will face even more disgruntled farmers than it currently has. It just goes to show the pain of the current market conditions is being shared by several businesses and although DFB have issues they have not seen £165 million wiped off their share value in a week! The Dairy Crest warning came only one working day after a similar warning from Wisemans whose shares appear to have stabilized around £3.18today.

 

Exchange rate reaches new heights of 86p to the Euro (14thNovember 2008)

Every little helps and the news that the Euro exchange rate today hit 85.61 is helpful (£1 =€1.162). This must help keep a few more tonnes of cheese and foreign milk out of the mainland.

 

Another record as average farm gate milk price hits27ppl(14thNovember2008)

The current DEFRA ex-farm gate milk price for September was 27.03ppl, up on the previous month’s average of 26.3ppland a new UK record.

 

Tesco go for cheap German & Irish cheese(14thNovembers2008)

Tesco have concluded their cheddar cheese contracts and whilst Kerrygold are the contract winners there is growing evidence that some of its requirements will come from Germany via a third party broker. Not a lot of support for either British dairy farmers or the Little Red Tractor from the retail giant.

 

Seismic change sat Dairy Farmers of Britain all within 7 days(14thNovember 2008)

No one could accuse DFB of rushing into any knee jerk decisions but the last 7 days has seen several changes. Chairman Rob Knight has finally gone having had almost 5 years to steer the good ship  DFB on course to profit and having failed miserably. The caretaker chairman will be John Grantchester who will at least give some comfort and confidence to members that the job is in safe hands. At least he will not rack up£400 a bottle wine bills whilst out on company business. But DFB needs a white knight and quickly. The past 7 days has also seen its Commercial Director, David Potts, and its finance guru, Philip Moody, exit. Smith Williamson Corporate Finance Ltd (S&W), of which Moody is MD, and Moody himself, will both miss the huge chunk of money DFB have paid them each year.

The latest version of DIN points to Moody having beenpaid£147,000 by DFB in the past two years “which is rather high for a non-executive director”. In addition, S&W were paid more than£1 million in the same two years making a Moody &Co grand total of£1.2million which is two thirds of the money members should have received as an interest payment last month. DFB has actually lost both its chairman and vice chairman in the space of 7 days with confirmation that David Wilkinson was ousted in favourof council member, Roger Taylor. The official line is that whilst Taylor contested the job he is unable to devote the required time to it until February so Wilkinson will stay on for 3 months to give continuity. One possibility must be for Roger Taylor to be parachuted into Rob Knight’s job as chairman assuming he wants the job.

 

So what do others think of Knight’s departure and DFB's communication?(14thNovember 2008)

Never before has Ian seen fit to quote word for word an article written by another commentator, however, for the benefit of all dairy farmers, in particular Stephen Yates, Chairman of DFB Council, below is an extract from milkprices.com. The article reads:

Chairman since 2003, Knight said: “Dairy Farmers of Britain has made huge progress in the last five years, transforming from a small milk broker into a major dairy processor. But the dairy industry is constantly changing and DFB must also adapt if it is to prosper in the future. As the business moves into a new phase in its development it is therefore an appropriate time for me to hand over the reins.”

 

Comment:  Mp,com has sat patiently on the sidelines while speculation has been rife regarding Rob Knight’s departure. But we cannot let him go without a few parting comments. To come out with such a departing quote would be a joke, if only it weren’t so serious with the millions of pounds of hard-earned farmers money at stake in the business. While he walks away having been paid vast sums of money, well over£1m since 2003,he leaves a business that everyone in the industry knows to be struggling. To Mp.com it smacks of arrogance that he feels he can leave with his head supposedly held so high. Firstly, DFB was never a small broker, when Zenith merged with The Milk Group in 2002/03 it had 4,250 members with 2.4bnlitres. Admittedly, national producer numbers have declined but today DFB has around2,000 members and 1.4bnltrs, that’s not growth in our book. Then to claim the company is a major dairy processor, well, we’re not going ‘rabbit on’ everyone knows the company’s processing, but you can hear other UK major dairy companies having a snigger over this one. ‘Handing over the reins!’ We suspect it’s more ‘had them taken from him’, with the DFB Council probably having played a major role in the orchestration. To appoint an interim Chairman in the capable hands of Lord Granchester, only serves to highlight recent developments have move apace, not allowing the opportunity to appoint a new Chairman in the appropriate manner. This website has never criticized DFB and never will, but we feel we cannot let the outgoing Chairman, who has overseen DFB into the position the business finds itself today, get away with comments that portray such a false picture of all being well. What is needed now is for C/E Andrew Cooksey and his team to be left alone to get on with the tasks in hand, and do the best job for members which ever route the business finds it has to take in the future.(Nov 13 2008) 

 

As for today's article in the Farmers Weekly, to be fair to its author he tried to get hold of anyone and everyone employed by DFB to comment but they all successfully avoided him and then shout when the article comes out very negative.

However, in British Dairying there is an excellent article written by Chris Walkland, which accurately sums up DFB’s history and current situation, which should be compulsory reading for all DFB members and management.

But still DFB try to pretend they don't have a communication problem. They do and its got to change. The one thing Ian does agree with milkprices.com on is that Cooksey now has to get on with the job only this time without one hand tied behind his back by Rob Knight. Commeth the hour, commeth the man, only time will tell whether he is that man when he is given the rope.

 

Big sale of6,000tonnesofcheese(14thNovember2008)

This week a reported 6,000tonnesof mild cheddar have been sold by DFB to Wyke Farms and Kerrygold. It’s a significant volume of cheese to sell in a week in what is a very weak and fragile market.

 

DFB now faces its toughest challenge(14thNovember 2008)

in restoring confidence to members and demonstrating it has a workable recovery plan. Members contacting Ian this week have by and large written off their capital retentions and are now worried whether they will receive their milk money in full. Well for those who are having sleepless nights of DFB’s ability to pay more than£30million out on Monday I would take a chill pill because I feel confident this month you will be paid in full and on time. The Farmers Weekly is suggesting that DFB could be on the brink of going into administration. Ian has certainly not heard that word mentioned and on the basis DFB are margin managing the business they will simply just have to cut member milk price if absolutely necessary.

 

Milk production continues to head south(14thNovember2008)

More bad news for processors but potentially good news for producers comes in the shape of the October production figures which at just over 1 billion litres(1.0145bn) was 27 million litres down on October 2007. This leaves cumulative production for the first 7 months of the year at 7.6522 billion litres down 197 million litres on 2007.

 

Wiseman, Meadow & First Milk seek new producers(14thNovember2008)

Wiseman has announced a series of 4 courtship meetings with potential dairy farmers in Lancashire, Chester, Shropshire and Staffordshire later this month. The plan is to select favourable producers within Wisemans existing milk fields. Meadow, Arla and First Milk are also known to be seeking new producers in the same areas as well as Cumbria.

 

First  Milk director for the chop partly due to the electricity deal(14thNovember 2008)

Carmarthenshire dairy farmer, Richard Twose, will replace Richard Davis on the board of First Milk for a 3 year period. Davis has spent 7 years on the board of First Milk and never contemplated being evicted but there is no doubt that as chairman of First Milk’s producer buying operation he stands accused of getting the 1stOctobergroup electricity purchases wrong only days ahead of a global drop in energy prices. A reminder that the buck stops with the chairman.

 

96 jobs axed by First Milk(14thNovember 2008)

More job cuts as First Milk responds to the need to cut costs as a result of Dairy Crest transferring its cheese packing to its new factory at Nuneaton away from First Milk at Maelor. The Dairy Crest business accounted for 40% of the Maelor throughput.

 

It’s a week Dairy Crest will want to forget as Johnny Rotten’s butter is recalled(14thNovember 2008)

If a collapse in its share price wasn’t enough, Dairy Crest is having to recall batches of Country Life spreadable butter due to rubber contamination. The butter is promoted by Johnny Rotten and one joke already circulating is that the rubber contamination could be as a result of a Johnny in the milk. On top of all this Dairy Crest is making 100 staff at its Surrey HQ redundant to add to the 215 previously announced at Nottingham.

 

Profitable year for another farmer’s co-op(7thNovember 2008)

Northern Ireland’s United Dairy Farmers co-op has released its end of year results for the year to31stMarch. Profit after tax was£2.3m on borrowings of only£21.7m. All achieved with a staff of780 and on the back of being highly dependent on exports. The co-op has2110 supplying farmers delivering 1.053 billion litres, which is less than 500,000litresper farm on average. These farmers will receive a share of a£500,000 bonus in the form of bonus shares.