IAN POTTER ASSOCIATES
11th April 2014
Specialist Agricultural Quota & Entitlement Brokers
Telephone 01335 324594 Fax 01335 324584
Website www.ipaquotas.co.uk Email sales@ipaquotas.co.uk
Today
Last Week
Clean
ppl
Producers 10,362
in E & W
1.25ppl
10,382
£:$
£:€
Crude Oil
Wheat
Soya meal
£1.66
£1.21
£106.50
£168
£388
£1.68
£1.21
£107
£170
£378
Change
Issue No. 765
4 Weeks Ago
1 Year ago
-20
0.2ppl
10,382
0.10ppl
10,681
+0.02
+0.50
+0.02
-£10
£1.66
£1.19
£108
£170
£405
£1.54
£1.18
£103
£202
£385
(Commodity and currency prices – source BOCM Pauls)
The figures we quote are www.milkprices.com whose standard litre is: 1 million litre producer on EODC collection, 4% butterfat, 3.3% protein,
200,000/ml SCC, 30,000/ml Bactosan. It excludes any capital retentions or AHDB levy.
Milk Quota Available (Sale)
Litres Available
1,500,000
1,000,000
178,849
470,000
Butterfat %
3.84%
3.90%
3.96%
4.03%
Price
2ppl
2ppl
2ppl
2ppl
Milk Quota Available (Lease)
Litres Available
500,000
Butterfat %
4.03%
Price
2ppl
March milk production weighs in at a hefty + 12.1% excluding butterfat adjustment
Oh dear, Oh dear March milk production has been provisionally calculated by the RPA to be 1.246 billion litres
representing an increase of 135 million litres (+12.1%) on that recorded in March 2013.
If that wasn’t enough Dairy Co’s weekly UK production figures for the two weeks ending 29th March 2014 averaged
14.8% more or 5.3m litres a day above the same period in 2013. Note, to put this into perspective production was hit by
the late dump of snow in late March 2013.
Taking GB on its own the daily increase recorded is an eye watering + 15.6% and these figures are calculated to a date 7
to 8 weeks before we hit the GB peak daily production.
The provisional 2013/14 end of year UK production stands at 13.67 billion litres up 5.4% on 2012/13.
With total UK wholesale quota for 2014/15 standing at 15.293 billion it means to hit quota and trigger a super levy we
have to produce on average 11.87% more milk this year to fill the 1.62 billion litre shortfall.
The only certainty is that April production will make a hole in that 11.87% trigger with production for the month well above
the March 12.1% uplift and could even be 15% plus up on April 2013 production.
Note, all of these figures completely ignore butterfat adjustment which has gone off the radar, however, given at 31 st
March 2014 the UK was 5 points over its national butterfat of 3.97% a trigger has to be factored in. For 5 points this
would take a further 137.6 million litres of the National Quota of 15,293 billion litres.
Time to get the calculators out and carefully follow the numbers but no need to get the prayer mats out just yet.
Understandably, producers who have little or no quota are in the market fearing their milk producer will withhold their milk
cheque once they exceed any quota. Others believe it’s too close to call and intend to take quota as insurance.
The super levy for 2014/2015 quota year is 27.83 Euro cents per 100kg (approx. 23ppl).
0.49ppl milk price increase for Tesco/Parkham Farms cheese suppliers – from 1st May
All views expressed in this bulletin are those of Ian Potter Associates and a shed load of dairy farmers. It is necessarily short and cannot deal with the various
issues that arise in any detail. As a result it must not be relied on as giving sufficient advice in any specific case. Every effort has been made to ensure the
accuracy of the content but neither Ian Potter Associates nor Ian Potter personally can accept liability for any errors or omissions. Professional advice must always
be taken before any decision is reached
At a time when production is rocketing the news that Tesco is to pay an extra 0.49ppl to its cheese supplying farmers is
be very welcome news and should put a sunny smile on all Parkham Farms Tesco suppliers’ faces.
This takes their www.milkprices.com standard price to a healthy 34.25ppl and includes the additional 0.2ppl for the Tesco
Welfare Code cost plus 0.5ppl for involvement in the Promar costing’s. If you factor the price into www.milkprices.com’s
manufacturing standard litre it comes out at 35.74ppl.
Correction to last week’s Tesco TSDG price adjustment
Last week we reported that the new Tesco TSDG Cost of Production had reduced by 0.88ppl to a 31.93ppl plus 0.5ppl for
the Promar costing’s. Having examined the 1st November 2013 Tesco TSDG COP it is clear it was 33.29ppl plus the
Promar 0.5ppl so the reduction is actually 1.36ppl not 0.88ppl.
Prices continue to weaken
Figures from Holland confirm that Dutch WMP and SMP powder prices have fallen for the past seven consecutive weeks.
During this period WMP prices have dropped by 8.5% and SMP prices by 11.6%, however, butter prices have more or
less been a stand on for the past three consecutive weeks.
All eyes will be on the results of next Tuesday’s GDT auction where more SMP tonnage will be on offer than two weeks
earlier.
Meanwhile, spot prices for milk with no home has weakened to between 22-24ppl.
Dairy Crest formula contracts uptake
Dairy Crest has two liquid formula contracts on offer this year and 160 producers with 110 million litres of milk have
signed up part or all of their production. This compares to 175 producers with 120 million litres that were attracted to the
original DC contract a year ago.
Of the 160 who have signed up, 35 are new to formula contracts.
with the rest going for the improved core formula contract.
The new simplified contract attracted 30 producers
One interesting change introduced by DC this year is from one April formula contract start date to four during the year in
April, July, October or January.
The core formula liquid contract standard litre price is 32.75ppl (www.milkprices.com)
The simplified formula liquid contract standard litre price is 32.56ppl (www.milkprices.com)
DC suppliers have the opportunity to sign up to one of these contracts during 2014/15 as indeed do any new recruits.
The next window runs until 1st July commencement date.
50% increase in the Fat Tax
Arla Foods have announced a 50% increase in its butterfat reconciliation for its GB AMCO co-operative members from 1st
May increasing from its current 0.5ppl to 0.75ppl.
The reconciliation (AKA the Arla Fat Tax) is an across the board deduction as Arla progress down the route to one
common Arla EU payment model.
The estimated value of the 0.75ppl reconciliation based on 3 billion litres is £22.5 million, which farmers are losing until
butterfats are improved.
No more gardening or full time farming for Peter Kendall
It was possibly one of the worst kept secrets in agriculture but now it is official that Peter Kendall is the new Chairman of
the AHDB from 1st April for a three year term.
So it took him less than 5 weeks from leaving his successful NFU Presidency role to the new appointment. Not very long
to be at home in Cambridge farming or gardening.
All eyes will now be on who will be appointed to succeed Tim Bennett as DairyCo Chairman with short odds on
Englishman taking the position this time around.
Lots of unanswered questions as cow fixing issue is closed
The Great Yorkshire show issued a statement this week, as follows:
All views expressed in this bulletin are those of Ian Potter Associates and a shed load of dairy farmers. It is necessarily short and cannot deal with the various
issues that arise in any detail. As a result it must not be relied on as giving sufficient advice in any specific case. Every effort has been made to ensure the
accuracy of the content but neither Ian Potter Associates nor Ian Potter personally can accept liability for any errors or omissions. Professional advice must always
be taken before any decision is reached
“The outstanding issue relating to allegations of tampering with dairy cattle at the 2013 Great Yorkshire Show has been
resolved. The Exhibitors concerned have withdrawn their Appeals. By mutual consent, they will not be exhibiting at any
future Great Yorkshire Shows.”
The statement ends a nine month investigation involving the Great Yorkshire Show, two exhibitors, lawyers, a Holstein
cow and a Jersey cow following allegations of fixing at last year’s show, which were exposed by vets attending the show.
Ian emailed the show requesting answers to the following questions:
“I have received and studied your brief statement in relation to what happened at last years show.
I have a few questions I hope you will be able to respond to fully.
When you state the exhibitors will not be exhibiting at future GY Shows do you mean the cattle owners and/or the
handlers?
I would just like to be sure who will not be exhibiting and given the fact one of the cows involved was allegedly in multiple
ownership its looks complicated.
Having said that it was the owners who took legal opinion and embarked on a lengthy legal exchange of correspondence
with the GYS so I guess it could be them who will not be showing in future.
Whilst the press release does state Exhibitors can you confirm the incident’s at the 2013 GY Show were confined to two
dairy cow Exhibitors one of whom showed Jerseys the other showed Holsteins.
Finally what has happened to the prizes and prize money these animals won in the ring at the show. Have they been
stripped of both or allowed to retain them.
Hope to hear from you and I am pleased to see the GYS did not back down
Regards”
Unfortunately the Yorkshire Show refused to answer any of the questions, which one presumes is a term of the deal and
the legal truce.
So the show and its gritty show Director Bill Cowling have done a deal whereby the litigious exhibitors accused of fixing
have withdrawn their actions and effectively conceded. In addition it looks like the exhibitors involved have been banned
from future Great Yorkshire Shows. No names mentioned but given how talked about the issue has been they may as
well have hung all the washing on the line.
I guess the policing for the 2014 show season and beyond falls entirely to the breed societies to mark the pitch and
referee the games.
All views expressed in this bulletin are those of Ian Potter Associates and a shed load of dairy farmers. It is necessarily short and cannot deal with the various
issues that arise in any detail. As a result it must not be relied on as giving sufficient advice in any specific case. Every effort has been made to ensure the
accuracy of the content but neither Ian Potter Associates nor Ian Potter personally can accept liability for any errors or omissions. Professional advice must always
be taken before any decision is reached