IAN POTTER ASSOCIATES
28th January 2011
Specialist Agricultural Quota & Entitlement Brokers
Telephone 01335 324594 Fax 01335 324584
Website www.ipaquotas.co.uk Email sales@ipaquotas.co.uk
Today
Clean
AMPE
MCVE
Producers in
E&W
£:$
£:€
Crude Oil
Wheat
Soya meal
Last Week
Issue No. 607
Change
4 Weeks Ago
1 Year ago
0.3ppl
29.5ppl
30.35pl
11,041
0.3ppl
-
0.25ppl
28.10ppl
29.65ppl
11,102
0.40ppl
25.10ppl
28.03ppl
11,502
1.59
1.16
$87
£205
£314
1.59
1.18
$89
£197
£320
-0.02
-$2
+£8
-£6
1.54
1.18
$92
£201
£318
1.62
1.16
$74
£100
£280
(Commodity and currency prices – source BOCM Pauls)
Milk price rises see key cheese processors farm gate prices eclipse liquid processors
This week’s pace setter on cheese price increases was Glanbia with a 1ppl rise, which once announced resulted in a
domino effect as numerous cheese producers followed with identical 1ppl rises.
The only announcement to fall below the 1ppl increase was Saputo, however, First Milk topped it with a 1.25ppl increase.
There are a number of notable absentees from the list of increases but it’s not yet February 1st so there’s time.
With MCVE now above 30p and AMPE very close behind (see above table) the pressure is on to increase prices each
month as the dam appears to be cracking.
1ppl milk price rise for Glanbia suppliers
From 1st February, which takes their standard litre price 25.05ppl ( milkprices.com)
1ppl milk price increase to producers supplying Barbers Cheese – From 1st February which takes their standard litre
price to 26.13ppl (milkprices.com)
1ppl milk price increase to producers supplying Lactalis Cheese – From 1st February, which takes their standard litre
price to 25.4ppl (milkprices.com)
1ppl milk price increase to producers supplying South Caernarfon Creameries – From 1st February, which takes
their standard litre price to 25.11ppl (milkprices.com)
0.75ppl milk price increase to producers supplying Saputo Cheese – From 1st February which makes their standard
litre price 25.38ppl (milkprices.com)
First Milk farm gate price increases
Co-op First Milk has announced the following milk price rises effective from 1st February.
1.25ppl increase to its cheese contract producers making a standard litre price of 24.52ppl.
1ppl increase to its balancing contract producers making a standard litre price of 24.27ppl.
0.25ppl increase to its liquid contract producers making a standard litre price of 23.88ppl.
A nett 0.75ppl increase to its 56 Highlands and Islands producers making a standard litre of 24.98ppl.
Clearly the recent deals done by Dairy Crest and Wiseman as First Milk’s largest liquid customers are severely limiting
any additional money the co-op can negotiate from the two processors. The reality is that First Milk’s liquid price is directly
connected to what DC & Wiseman pay their direct producers.
Once again the spotlight is firmly on Arla and Wiseman to make the next positive move on prices.
Dairy Crests deferred liquid milk price increase triggers flashing blue lights
Dairy Crest have announced the following milk price rises:
1ppl increase to its cheese contracted producers from 1st February.
1ppl increase to its non aligned liquid contracted producers but delayed until March 1st.
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
Clearly the delay in the liquid increase will be a hot topic for conversation because increased producer costs and booming
dairy markets are here now whereas farmers will not see this additional money in their bank accounts until Mid April.
Whilst some producers and organizations may feel DC have made a good move in announcing a 1ppl rise in its liquid
price it could equally be argued that DC have missed a huge opportunity to be bold and brave.
DCD only three weeks ago were shouting for their processor Dairy Crest to increase the liquid price by more than 3.5ppl
to a 27ppl base price. In only achieving 1ppl and delaying until March 1 st it could easily be argued that DC have effectively
capped liquid increases to 1ppl which can at best be described as could do better. Perhaps DC have been brave and
asked for much more money from their customers in order to increase prices to its farmers (and by default First Milks
farmers) in subsequent months to achieve the 3p plus demanded by DCD.
The smart money is clearly on Wiseman and Arla similarly delaying any increases until March 1 st and following with
something close to the same 1ppl. If that happens the lesson is if your processor moves first make sure it’s a brave move
and not a defensive move.
As the Michael Jackson song goes “You are not alone” but you certainly are the last domino in the pack
The news from Western Australia is that dairy farmers were horrified to see that in an area that relies exclusively on its
liquid market, Aldi have dramatically cut the shelf price of milk by 30% along with two other retailers, Woolworths and
Coles.
The Australian Dairy Farmers Vice President, Chris Griffin said he was at a loss “to understand how setting a new low for
the retail price at a time when the price of dairy commodities is rising, is of benefit to the industry.” The move was
described as “shameful, cruel and insensitive”. Remember in addition Australian dairy farmers have been affected by
flooding. So GB liquid suppliers are not alone in sharing the pain of good news for consumers and devastating and
demoralising news to dairy farmers.
As one Australian reporter summarised lower prices in supermarkets = lower returns to processors = lower returns to
farmers because dairy farmers are simply the last domino in a short line of dominos.
Milk Link expansion
Milk Link continues to expand gradually and has this week announced its purchase of Cornish County Larder Cheese
who produce Cornish Brie, Camembert and other award winning soft cheeses. They are exceptionally good as chief
cheese taster Ian can testify.
Wiseman issue interim report
Wisemans have issued a trading update indicating they expect end of year profits to be on target.
The report acknowledges the increase in bulk cream prices, which appear to have stabilised at the increased level but
that the extra revenue has been absorbed partly by “margin pressure in an intensely competitive market”.
In addition, Wisemans acknowledge the difficulties faced by its farmer suppliers in meeting their increased costs and calls
to increase the price they pay for milk but unfortunately no news yet of any positive movements in that direction.
Wiseman closures and redundancies
Wisemans are to close their Okehampton, Devon dairy which in a previous life was Peninsula Milk with the milk due to be
shipped to Bridgwater.
In addition, Wisemans distribution depot in Cupar, Fife will be closed. Total jobs affected by both closures are 69,
however, this needs to be balanced against 500 jobs created at its Bridgwater factory.
Dairy farm inspections to drop by 75% but producer numbers are wrong
The cutting of red tape by the FSA appears to have started ahead of the publication of Richard MacDonald’s report.
From April 2010 the proposal is that inspections on Red Tractor Assured Farms be cut from once every 2 years to once
every 10 years in England and Wales. This is good news, which will cut cost and hopefully the move will quickly extend
to Northern Ireland and Scotland.
However, there is clear evidence that either Assured Food Standards (AFS) or the Dairy Hygiene Inspectorate (DHI) have
got their numbers wrong.
In the press release AFS claim 11,800 dairy farms have Red Tractor Assurance and they produce 95% of GB milk.
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
If we assume 95% of producers produce 95% of the milk and we gross the 11,800 up to represent 100% it equates to
around 12,420 dairy farmers in England and Wales.
However, as can be seen from our weekly table above the statistics show we only have 11,041 dairy farmers left in
England and Wales and the last time we had close to 12,420 was almost 3 years ago in March 2008. So who is working
off the right figure?
If we assume the 11,041 figure supplied by the Dairy Hygiene Inspectorate is correct and 95% of these are Red Tractor
Farm Assured it should result in 42,000 less inspections in a 10 year period, a massive reduction of 75%.
NFU image of dairy farming is exceptionally clean
Ian couldn’t help but smile at the front cover picture of the NFU’s January 2011 British Farmer and Grower.
It showed a very happy Justin Farthing stood in his parlour milking the cows. Justin is the only dairy farmer we know who
can keep so pristinely clean, especially his hands and trousers, whilst milking 300 cows. Perhaps as the NFU’s article
headline stated “farming can sometimes be child’s play”.
Liquid Milk
Incredible steal of the week
B&M, Penrith selling Delamere Dairies sterilised whole milk for 20p litre.
Farmfoods 2 x 2 litres £1.50 Wisemans = 37.5ppl
Tesco – 2 x 27 litre packs for £2 = 44ppl
ASDA – 2 x 2.27 litre packs for £2 = 44ppl
Sainsburys – 2 x 2.27 litre packs for £2 = 44ppl
Cheese
Tesco Seriously Strong grated cheddar 2 x 200g for £2
ASDA Cathedral City mature cheddar 400 g £2
M&S – 750g of Vintage Welsh Cheddar for £3.75 = £5.00/kg
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