IAN POTTER ASSOCIATES
Telephone 01335 324594
Website www.ipaquotas.co.uk Email [email protected]
Today
Last Week
Change
Producers in
E&W
9,827
£:$
1.560
1.541
16th June 2015
4 Weeks Ago
9,856
10,274
1.552
1.70
1.384
$65.70
£116
£284
19.9 (April)
24.5 ((March)
1.25
$114.80
£149
£346
31.3 (May)
32.1 (May)
+0.019
£:€
1.385
1.359
+0.026
Crude Oil
$66.68
$61.43
+$5.25
Wheat
£120
£119
+£1.00
Soya meal
£284
£284
AMPE 2014
18.2 (May)
MCVE 2014
24.3 (May)
(Commodity and currency prices – source ForFarmers)
Issue No. 815
1 Year ago
GDT average continues to head south - but
Today's GDT all products average fell for the 7th consecutive time this time by the smaller margin of 1.3% to average US
$ 2409 compared to the average achieved two weeks ago.
The positives, other than the fact the fall was smaller than recorded in recent months, was the fact many key products
were either close to a stand on price or saw their average price improve.
Also the number of registered bidders continues to increase and today totalled 649 compared to 642 at the last auction
and similarly the number of winning bidders increased from 115 to 125 which is encouraging
Key movers of interest:
Cheddar
+ 2.4% to average
Butter
+3.3% to average
WMP
0.1% to average
SMP
0.2% to average
Westbury SMP
2.1% to average
$3128 tonne
$2707 tonne
$2327 tonne
$1978 tonne
$1875 tonne which is the lowest recorded average
0.661ppl milk price reduction for Dairy Crest Formula producers
This is from 1st July and means the gap between the standard Dairy Crest price and the formula price is 4.747ppl. The
adjustment is predominantly as a result of a 20% plus fall in cream prices.
The resulting formula standard litre price will be 27.957ppl.
0.11ppl milk price reduction for Sainsburys (SDDG) – from 1st July
This is a quarterly review and will result in the following standard litre prices:
Muller
Dairy Crest
Arla
30.87ppl
30.81ppl
30.75ppl
Bottled it! Muller-Wiseman merger goes to phase 2
This was a very appropriate headline from Shore Capital’s dairy analyst Clive Black as he reported on The Competition &
Markets Authority (CMA) press release, which was bizarrely issued at 17:30 hours last Friday.
The £80 million bid by Muller to acquire the liquid business of Dairy Crest will now move to an in depth investigation under
phase 2 “unless acceptable undertakings are offered by Muller to the CMA by this Friday, 19 th.”
Throughout the press release there is no acknowledgement from the CMA that this deal simply has to take place because
no business can continue to lose circa £15 million a year as Dairy Crest did last year in its liquid division.
Instead it’s obvious from the press release that one or more of our big retailers has objected to the deal on the grounds
that there will be:
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
“a realistic prospect of a substantial lessening of competition in the supply of fresh milk to
major grocery retailers with national scope (national multiples) in certain regions in Great
Britain” commented the CMA in their press release.
In Ian’s opinion this points to one region with up to two national retailers who are the most likely to have objected.
The region is most likely to be the South West and the short odds are on a complaint from Sainsburys followed possibly
by Morrisons.
The CMA has confirmed to Ian that the identity of objectors in phase 1 and/or the substance of their objection will not be
publically disclosed.
In its press release the CMA goes on to state:
“The CMA considers that the merger may lead to higher prices in the supply of fresh milk to
national multiples and, in turn, for consumers.”
Clive Black accurately comments that “no one seriously believes that the Big Four (supermarkets) will charge more to
customers for milk in Plymouth, Swansea and Taunton that the rest of the country. Using an old fashioned milk industry
term, therefore, has the CMA bottled it?”
He is spot on they have bottled it and completely ignored the farmer impact of the deal and have hidden behind one or
more of our big 4 retailers – wimps.
Speculation over what the Muller team might do next
As Ian sees it Muller have three options:
1. They could simply say let’s go to phase 2 and let it run its 6 month course to Xmas. They can do this in the full
knowledge that the deal is almost certain to be approved at the end of phase 2.
2. Assuming the South West is the region in question; Muller could offer to sell its Bridgwater liquid factory. There
must be more chance of Ian becoming an Olympic synchronised swimming gold medallist than that happening.
That’s a scary thought!
3. Muller say to hell with it, we don’t need the aggro. We will immediately withdraw the offer and let Dairy Crest’s
liquid business bleed to death.
Option 3 looks tempting to Ian followed by option 1, however, given the deal is right for both parties and right for the UK
dairy industry I suspect Muller will be determined that option 1 is the right avenue to pursue.
Arla Tesco farmers are 6ppl apart but for how much longer?
The difference in the milk price received by Arla AMCO co-op members on a Tesco aligned contract and the Arla Tesco
directs is almost 6ppl and must surely be at its widest point.
By 1st November Tesco are sure to reduce the price by at least the change in the cost of production if not more which will
narrow the gap by a sizeable percentage.
As part of a costings review Arla have examined the 0.2ppl livestock Code of Practice enhancement paid to Arla AMCO
members who supply Tesco and the result is the true cost is 0.48ppl. Note, this premium is not paid to the Arla Tesco
directs.
From 1st July the premium paid will increase from 0.2ppl to 0.48ppl. In addition, a back payment of 0.6ppl to cover the top
up from 1st January 2014 to 30th June 2015 will be paid to all Arla AMCO Tesco suppliers who are members at 31 st
December 2015.
There will be some who question why there is a delay in paying the top up payment. We can only come up with one real
reason and that is the delay is an attempt to persuade any Arla AMCO Tesco farmers contemplating serving 3 months
notice to become Arla Tesco direct suppliers to not make that move.
In addition, by the time the 0.6ppl is paid the gap and the situation is likely to have changed, which coupled with the
0.6ppl top up is likely to influence some AMCO members.
Arla 0.5ppl levy is suspended again
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
Arla AMCO members will not be paying the 0.5ppl levy for the three month period starting 1 st July. The holiday from the
levy was in place from January to March then re-introduced from April to June.
Cheap Milk
4 litres (7 pints) for £1. Spotted in Premier Lea Village Convenience Store, Kitts Green Road, Birmingham – Milk from
Paynes Dairies.
Morrisons have cut the price of 4 pints to 89p and in doing so have followed ASDA and Aldi.
Morrisons commented that the reduction will not affect the price they pay their dairy suppliers. Yeah, yeah and all in the
dairy industry believe them!
v
England V Estonia Football Tickets – 8th September 2015 – 19:45 pm
If anyone is interested in 2, 3 or 4 tickets in any section of Wembley, please email [email protected] as soon as
possible.
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