Ian Potter Associates Weekly Bulletin
18th November 2016
Issue No: 876
Today
Last Week
Change
9,496
-
-
9,654
Producers in
E&W
4 Weeks Ago
1 Year ago
£:$
1.24
1.24
-
-
1.52
£:€
Crude Oil
AMPE
1.16
$46.78
31.3
(October)
33.9
(October)
1.14
$45.54
+0.02
+$1.24
28.5 (September)
1.42
$44.22
17.9 (October)
32.4 (September)
20.7 (October)
MCVE
(Commodity and currency prices – source ForFarmers)
For more information about feed prices and market trends visit www.forfarmers.co.uk or contact ForFarmers DML: 0870 0500306
BPS Entitlements Now Trading
All Entitlements are subject to availability and vendor acceptance:
No. of Ents
5.51
42.79
35.35
Entitlement
Price/Entitlement
NSDA
£200 ono
NSDA
£200 ono
NSDA
£200 ono
The 2016 payment was £209 or £84 per acre
Use by date
2018
2017
2017
If you have any surplus English Entitlements please contact Jacquey at the office - Tel. No. 01335 324594 – Email
[email protected]
2016 Subsidy Payment Comparison (2015 in brackets)
Exchange Rate
Non SDA
SDA
0.85228 (0.73129)
£211.64/ha (£178) or £85.65/acre (£72)
£210.11/ha (£177) or £85.03/acre (£72)
2ppl milk price increase for suppliers to Grahams Dairies (Scotland) – from 1st December
2ppl milk price increase for suppliers to Paynes Dairies – from 1st December
Muller under fire from its non-aligned suppliers
Ian has been somewhat alarmed to receive a large number of emails this week from Muller non-aligned farmers who were
very keen to report back from 4 of the first 5 regional producer meetings. Rarely, if ever, has Ian received so much
feedback, in fact. Given the fact there are several more meetings during the next 10 days Ian has decided to wait to see
what comes in next week, and will discuss the comments and Muller’s proposals in the next bulletin, so please continue
to send in your comments.
The meetings have certainly welded opinion in the Muller non-aligned producers and several have subsequently hit the
keyboard. Literally. Several will now have big holes where the letters M,U,L,E and R once were.
The Muller staff and board members present at the meetings have certainly been given some very direct messages. The
general view from the emails received is that the non-aligned see the contract changes as being nothing more than a
price cut, heaping further pain and unfairness upon them.
Ian will also comment on the proposed new producer representation structure and whether it is a step forward, particularly
with reference to the non-aligned producers representation within the group of 21 and whether they will be represented,
which the board of this group will select.
The Grocer Magazine on-line has summed up the situation with a very forthright article, written by Kevin White, with the
headline “Muller facing frothing in its non-aligned milk pool”. The article points towards Muller pushing more of its own risk
on to its 800 non-aligned farmers with the new contract. With Muller purchasing 30% of Britain’s milk this is a big issue
and there will be many column inches written on the subject over the coming weeks and months.
GDT auction up 4.5%
Tuesday’s auction produced another set of encouraging results with the overall product index up 4.5% compared to that
recorded two weeks ago. All products delivered increased in value, however, note the volume on offer was down 13.8%
to 23,902 tonnes to that traded two weeks earlier.
The reduction is mainly attributable to Fonterra’s confirmation that milk volumes have plummeted during October (-14%
and November)
Notable movers
Cheddar
+11% to average $3697 tonne
SMP
+9.8% to average $2562 tonne
WMP
+3.2% to average $3423 tonne
Ian Potter, Grahams Dairies and the A & B deduction scheme
During the past two of weeks I have commented on the A & B contracts, in particular in relation to processors who make
milk price deductions to producers who, for various reasons, fail to deliver their full A litre allocation in a particular month.
With the decision by Freshways to abandon A litre deductions the focus moved north of the Border to Grahams Dairies, in
Scotland. In late October I was quoted in The Scottish Farmer saying that Graham’s suppliers were given no notice of the
A litre deductions. Grahams has asked me to clarify that it did give notice that there could be A litre deductions when they
introduced the scheme in 2014 and the fact that A deductions were on the cards was also mentioned in a letter to
Producers dated 17th August. I accept this point and have offered my apologies to the company for inferring otherwise.
My comment regarding the lack of notice centred on the information that Graham’s suppliers were not notified that A litre
deductions were on the cards for October deliveries until a letter was posted in mid October. However I have now been
told that there will be no October deductions. This is excellent news for Grahams suppliers and a very positive step
forward.
I also stated that the Grahams B Price was cut to 7ppl which was what Grahams told me it would be in July 2015.
However having made enquiries I am now informed that the lowest price paid was actually 10ppl.
As part of Grahams robust defence of the business in the face of negative publicity I was provided with milk pricing
figures from the company. The figures stated that the net average paid out to its farmers (including A and B prices) from
October 2015 to September 2016 was 23.61ppl compared to its main Scottish competitors, Arla, Muller and First Milk
who, according to the numbers I was given, ranged between 22.77ppl and 17.47ppl. I duly had these other figures
checked by independent dairy analyst Chris Walkland, who has confirmed that the Grahams figure is accurate and the
Arla and Muller figures, while not an exact match to his, are close enough. He did not analyse the First Milk figure.
Thus Grahams have, overall, paid what appears to be the highest 12 month average nett pay-out to dairy farmers in
Scotland even with the B scheme. Graham’s claim that the A & B scheme has succeeded in protecting their farmers’
milk price does, therefore, have merit.
However I believe that, despite this, the A & B scheme has not been well communicated by any of the companies who
adopted it, including Grahams, and that the scheme has too many negatives attached to it. This is especially the case
when compared to the simplicity of other companies who pay a single price for ALL of the litres, even if their headline
price is not be as high as the A price would be. The effectiveness of the A & B deduction scheme can also easily be
disproportionate across different farmers, with major unintended negative consequences on their businesses, again not
helping the image of the scheme.
A & B contracts were believed to be ground-breaking when they were first conceived in 2014 but back then no one
envisaged the current scenario whereby A litre deductions of 7 to 8ppl or more could be applied. A lot of time and effort
went into the development of the new contracts but I believe that it is time to evaluate the pros and cons and either refine
them significantly or revert to alternative mechanisms. The risk of bad press and farmer discontent on an A or B price
deduction outweighs the value. Grahams have today confirmed to Ian that they are reviewing their A and B contracts on a
one to one basis with producers to canvass their thoughts which is a positive time consuming move by the company
which will give farmers the opportunity to have their say.
The bottom line is Grahams, like all other milk purchasers, have to balance supplies against sales and in the space of 14
months the spot price has varied from 10p to 41p making balancing extremely challenging. For Grahams the variation for
them in that period has been from 20% (2 million litres) of milk above the A volumes (AKA B milk) to now, where
production is 8% (1 Million litres plus) below A volumes.
It is a priority for the industry that a long-term solution to these swings must be found. But it is my view that the A & B
system requires further reform if it is to have a role in that going forward.
Dairy farmers in Northern Ireland vent their anger
An estimated 250 or so dairy farmers in Northern Ireland have had enough and have agreed to strike. Part of their
frustration is the lack of upward movement on farm gate milk prices in addition to anger at the stances taken by Dairy UK
in connection with its decision to cease engagement with the Ulster Farmers’ Union.
The group stated “After the news this week that Dairy UK (NI) have blocked future engagement with the UIster
Farmers’ Union over their criticism of the failure of co-ops to pass on better milk market returns to farmers, the
contempt and arrogance that milk co-ops now have for their producer members is totally unacceptable and
should result in co-op farmer board members requesting their co-ops withhold levies for now.”
Strong words but the only surprise is perhaps that it has taken this long to boil over.
BVD Tag Prices Slashed!!!!
BVD Tag Permutations
Large & Large
Large & Button
Large & Metal
Medium & Medium
Medium & Button
Medium & Metal
Match up tag
Large BVD tag Only
Management BVD
Applicator
Ian Potter Associates Price
£4.30
£4.30
£4.30
£4.30
£4.30
£4.30
£4.20
£4.20
£4.20
£15.00 (free with large orders)
Breaking News on BVD Tags
Potter’s have a fantastic bulk deal on BVD tags and are now offering them at incredibly competitive prices, and have
brought our prices down on average by 55p a set.
Please don’t hesitate to call the office on 01335 320016 for more information and to order. Alternatively go our website
http://www.ipaquotas.com for an order form that can be completed and forwarded to our office via email –
[email protected]
Remember this bulletin at the moment continues to be available free of charge and takes Ian and the team some
considerable time to produce. The only encouragement to keep producing it is a combination of enthusiasm as well as tag
sales and enquiries from our readers.
Please consider contacting us when you next require tags.
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 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 any liability for any errors or omissions. Professional advice must always be taken before any decision is reached.