Milk Price Update

 

10-11-2000 Milk Link makes final announcement  - go to Winter 2000 Milk Price

11-10-2000  D Crest ups its offer by 0.6ppl - to 2.0ppl

September 29th

Dairy Crest and Unigate had their meetings in the region this week - Unigate up 1.4ppl and D Crest up 1.35ppl - I guess for the county as a whole I will have full price details available by the end of the first week in September. 

Recent meetings were - shall we say - less than easy for the buyers.  The advent of FFA has perhaps put pressure on the disparate local producer group farmer chairman.  Good - its time they did their job effectively on behalf of members interests.  Either join FFA or Nationally organise super groups.  Preferably do both - and eat their company lunches in paper bags outside the processors & super markets.

Try david@goddard30.freeserve.co.uk - Tel: 01684 294737 Fax: 01684 297197 for news of local "visits"
or go to FFA Website

UP 2ppl from October?

ASDA & Safeway announce this week (beginning 18th Sept) a 2ppl increase on Drinking milk (less than 50% of the market for total milk) with Tesco advising that they expect this rise to come from the market place.  Of course supermarkets are not allowed to collude - at least on the face of it when dealing with the OFT. 

Does this mean a full 2ppl across all milk?  - Maybe

Maybe not - but international prices traded mainly on the $US are firm & have become more so as £:$ gap narrows to $1.40.  For those processors mainly on Liquid milk to supermarkets yes - for those processors on cheese - butter ie commodity non drinking products - maybe not 2ppl.

Is this a satisfactory Negotiation Method for milk price? - NO

Absolutely not.  Until a fair price regulation method that puts a floor in the market place during currency weakness is instituted above the Intervention Milk Price Equivalent - the better.  The US did it for certain states - its called a Dairy Compact.

 

Milk Price Update August 2000

Milklink in their August announcement have laid down the gauntlet to the Southern producer groups and processing companies.  Key in their pricing structure is a volume incentive to the large producer.  Further price increases are likely forthcoming despite the weakness of the Euro.

Milklink pricing policy

The example below is for a producer selling 1.5 million L per year ie 200 cows at 7500L

Due to reductions in overheads from August 1st the following changes take place.

£2 of the daily collection charge
Scaled bonus according to average daily (Not alternate day) volume collection on a monthly basis

<2000L         0.1ppl
<3000L         0.2ppl
<4000L         0.3ppl  & so on to a maximum 0.8ppl

For the large producer this is a very competitive policy and requires a robust response from the competition


Conclusions

Little in it for the smaller producer,  but a clear signal to the larger producer that they are to be looked after.  Watch quota price as a result of this announcement and milk production figures announced within the first 10 days of September.  Clients are advised to secure remaining requirements for the quota year.  If purchasing then a lease + 100% used is likely to be the most profitable option.

 

Notes to Table

Price projections are as if the August 2000 announcement from Milklink were paid all year the price for Apr - July is therefore misleading if looked upon as an accurate reflection of the 2000 quota year
Assumption is 1.5million L average Fat & Protein % on EODC, meeting all quality bonuses
Five calving patterns are shown.  The producers current,  all year round, and four  6 month spreads with the majority calved in 3 months around May August, October and December

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Annual 1,500,000L Difference
Calving Patter
All Year Round 4.11%F
Milk Link 00/01 16.0 15.3 16.1 19.5 19.4 17.8 17.4 17.7 17.3 17.2 17.2 17.2 17.4 3.43%P 260,355
Dairy Crest 00/01 15.5 15.0 16.2 19.8 20.2 19.4 18.4 17.0 16.6 16.4 16.4 16.5 17.3 EODC 259,063 -1,292
Unigate 00/01 15.3 15.3 19.7 21.0 21.2 19.7 16.8 16.9 16.7 16.6 16.6 16.7 17.7 265,688 5,333
Peninsula MP 00/01 15.1 14.2 15.3 18.3 19.8 19.0 17.0 17.3 16.9 16.7 16.6 16.8 16.9 253,589 -6,766
May
Milk Link 00/01 15.5 14.8 16.0 19.6 19.6 18.0 17.6 17.8 17.4 17.2 17.0 17.0 17.7 265,261
Dairy Crest 00/01 15.3 14.9 16.1 19.9 20.2 19.4 18.4 17.0 16.6 16.4 16.4 16.4 17.7 266,172 910
Unigate 00/01 15.1 15.1 19.6 21.1 21.2 19.8 16.8 16.9 16.7 16.6 16.6 16.6 18.1 272,054 6,793
Peninsula MP 00/01 14.8 13.8 15.2 18.4 19.9 19.1 17.1 17.3 16.9 16.7 16.6 16.6 17.4 260,378 -4,883
August
Milk Link 00/01 16.0 15.2 15.9 19.0 19.0 17.7 17.6 17.9 17.5 17.3 17.3 17.3 17.2 258,065
Dairy Crest 00/01 15.5 15.0 16.1 19.7 20.1 19.3 18.4 17.0 16.6 16.4 16.4 16.5 17.0 254,443 -3,622
Unigate 00/01 14.8 14.8 19.1 20.3 20.4 19.2 16.3 16.4 16.3 16.2 16.2 16.2 16.7 250,270 -7,796
Peninsula MP 00/01 15.1 14.1 15.1 18.0 19.4 18.9 17.1 17.4 17.0 16.8 16.7 16.8 16.7 251,158 -6,907
October
Milk Link 00/01 16.1 15.4 16.1 19.4 19.2 17.3 16.9 17.6 17.5 17.2 17.3 17.4 17.2 257,720
Dairy Crest 00/01 15.5 15.0 16.2 19.8 20.2 19.2 18.3 17.0 16.6 16.4 16.4 16.5 16.9 253,132 -4,588
Unigate 00/01 14.8 14.8 19.2 20.5 20.6 19.0 16.0 16.3 16.2 16.2 16.2 16.2 16.9 253,063 -4,657
Peninsula MP 00/01 15.2 14.2 15.3 18.3 19.6 18.6 16.7 17.2 16.9 16.7 16.7 16.9 16.6 249,397 -8,323
December
Milk Link 00/01 16.1 15.5 16.2 19.5 19.5 17.7 17.2 17.2 16.8 17.0 17.3 17.4 17.2 258,537
Dairy Crest 00/01 15.5 15.0 16.2 19.9 20.2 19.4 18.3 16.8 16.5 16.4 16.4 16.5 17.1 256,902 -1,635
Unigate 00/01 14.8 14.9 19.2 20.6 20.7 19.2 16.2 16.1 16.0 16.1 16.2 16.2 17.2 258,137 -400
Peninsula MP 00/01 15.2 14.3 15.4 18.4 19.8 19.0 16.9 16.9 16.5 16.6 16.7 16.9 16.7 250,754 -7,783