Milk Price Tracker

[Chips]

My capital figures include the value of Milklink and come from the paper released at BoR that has determined the BoR representation for the coming election cycle.

I understand your annoyance and predicted it would be a potential issue when it was explained last week, but please look at the overall picture. Everyone can have reasons why they feel another member got a slightly better deal, because they came in with Milklink, having only just joined or have expanded or paid a bit different interest rate on there loan and so on. Certainly some ex Milk Link members think AFMP members got in cheaply compared to the 10 years (some quite painful years) it took to build Milklink.

Up until last week it was virtually free to join in Denmark & Sweden. It was easy for farmers to resign and return as they pleased which we in the UK had complained about. Now there is at least some cost and it is equal to all. Most of the potential new members are coming in because they have been getting a lower milk price than we have, so they have their own problems. Our business could do with their milk so we have enough to meet our contracts and sales opportunities in the next trough period, that will benefit all of us.

I should also point out that under the new terms the new members do not end up with as much in individual capital, so when they leave they get less back, but I understand that you may not think that makes any difference as you would prefer the money to use.

It's a bit like when you buy a tractor , you never pay exactly the same as the next customer , prices rise and fall , unfair but that's life .
What I don't understand is why we need to keep recruiting , we are constantly told it was simple supply and demand that drove our price to the depths it went and the solution for the future is to get a higher percentage of our milk into premium brands , surely the quickest and cheapest way to do this for our current members interests would be to pull our current supply up the price ladder as we lose some milk , taking milk away from those highly volitle commodity markets , yes it may mean we miss out on the highest of highs , but I think most of us would prefer a pretty steady price . I know we have to have a certain amount for balancing but I believ currently only 44% of our milk is in our own brands , surely there is plenty of balancing capacity already . we were told our brands never dropped below a farmgate price of roughly 25p during the trough , had Arla never dropped below that I think most would of accepted not getting the highs of the autumn just gone and there would be a lot less discontent . Either that or we need to have two prices in arla one for your core and one for extra litres and pay on them accordingly that way each farmer can choose how he wishes to proceed through a downturn and not have to subsidize his neighbor with deeper pockets who is effectively trying to put his neighbour out of business . What's the point in subsidizing extra production of milk in a downturn to go into contracts only returning single figures ?

 

[lazy farmer]

the supply and demand you talk of is surely a global situation not an Alra one. why wouldn't you want your company to have as much market share as possible in as many markets and as many products as possible?

 

[meekers]

the supply and demand you talk of is surely a global situation not an Alra one. why wouldn't you want your company to have as much market share as possible in as many markets and as many products as possible?

Because we need the majority of our milk to be in the Arla branded products to protect us from the volatility of the market. Until the branded sales account for a larger percentage of the milk sales then I agree with chips.

 

[farmer on a bike]

It's a bit like when you buy a tractor , you never pay exactly the same as the next customer , prices rise and fall , unfair but that's life .
What I don't understand is why we need to keep recruiting , we are constantly told it was simple supply and demand that drove our price to the depths it went and the solution for the future is to get a higher percentage of our milk into premium brands , surely the quickest and cheapest way to do this for our current members interests would be to pull our current supply up the price ladder as we lose some milk , taking milk away from those highly volitle commodity markets , yes it may mean we miss out on the highest of highs , but I think most of us would prefer a pretty steady price . I know we have to have a certain amount for balancing but I believ currently only 44% of our milk is in our own brands , surely there is plenty of balancing capacity already . we were told our brands never dropped below a farmgate price of roughly 25p during the trough , had Arla never dropped below that I think most would of accepted not getting the highs of the autumn just gone and there would be a lot less discontent . Either that or we need to have two prices in arla one for your core and one for extra litres and pay on them accordingly that way each farmer can choose how he wishes to proceed through a downturn and not have to subsidize his neighbor with deeper pockets who is effectively trying to put his neighbour out of business . What's the point in subsidizing extra production of milk in a downturn to go into contracts only returning single figures ?

Various issues, to me the main issue is the seasonality of our supply. This Autumn we could be more short of milk than we were in 2016, and it demand for our products is increasing. Arla as a whole had about 20% in trading milk, Peter Tuborgh at BoR told us that much below that and we may not be able to balance effectively and supply all the higher value products when we have the demand. In reality we were told it was less than 20% in the second half of the year, hence the need for extra milk in a few specific places.

 

[meekers]

Various issues, to me the main issue is the seasonality of our supply. This Autumn we could be more short of milk than we were in 2016, and it demand for our products is increasing. Arla as a whole had about 20% in trading milk, Peter Tuborgh at BoR told us that much below that and we may not be able to balance effectively and supply all the higher value products when we have the demand. In reality we were told it was less than 20% in the second half of the year, hence the need for extra milk in a few specific places.

Seem to be going round in circles here, but my answer would have been to make a better seasonality scheme where existing producers are given the chance to produce that milk in the autumn for a premium.
Arla get more milk when they need it, the percentage of Arla milk going into branded products increases and existing members get paid better for their hard work. Everyone is a winner.

 

[meekers]

Various issues, to me the main issue is the seasonality of our supply. This Autumn we could be more short of milk than we were in 2016, and it demand for our products is increasing. Arla as a whole had about 20% in trading milk, Peter Tuborgh at BoR told us that much below that and we may not be able to balance effectively and supply all the higher value products when we have the demand. In reality we were told it was less than 20% in the second half of the year, hence the need for extra milk in a few specific places.

Seem to be going round in circles here, but my answer would have been to make a better seasonality scheme where existing producers are given the chance to produce that milk in the autumn for a premium.
Arla get more milk when they need it, the percentage of Arla milk going into branded products increases and existing members get paid better for their hard work. Everyone is a winner.

 

[farmer on a bike]

Seem to be going round in circles here, but my answer would have been to make a better seasonality scheme where existing producers are given the chance to produce that milk in the autumn for a premium.
Arla get more milk when they need it, the percentage of Arla milk going into branded products increases and existing members get paid better for their hard work. Everyone is a winner.

Quite agree, I have been pushing hard for last 3 years and even more in last 6 months and still am. What I want is not to penalise Spring any more ,but to give a better incentive for late summer/ early autumn milk. I have discussed it on previous posts on here.

 

[meekers]

Various issues, to me the main issue is the seasonality of our supply. This Autumn we could be more short of milk than we were in 2016, and it demand for our products is increasing. Arla as a whole had about 20% in trading milk, Peter Tuborgh at BoR told

Various issues, to me the main issue is the seasonality of our supply. This Autumn we could be more short of milk than we were in 2016, and it demand for our products is increasing. Arla as a whole had about 20% in trading milk, Peter Tuborgh at BoR told us that much below that and we may not be able to balance effectively and supply all the higher value products when we have the demand. In reality we were told it was less than 20% in the second half of the year, hence the need for extra milk in a few specific places.

The reason that you were so short of milk last autumn was related to the fact the price was so bad. I notice you say you COULD be short of milk this autumn. Well how about asking producers what they are going to produce and take the guessing out of it!

 

[stablegirl]

Arla to me can be likened to an oil tanker, its so big that it just trundles on, but its extremely slow to maneuver when it comes to milk price and seasonality.

For example even if it now knows it will be short in autumn i think I'm right in saying it would take 2 years to change the seasonality scheme.

 

[Coo man]

Can we rename this thread Arla milk pricing

 

[gremlinatrix]

http://www.dailypost.co.uk/news/local-news/new-14m-cheese-plant-earmarked-12711669

Can finally talk in the open about this!

 

[Cows 'n grass]

http://www.dailypost.co.uk/news/local-news/new-14m-cheese-plant-earmarked-12711669

Can finally talk in the open about this!

I thought you were in Scotland.

 

[Chips]

Various issues, to me the main issue is the seasonality of our supply. This Autumn we could be more short of milk than we were in 2016, and it demand for our products is increasing. Arla as a whole had about 20% in trading milk, Peter Tuborgh at BoR told us that much below that and we may not be able to balance effectively and supply all the higher value products when we have the demand. In reality we were told it was less than 20% in the second half of the year, hence the need for extra milk in a few specific places.

I am not necessarily talking about reducing traded milk , but reducing the amount that goes into rubbish contracts that serve no one other than to grow for the sake of growth , we were told our brands always returned 26p and above as did our better own brand contracts , now it took more than twenty percent of our pool to drag our price down into the teens unless of course we gave that milk away FOC , there must have been a whole host of rubbish contract milk too , I see no reason to go out recruiting just to supply these customers , if they were not willing to support us through the trough why should we support them now , just leave it to the other buyers who do not take capital from their suppliers to fight it out for those markets . Arla's aim must be to provide a sustainable milk price to it's current owners, which I think it can by getting a higher percentage of sales into our own brands (this is what I think most of us signed up to ) , not to keep growing for the sake of growing and simply recruiting new owners every time it loses past owners who couldn't survive the bottom of the trough , otherwise what is the point of paying into Arla , you are simply working towards some one else future , you may as well do that at a processor who doesn't require capital contributions .
Now I'm not suggesting we suddenly drop all these contracts but a more gradual move so we end up working in a situation where that traded milk is just there to balance our own products and not someone else's and growth comes more organically from our current members .
It might not be the most profitable way for Arla but that should not be it's goal , after all greater profits by greater numbers of members or milk just means the profits are shared over greater litres and do nothing to actually increase the price of that litre . Arla's aim should be a balance of milk price and a home for every litre of it's current members milk .
Over simplistic I know and no doubt everyone will now explain why so

 

[Iogijones]

http://www.dailypost.co.uk/news/local-news/new-14m-cheese-plant-earmarked-12711669

Can finally talk in the open about this!

At last. This will shake up south Caernarfon and Glambia

 

[happycows]

Let's face it anything that creates more demand for milk, Is British and displaces cheap Irish cheddar has got to only be great news for the British dairy industry. Let's play that Oruna and it's Pilgrims Choice at it's own game.

 

[supercow]

No visable haulage charge and 1.9p volume bonus............ still something not right !!

U don't get a haulage charge? What contract r u on Scottish mainland? Or Lake District ? I agree something isn't right 2 pence difference, take it up with your friends at the local meetings end of March !

 

[cornishfarmer]

Arla to me can be likened to an oil tanker, its so big that it just trundles on, but its extremely slow to maneuver when it comes to milk price and seasonality.

For example even if it now knows it will be short in autumn i think I'm right in saying it would take 2 years to change the seasonality scheme.

This autumn, next autumn and the year after. That's because spring milk isn't penalised enough and autumn milk isn't incentivised enough. Quick way to help bring in a new seasonality with a and b the same then if they are looking short trigger a 1ppl minus in March April, may June then pay it sept till Dec. As Arla members we know already that we have to produce more than last year to get a bonus so it doesn't stack up to produce marginal litres when they really are needed

 

[farmer on a bike]

The reason that you were so short of milk last autumn was related to the fact the price was so bad. I notice you say you COULD be short of milk this autumn. Well how about asking producers what they are going to produce and take the guessing out of it!

Arla's experience has consistently shown that other market information is a better predictor than asking farmers which is why they stopped. For example using calving predictions, feed to milk price ratio, etc.

 

[farmer on a bike]

I am not necessarily talking about reducing traded milk , but reducing the amount that goes into rubbish contracts that serve no one other than to grow for the sake of growth , we were told our brands always returned 26p and above as did our better own brand contracts , now it took more than twenty percent of our pool to drag our price down into the teens unless of course we gave that milk away FOC , there must have been a whole host of rubbish contract milk too , I see no reason to go out recruiting just to supply these customers , if they were not willing to support us through the trough why should we support them now , just leave it to the other buyers who do not take capital from their suppliers to fight it out for those markets . Arla's aim must be to provide a sustainable milk price to it's current owners, which I think it can by getting a higher percentage of sales into our own brands (this is what I think most of us signed up to ) , not to keep growing for the sake of growing and simply recruiting new owners every time it loses past owners who couldn't survive the bottom of the trough , otherwise what is the point of paying into Arla , you are simply working towards some one else future , you may as well do that at a processor who doesn't require capital contributions .
Now I'm not suggesting we suddenly drop all these contracts but a more gradual move so we end up working in a situation where that traded milk is just there to balance our own products and not someone else's and growth comes more organically from our current members .
It might not be the most profitable way for Arla but that should not be it's goal , after all greater profits by greater numbers of members or milk just means the profits are shared over greater litres and do nothing to actually increase the price of that litre . Arla's aim should be a balance of milk price and a home for every litre of it's current members milk .
Over simplistic I know and no doubt everyone will now explain why so

I know a bit about some of these contracts, which is obviously commercially sensitive and it is significantly more complicated on how it impacts on overall price. For example product was sold in Germany below what turned out (with hind sight) to be the trading price. The problem is that if you walk away from the market it is not easy to get back in as it climbs again. I'm glad it is not my job to make that decision.

 

[Chips]

I know a bit about some of these contracts, which is obviously commercially sensitive and it is significantly more complicated on how it impacts on overall price. For example product was sold in Germany below what turned out (with hind sight) to be the trading price. The problem is that if you walk away from the market it is not easy to get back in as it climbs again. I'm glad it is not my job to make that decision.

But my point is we wouldn't want to climb back in when the market turns , yes it might mean we don't get the highs of the market but if we hadn't been taken down to the depths of the sub 20's I don't think the membership would care , the only reason they all shouted so much about not getting the highs in the back end was because we went so low , had the price only dropped to say 24p I don't think many would be moaning at only getting to 27p . Look at rover cars , for years they had land rover and loads of rover cars and didn't get very far , then they dropped the rover cars and focused on the profitable side of the business land rover and now there is no stopping them , I'm not saying we can stop all these poor contracts straight away , just we maybe shouldn't be going out recruiting new supplies just to build rover cars just for the sake of scale .
Ultimately , a cliche I know , but we can't keep doing what we did yesterday and pray for different results , and unless we get a significantly higher proportion of our milk into own brand or stop cross subsidizing marginal litres with our brands we will just end up in the same boat during the next trough , and some of our fellow farmers will not make it through and those that do will be badly hurt and thus we will be short of milk and go out and recruit it or buy it off spot , either way it's our members money being given away to non members of today .
It is great to see vision 2020 has conceded this point slightly in that when first launched ,while proposing growth of our brands it was only in line with the growth of it's milk intake and thus no progress on a per litre basis , now it does include growing value as well as volume but crucially the percentage of our milk in brand will now grow slightly , however this is not through the choice of Arla but rather the fact due to price impact it simply won't get the volume of milk it expected from it badly wounded members .
Sure recruit where we need it for our brands or to balance our brands but why don't we start slowly moving away from these contracts that while profitable some years are quite happy to rip the heart out of Arla members in other years