Milk Price Tracker

[Farmer1001]

Farmers Weekly running the news this weekend but saying 50% of your production up a maximum of 10,000lts per month! I am thinking they may have missed a 0 of the 10,000.

I think the minimum is 10,000 litres/month up to a max of 50% of production, interestingly the 28ppl is 4ppl above Muller average for 15/17 - according to AHDB. Don't forget Glanbia have offered producers the chance to fix up to 100% of their milk at 31 eurocents a litre at 3.6% butterfat and 3.3% protein, across a five-year period. This makes Muller announcement not as great as it's made out, even more it just shows they can offer forward prices for longer periods than producers are lead to believe, proving the normal month by month way of pricing milk has only ever been to ensure buyers pay as little as they can get away with and no more than they have to - for those who still think the milk market in the Uk is 'normal'!

 

[Farmer1001]

I think the minimum is 10,000 litres/month up to a max of 50% of production, interestingly the 28ppl is 4ppl above Muller average for 15/17 - according to AHDB. Don't forget Glanbia have offered producers the chance to fix up to 100% of their milk at 31 eurocents a litre at 3.6% butterfat and 3.3% protein, across a five-year period. This makes Muller announcement not as great as it's made out, even more it just shows they can offer forward prices for longer periods than producers are lead to believe, proving the normal month by month way of pricing milk has only ever been to ensure buyers pay as little as they can get away with and no more than they have to - for those who still think the milk market in the Uk is 'normal'!

the point being the market can tell producers what they will pay you in March 2020, therefore there is no valid reason a producer should be locked into a contract at a price not known or unacceptable.

 

[Surface Tension]

the point being the market can tell producers what they will pay you in March 2020, therefore there is no valid reason a producer should be locked into a contract at a price not known or unacceptable.

These prices relate to specific volumes of milk though and unless processors have access to fixed prices further up the supply chain, either with retailers or via commodity contracts, then they won't be in a position to offer long term fixed price contracts to farmers without exposing themselves to potential future losses.

Also what happens when you have an 18 month contract to supply a fixed volume at a fixed price and the market moves up 5ppl (for example)? Your fixed price contract effectively locks you into supplying that processor for that time period, so even though you may have a 3 month resignation period specified in your contract it would be negated by your 18 month contract.

 

[Kingofgrass]

Yew tree march 4.81fat/3.56pro
Some at 32.48,some at 30 market price litres 26.34pltr
Average 29.5
28ltrs/cow/day sold

 

[Alfred]

These prices relate to specific volumes of milk though and unless processors have access to fixed prices further up the supply chain, either with retailers or via commodity contracts, then they won't be in a position to offer long term fixed price contracts to farmers without exposing themselves to potential future losses.

Also what happens when you have an 18 month contract to supply a fixed volume at a fixed price and the market moves up 5ppl (for example)? Your fixed price contract effectively locks you into supplying that processor for that time period, so even though you may have a 3 month resignation period specified in your contract it would be negated by your 18 month contract.

Spot on with that analysis @Surface Tension

 

[Farmer1001]

These prices relate to specific volumes of milk though and unless processors have access to fixed prices further up the supply chain, either with retailers or via commodity contracts, then they won't be in a position to offer long term fixed price contracts to farmers without exposing themselves to potential future losses.

Also what happens when you have an 18 month contract to supply a fixed volume at a fixed price and the market moves up 5ppl (for example)? Your fixed price contract effectively locks you into supplying that processor for that time period, so even though you may have a 3 month resignation period specified in your contract it would be negated by your 18 month contract.

Sorry I thought there was discontent with howv the market has/does reward primary producers by virtue of the fact the market is what it is, but contracts alllow buyers to place risk wholly with producers. Point taken.

 

[Farmer1001]

These prices relate to specific volumes of milk though and unless processors have access to fixed prices further up the supply chain, either with retailers or via commodity contracts, then they won't be in a position to offer long term fixed price contracts to farmers without exposing themselves to potential future losses.

Also what happens when you have an 18 month contract to supply a fixed volume at a fixed price and the market moves up 5ppl (for example)? Your fixed price contract effectively locks you into supplying that processor for that time period, so even though you may have a 3 month resignation period specified in your contract it would be negated by your 18 month contract.

At least you have locked into a price you are make money at, rather than losing sleep not knowing if your going to be in business or losing money hand over fist.

Spot on with that analysis @Surface Tension

Milk price doesn't kill the industry, volatility does. Fixed term pricing on some or all of production removes volatility and (as not included in the above analysis) protects producers if the market moves down - and there will always be more direct downward pressure than up, not saying the price will always be forced down, but buyers dont put effort into forcing prices up. Anyway, producers don't have to fix and many doubt have the choice.

 

[Scholsey]

March Omsco, 36.5ppl 3.85bf 3.1p 31bac 160scc, seasonality screw is being tightened.

 

[Alfred]

At least you have locked into a price you are make money at, rather than losing sleep not knowing if your going to be in business or losing money hand over fist.


Milk price doesn't kill the industry, volatility does. Fixed term pricing on some or all of production removes volatility and (as not included in the above analysis) protects producers if the market moves down - and there will always be more direct downward pressure than up, not saying the price will always be forced down, but buyers dont put effort into forcing prices up. Anyway, producers don't have to fix and many doubt have the choice.

You need to read slowly what @Surface Tension says again!!
Also don't forget that you will be locking in anywhere up to 50% for 3 years @28p which is below what most of the supermarket’s state is the true cost of production on the aligned contracts of their own!!
Then you realise that buy default you have locked in the other 50% at whatever they want to get away with paying you for 3 years, basically whatever they want to in the knowledge that you can't leave them with 3 months notice anymore.
Do away with the "exclusivity" part of the contract, keep 50% @28p and have the option of selling the other 50% to another buyer, then you are in business!!!!
But that ain't being offered, and I doubt very much if it will be anytime soon.
That's far too much risk to spread over 3 years and does nothing to spread the risk associated with volatility, all it does is handcuff you to one buyer for 3 years!

 

[Farmer1001]

You need to read slowly what @Surface Tension says again!!
Also don't forget that you will be locking in anywhere up to 50% for 3 years @28p which is below what most of the supermarket’s state is the true cost of production on the aligned contracts of their own!!
Then you realise that buy default you have locked in the other 50% at whatever they want to get away with paying you for 3 years, basically whatever they want to in the knowledge that you can't leave them with 3 months notice anymore.
Do away with the "exclusivity" part of the contract, keep 50% @28p and have the option of selling the other 50% to another buyer, then you are in business!!!!
But that ain't being offered, and I doubt very much if it will be anytime soon.
That's far too much risk to spread over 3 years and does nothing to spread the risk associated with volatility, all it does is handcuff you to one buyer for 3 years!

I did read it clearly and thoroughly. But to answer some of your points, currently very very few producers can leave with 3 months notice and many stuck with up to 2 years notice, so affectively 'handcuffed' to one buyer and no idea what price will be paid. Also, whilst fixed priced seems alien to many producers when selling milk, it's not alien when buying inputs such as feed, fert, fuel, funding - the principle is identical and most producers engage in forward fixed buying for the exact reasons I am an advocate for more offers of forward selling. The point you make about selling 50% to one buyer and being free to sell to another will never ever happen, it's not practical or realistic - 2 tankers a day? Or buyers take in turns every other day, it won't work, will add cost and confusion. Ultimately being offered the option of fixing the price on some milk is better than not having the option, it's your choice (if you have the choice) to say yay or nay, no one is forcing producers to lock in, but you 100% are forced to accept the price that's currently inflicted upon you. I am sure some on here who are currently receiving 6PPL more for their forward sold milk than their market milk are quite pleased they had the choice. Ultimately I am not over impressed with the Muller deal when compared to Glanbia, but am far less impressed with current contract practice and would rather have some certainty when faced with the most uncertain future we face. But that's just my opinion.

 

[dinderleat]

March Omsco, 36.5ppl 3.85bf 3.1p 31bac 160scc, seasonality screw is being tightened.

You’ll get reprimanded for sharing that price mind. [emoji6]
Looks like runny egg has found a friend

 

[Alfred]

You’ll get reprimanded for sharing that price mind. [emoji6]
Looks like runny egg has found a friend

Ha ha @dinderleat, I'd send him a greeting card and say hello, I've been searching for the address on goggle maps, but unfortunately I can't find the postcode for "cloud Cuckoo Land"

 

[Cows 'n grass]

@Alfred

You may have mentioned it before but I must have missed it. Can I ask who you supply and what price you received in March?

 

[coomoo]

@Alfred

You may have mentioned it before but I must have missed it. Can I ask who you supply and what price you received in March?

Or who you work for

 

[Farmer1001]

Ha ha @dinderleat, I'd send him a greeting card and say hello, I've been searching for the address on goggle maps, but unfortunately I can't find the postcode for "cloud Cuckoo Land"

2015 will live long in the memories of most in the industry, it took its toll physically, financially and mentally and many are still paying the price. But 2015 was not caused by a blip of some kind, it was the way the market works in a post quota world and all the things that conspired resulting in 2015 are still a risk, i.e. Uncapped production, cancelled export deals, ruthless buyers able to pass risk down the line etc. I am not preaching wholesale change, I am an advocate for reducing risk, increased promotion, greater consumer interaction and fair contracts, and fixed pricing is a growing part of the latter. But I agree I probably do live in cloud cuckoo land . Btw with your earlier ref to aligned supermarket contracts - these cost plus contracts are a form of fixed pricing where producers know where they stand and accept a margin rather than a gamble, and if I'm not mistaken, the producers on COP contracts had a good year in 2015.

 

[Farmer1001]

You’ll get reprimanded for sharing that price mind. [emoji6]
Looks like runny egg has found a friend

You can never have too many friends

 

[Scoobyscotlad]

Re: Lidl Muller fixed price contract, don’t expect many will achieve 50% of production if apply...letter states 50% of your lowest months production rounded down to nearest 10,000 litres .....do the maths 180million litre contract,if all 650 apply, average 1million producer, 650million - 50% is 325million...closer to 25-30% of production if all uptake it

 

[Farmer1001]

Re: Lidl Muller fixed price contract, don’t expect many will achieve 50% of production if apply...letter states 50% of your lowest months production rounded down to nearest 10,000 litres .....do the maths 180million litre contract,if all 650 apply, average 1million producer, 650million - 50% is 325million...closer to 25-30% of production if all uptake it

You tempted?

 

[Scoobyscotlad]

It’s interesting but like everything in this industry we operate in, dressed up to be more than it actually is....
We are grazers thru and thru, the blood runs green, but cows will be entering their 10th month housed come May, it’s been a very tough year up here, we are needing a break!...

 

[Farmer1001]

It’s interesting but like everything in this industry we operate in, dressed up to be more than it actually is....
We are grazers thru and thru, the blood runs green, but cows will be entering their 10th month housed come May, it’s been a very tough year up here, we are needing a break!...

Devils always in the detail. I wish you a long warm green summer. Best wishes.