issue 130 april 2015 independent ... - direct milk dpo...milk production in the uk contin-ues to...
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www.dairycrestdirect.co.ukNEWSLETTER
Issue 130 April 2015 Independent Representation for Dairy Crest Direct DPO Suppliers
Dairy Ingredient Prices - MARCH 2015Source AHDB DAIRY - next review W/C 27 April
Mar 2015 Feb 2015 Mar 2014 Yr on yr changeButter £2,350/t £2,500/t £2,900/t - £ 550/t - 18.97% SMP £1,550/t £1,700/t £2,725/t - £1,175/t - 43.12%Mild Cheddar £2,350/t £2,450/t £3,300/t - £ 950/t - 28.79%Mature Cheddar No Dairy Co mature cheddar data published since July 14Cream £1,070/t £1,170/t £1,380/t - £ 310/t - 22.46%Whey Powder £ 690/t £ 705/t £ 780/t - £ 90/t - 11.54%
Cream Index 6.08p/l 6.66p/l 7.75p/l - 1.67p/l - 21.55%AMPE14* 19.40p/l 21.60p/l 33.60p/l - 14.20p/l - 42.26%MCVE14* 22.70p/l 23.90p/l 33.70p/l - 11.00p/l - 32.64%* AMPE/MCVE 14 - includes -2p/l D Co estimated delivery cost ‘farm to dairy’.
DC Price In Context with AMPE 14/MCVE 14*
MARCH DAIRY MARKETS - REVERSEDCD DPO - THE UK’S FIRST DAIRY PRODUCER ORGANISATION
DCD DIRECTOR AND FORUM ELECTION - RESULTS
Milk production in the UK contin-ues to track record volumes pro-duced a year ago (see chart above)and expected to reach 14.4bn forthis milk year, +700m litres on13/14 and a record for more than30 years. Meanwhile EU memberstates gear up for production free-dom ‘post quota,’ and ‘downunder’ the drought in NZ abates,and so global, EU and UK dairymarkets have unfortunatelyreversed during March.The latest GDT auction result of-8.8% two weeks ago sent anunwelcome warning of the globalmarket fragility, this in contrast tothe increases reported sinceDecember. Auction results acrossthe EU have also recorded similardownturns during March, particu-larly since the EU commissionconfirmed the new ‘easy paymentthree year’ term to pay off therecord final €750m (£550m) overquota levy impacting across morethan a dozen EU states. So as UK production climbs, spotmilk returns have declined to lessthan 20p, with average Irish milk
prices alreadyat just 21p/ladding furtherpressure. AHDB Dairy(Dairy Co)released theMarch monthlyw h o l e s a l edairy price
report last Friday - see chartbelow, recording a reversal of themore optimistic market newsrecorded for February. This haslargely been a consequence of theEU growth in production and cur-rency issues. The weakness of theEuro vs. the strength of Sterlingproviding a currency aided com-petitive advantage for those seek-ing to access UK markets.Dairy Co’s latest market indicatorresults for AMPE (processing milkinto butter/skim milk powder) reducedby over 2p/l this month, and signif-icantly -14.2p/litre (-42.3%) deficitto the position in March 2014.MCVE (processing into mild cheddar)is down -1.20p/l, and -11p/litre(-32.6%) deficit year on year.In conclusion, no changes are toapply to Dairy Crest StandardLiquid or Davidstow prices forMay. The DCD agreed ‘milk pricefloors’ applied to both contractsfrom March will remain in placeuntil July, providing a very usefulguarantee against the recentunwelcome UK and EU dairy mar-ket downturn.
DPO
As we went to press with theMarch Newsletter, DCD had justbeen informed that it had passedthe RPA regulatory requirementsto become the UK’s first DairyProducer Organisation (DPO). Thisnews followed up by a Defra invita-tion - see above.Through our successful applicationto access £110,000 of RDPE DairyFunding, one of the Dairy Fundprojects was to evaluate DCD’sstructural arrangements, and thepotential that forming a DPO maypresent.During 2012, in preparation for theending of milk quotas, the EUpassed new laws to allow for theprovision of legally constituted,electorally accountable groups ofdairy farmers selling their milk toprivate dairies to form DPO’s. Thissecures exemptions from competi-tion rules (as long as the DPO repre-sents less than 33% of national milksupply) and provides DPO’s legalstatute to formally negotiate pricesand contracts. There are alreadydozens of DPO’s in the EU, but
DCD will be the very first regis-tered in the UK.DCD member contracts willremain between the individualmember and processor, with theDPO legally negotiating prices,co ordinating milk forecasts, con-tract terms and conditionsincluding developing new optionson member’s behalf. The DCDDPO, as a democraticallyaccountable independent organi-sation will also offer training and
support for it’s reps, whilst provid-ing a processor with a structuredconduit to add value to memberconsultation and future projects.Since the DCD DPO approval, wehave been working with DairyCrest to integrate the legal DPOstructural requirements within theProducer and Member Agreements- these will be launched soon. So how does the proposed sale ofDairy Crest’s Dairies business toMuller affect the DPO? The EU hasrecently referred the DC proposedsale back to the UK Competitionand Markets Authority (CMA). DCD’s objective is to establish asingle DPO in the first instancewith the potential to divide thisinto two following the conclusionof the sale process. This providingfinancially independent and elec-torally accountable DPO’s to: a) Muller, and, b) Dairy Crest Davidstow, with structures that are legally con-stituted, robust and competitioncompliant.
David Herdman (DCD Chairman) being congrat-ulated on the DCD DPO success by Brendon
Lancaster, (Head of Dairy Team, Defra), London.
PRODUCTION UP, MARKETS DOWN DCD DPO
Dairy Crest Direct Limited, Registered in England and Wales, Company Number 5094434Registered Office: Hill Farm, Longney, Gloucestershire, GL2 3SW
Useful Contacts:Your DCD Forum
MemberForum contact details can befound via the DCD Website or
via the Dairy Crest Farm Connect website
DCD Office:Michael MastersT: 01458 835060M: 07729 788767F: 01458 833007E: [email protected]: www.dairycrestdirect.co.uk
Dairy Crest FarmBusiness Centre: Freephone: 0800 121 [email protected] assist:Electricity: 0844 887 1114Footprinting: 01452 720053White Gold: 0845 873 1410
DCD Election Results New Director - Stephen Riding
Further to the requestfor candidates to benominated as a DCDDirector, three applica-tions came forward.Following the ‘ForumHustings’ held lastmonth, Stephen Riding
(above) was ultimately successful through theelectoral process. Stephen commences his roleon the Board from April.Stephen is the first ever DCD Director elect-ed from Lincolnshire, and has sold his milk toDairy Crest via a Liquid contract since 2009.He farms 850 acres with his family whichincludes a herd of just under 200. He has abreadth of experience as a representative,serving on the DCD Forum for four years, plusholding NFU office as Lincolnshire andNottinghamshire Milk Committee Chairmanfor six years, as well as being a CouncilMember with DFB.Forum Member - ResultsAll DCD Officer elections are held by rotation,three year terms, for both the Board and theForum. This year, elections within Liquid Forumareas have been postponed to allow for theproposed sale of the DC Dairies business toconclude to provide the continuity requiredthrough the transition. So this year, rotationalDavidstow Forum candidate requests were cir-culated, plus a by election to cover OrganicRepresentation. As a result the following wereelected.Organic - Sue Rawlings
Sue has been the ViceChairman of the DCDOrganic Group formany years, and hasnow become bothForum Rep andOrganic Chairman. Suehas farmed organically
with her husband Colin for 14 years. Davidstow - East Cornwall Gemma Smale-Rowland
Gemma joins theForum as a newDavidstow Forum Rep.She farms with herhusband and his familynear Launceston, aswell as working for
Mole Valley Farmers as their Dairy Hygienespecialist for the south west. Davidstow - North, South & East Devon- Andrew Branton
Andrew has been re-elected as theDavidstow Rep for thisregion. He farms nearTiverton in Devon withhis wife Nicky. This willbe Andrew’s third termof Office on the
Forum, he currently holds the responsibility asForum Vice Chairman. Formerly this regionwas a joint Davidstow/Liquid contract area, buthas now been assigned a Davidstow onlyregion in preparation for the DairyCrest/Muller sale.Andrew will join his colleagues on theBoard/Forum at the next Forum Meeting laterin April when Mike Sheldon, Dairy CrestGroup Procurement Director will in atten-dance through a Q&A session. If you have aquestion that you would like addressed at themeeting, do contact your local regional ForumRepresentative - contact details on your milkstatement or via www.dairycrestdirect.co.uk
Davidstow Meetings &Farm Standards Launch
Capacity attendances gathered at several of theDCD arranged meetings held earlier in March
for Davidstowm e m b e r s .During thesesessions newDavidstow FarmStandards werelaunched. These
detailing the latest requirements, permitteddairy chemicals and additional protocols neededto supply milk that is destined tobecome the key ingredient forInfant Formula production fromthe new Davidstow de-miner-alised whey powder facilities.If in any doubt about the permit-ted Dairy Chemicals that canstill be used, do seek writtenreassurance from your supplierthat the Dairy Chemicals you use in the parlour,dairy or in footbaths do not include QAC’s, orSodium dichloroisocyanurate ingredients. All Davidstow members will be audited to thesenew standards between 1st April and 30th Juneto dovetail with commissioning of the new pro-cessing at the Creamery.Asian markets for Infant Formula have increasedexponentially with the onset of the rapiddemand for dairy, and of course, the 2013 relax-ation of the single child policy in China.
According to theWorld Bank, China has30% of the global InfantFormula market, withparents prepared to
spend 20%+ of their disposable income on InfantFormula purchases. Since the 2008 Chinesemelamine contamination(when 50,000 childrenwere hospitalised),imported Infant Formulais regarded as verymuch safer, withFonterra (Dairy Crest’strading partner atDavidstow) supplying90% of this market.
DCD DirectorIan Harvey DCD Dairy Fund - Outputs
DCD this month completed it’s Dairy Fundprojects, investing the Defra/RDPE funding of£110,000 into a number of key projects.1. DCD DPO DevelopmentAs reported overleaf, DCD engaged consult-ants Promar International to facilitate thisevolution with the Board and Forum, securingRPA DPO approval at the end of February.2. Contract Evolution Incl Dairy FuturesDCD engaged Stephen Bradley ofmilkprices.com to evolve new contractoptions, and Eurex Dairy Futures specialistsFC Stone to develop an innovative DairyFutures option - more news to follow.3. DCD Forecast Predictor ToolDeveloped with Promar International, provid-ing DCD members with a 24/7 facility for pre-dicting milk production - launched to coincidewith DCD’s recent forecast capture process. Please remember that this Forecast Tool isavailable for you outside of the usual forecastrequest periods.