www.dairycrestdirect.co.ukNEWSLETTER

Issue 133 July 2015 l Dairies l Independent Representation for Dairy Crest Direct DPO Suppliers

Dairy Ingredient Prices - JUNE 2015Source AHDB DAIRY - next review W/C 27 JULY

June 2015 May 2015 Jun 2014 Yr on yr changeButter £2,150/t £2,150/t £2,875/t - £ 725/t - 25.22% SMP £1,275/t £1,325/t £2,400/t - £1,125/t - 46.88%Mild Cheddar £2,350/t £2,350/t £3,050/t - £ 700/t - 22.95%Mature Cheddar No Dairy Co mature cheddar data published since July 14Cream £1,000/t £ 920/t £1,400/t - £ 400/t - 28.57%Whey Powder £ 571/t £ 645/t £ 741/t - £ 170/t - 22.94%

Cream Index 5.44p/l 5.00p/l 7.98p/l - 2.54p/l - 31.83%AMPE14* 15.70p/l 16.20p/l 30.30p/l - 14.60p/l - 48.18%MCVE14* 21.90p/l 22.30p/l 30.80p/l - 8.90p/l - 28.90%* AMPE/MCVE 14 - includes -2p/l D Co estimated delivery cost ‘farm to dairy’.

DC Price In Context with AMPE 14/MCVE 14*

DCD DPO 95% ‘SIGN UP’ SUCCESS BY 1st JULY STANDARD LIQUID & ORGANIC PRICE - FURTHER AUGUST STABILITYDAIRY MARKETS REMAIN UNDER PRESSURE AS PRODUCTION INCREASES

JUDCD DPO SUCCESSAs this Newsletter goes to press, DCD hassignificantly exceeded the RPA thresholdrequired to establish the UK’s first DairyProducer Organisation (DPO) as 95% ofmembers have ‘signed up’. Very many thanksto the record numbers attending the recentmeetings, and to all who have chosen to jointhe DPO. Dairy Crest will now be counter-signing the DC Milk Producer Agreementsand returning a copy to you to retain. Reminder: Those who still wish to join theDPO need to complete, sign and return bothof the new Dairy Crest Milk ProducerAgreements and one copy of the DCD DPOMember Agreement asap. Those selecting toremain outside of the DPO not priced byFormula or retail arrangements, will retainmilk pricing ‘by discretion’. At this year’s Royal Cornwall Show (see pic-ture right) discussions were dominated bymilk price prospects, interest in the progressof the new whey processing facilities atDavidstow, and of course the new DPO con-tract changes. Farming Minister GeorgeEustice also visited the DC/DCD showstandand congratulated and endorsed DCD’s UKleading role in evolving to DPO status. August Milk PricingAgainst an extremely unhelpful backgroundof increasing milk volumes domestically andin the EU, dairy markets have again beenunder tremendous pressure. This evidencedall too clearly by falling spot milk prices, poorcommodity returns, plus some competitorsat short notice cutting prices further.Despite this, DCD has been able to agree toan additional month of welcome milk price

stability for August for Standard Liquid andOrganic contracts. Davidstow: In recognition of the new higher productionstandards required to supply the globalInfant Formula market, with these achieved,this will deliver an agreed milk increase of+0.25p/l to apply from August.Dairy Markets - latestAHDB’s (Dairy Co) June market review(released Friday - see chart below) reportsan improvement for cream returns, but oth-erwise records a downbeat market dataset.AMPE (processing milk into butter/skim milkpowder) falls yet again and back to a level notseen since August 2006, with SMP valuesnow at almost intervention levels.Meanwhile, MCVE (processing into mild ched-

dar), falls again, with conventional whey pow-der returns down to the lowest levels forfive years at £571/t.

Milk Production - UK AHDB’s latest UK daily milk production datareleased last Friday for the period to 20thJune, reports +1.1m litres/day above thesame week in 2014. At last - a reductionrecorded in the weekly incremental increas-es for the first time in weeks. (cont over)

DPO

FARMING MINISTER GEORGE EUSTICE M.P. ENDORSES DCD’S LEADING DPO STATUS

L TO R: DCD Directors Ian Harvey; DCD Vice Chairman Stephen Bone;The Minister inspecting the new Milk Producer Agreement/DCD DPO Agreement; Richard Stanbury , and Dairy Crest’s Agriculture & Communications Director Lyndsay Chapman

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: m.masters@dairycrestdirect.co.ukW: www.dairycrestdirect.co.uk

Dairy Crest FarmBusiness Centre: Freephone: 0800 121 4766farm.business@dairycrest.co.ukAgri assist:Electricity: 0844 887 1114Footprinting: 01452 720053White Gold: 0845 873 1410

Production & Markets cont: UK milk production results released the pre-vious week to 13th June recorded anincrease of +1.6m litres/day (+0.5m l/dayhigher), and production levels similar tothose achieved at the 2014 peak. Excellentgrass growing conditions so far this year, anincreasing UK herd and a record number ofimported cattle in 2014 have all contributedto further historic levels of milk production. As we reported at the recent DCD membermeetings, the change in the rolling UK 12months milk production across the last twoyears has seen an increase amounting to anadditional 1.6billion litres. This volume placedin context against UK retail liquid milk salesequates to approx. the entire annual retailliquid milk sales of major retailers Tesco,Sainsbury and Waitrose - combined.Production across many EU states nowunshackled by milk quotas is similarly accel-erating. The ‘Irish Farming Journal’ only thislast week reported that major Irish proces-

sor Glanbia is recording increases in milkproduction equating to +18% for June alone.Other Irish processors are reporting similarincreases. No details are available as yet as towhat dairy products this additional milk hasbeen processed into; cheese, butter or milkpowders.

Respected bankersto the international

dairy sector, Rabobank, in their latest quar-terly Dairy Prospects report that dairy mar-ket recovery is now not expected until laterin 2016. Milk production supply vs demandrequiring to come into balance before anyrecovery starts. That said, caveats around asignificant adverse ‘weather event’ maychange this position. This week’s announc-ment of a further 12 month’s extention tothe Russia/EU dairy trade embargo will notprovide any early welcome respite either.As a consequence of the global change indairy market fortunes, those nations morereliant on international markets are now

offering longer term fixed prices at low lev-els. In Ireland c.20p/21p/l for the next threeyears, and NZ Fonterra offering a guarantee15/16 payment of c. 17p/l - this being 100%oversubscribed even at this low level. NZ milk prices in February 2014 by contrastwere c. 34p/l.

DCD Annual Report& AGM - 14th JulyThe AGM is being held atStonehouse Court Hotel, BristolRoad, Stonehouse, Glos, GL103RA. All details are includedwithin the 11th DCD AnnualReport circulated previously tocomplement this meeting. Thereport details what has been atransformative year in DCD’sdevelopment, enhanced by ourGovt. Dairy Funded activities. The AGM usually lasts an hour,light refreshments to follow.

Muller & Dairy Crest‘dairies sale’ Latest The CMA who arethe regulatoryauthority reviewing the pro-posed sale, announced last Fridaythat Muller has responded to theCMA’s initial report (12th June)requiring that further ‘undertak-ings’ to safeguard competitionwould be necessary. The CMA now has until 21stAugust to report. To see the fullCMA press release see the web-site www.dairycrestdirect.co.uk

On Farm AntibioticTesting RequirementAs a reminder, the New MilkProducer’s Agreements requiresthat all farms must have theirown antibiotic test kit, and up todate ampules on farm. DCD hasagreed discounted rates tosecure Delvo SP kits and con-sumables. This is the most com-prehensive AB testing kit avail-able, also used by NML.DCD Price - excl VAT and p&pDelvo SP incubator £101.00 25 pack ampules £ 41.95

June saw celebrations take placemarking one and a half decades ofboth the Marks & Spencer andWaitrose milk pools. These two

retail relationships are the ‘forerun-ner exemplars’ of all farmer retailmilk pools. Originally launched byUnigate, with an initial milk pricepremium of just +0.2p/l above the

standard liquid contracts back in 2000, to the levelachieved today within Dairy Crest’s stewardship. The scheme’s standards required to supply both of

these premium retailers have naturallyevolved considerably over the interven-ing 15 years, these developed in closeconsultation with their DCD reps andDairy Crest throughout. Special mention of thanks must beextended to all of the representativeteams involved since the outset, and inparticular, to the two pool Chairman,Brian Barnett (Waitrose) and MarkRobins (M&S) who have overseen bothpools for many years.

Brian Barnett

Dairy Chemical Alert - QACsDue to a legislative change acrossthe entire food sector from 12thAugust, will see the need to removeall inclusions of dairy chemicals containingQACs (Quaternary Ammonium Compounds)ingredients. This largely (but not exclusively)affects powder based dairy chemicals. So do ensure that you seek written assur-ances from your dairy chemical supplier,along with new chemical datasheets substan-tiating no inclusion of any QACs ingredientsin any dairy chemical used. More details will follow from Dairy Crestshortly.

To order or for more informationt. 01225 460234/423894

or: www.millwoodproducts.co.uk

Mark Robins

15 Year Anniversary of DCD Member Milk Pools