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Milk Price III

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  • Registered Users Posts: 532 ✭✭✭wats the craic


    That's including vat, isn't it?

    The journal needs a good kick in the unmentionables for starting this milk price and add vat when the vast majority of farmers talk of vat inclusive price:mad:

    yes that includes vat .


  • Registered Users Posts: 11,144 ✭✭✭✭mahoney_j


    Returned my arrabawn fixed schem application today to fix 10% of 2016 supply with option to fix another 10%


  • Registered Users Posts: 2,485 ✭✭✭Keepgrowing


    mahoney_j wrote: »
    Returned my arrabawn fixed schem application today to fix 10% of 2016 supply with option to fix another 10%

    MJ, is there a link to input prices?


  • Registered Users Posts: 11,144 ✭✭✭✭mahoney_j


    MJ, is there a link to input prices?

    None 3 years from March this year and for 8 calendar months from March to October yearly


  • Registered Users Posts: 4,972 ✭✭✭alps


    mahoney_j wrote: »
    Returned my arrabawn fixed schem application today to fix 10% of 2016 supply with option to fix another 10%

    Big call MJ......definitive, while the rest of us dither..

    Well done.


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  • Registered Users Posts: 6,938 ✭✭✭kevthegaff


    Mine is in the bin jerry :-)


  • Registered Users Posts: 8,611 ✭✭✭Mooooo


    Left off here as well. Have some fixed till August if I had joined this one 25% would be fixed below price at the minute and hopefully we will be above it till then anyway. If it doesn't rise much over the year is be wondering would it fall.much the following year. I dunno, maybe chancing it


  • Registered Users Posts: 11,144 ✭✭✭✭mahoney_j


    kevthegaff wrote: »
    Mine is in the bin jerry :-)

    Naghhh I hear you applied to fix 30% Kev !!!!!


  • Registered Users Posts: 11,144 ✭✭✭✭mahoney_j


    alps wrote: »
    Big call MJ......definitive, while the rest of us dither..

    Well done.

    Just looking long term and I've long been a supporter of having a fixed scheme .ill loose this year that's a certain but in 2018 or 19 it could be a saviour .its a gamble but one I'm willing to take for the security it brings .a lot around here very much on fence with an eye on just this years milk price ,only my opinion but I think it's very short sighted .with quotas.now long gone milk is a commodity and like them all will be volatile .i see fixing a portion as like insurance


  • Registered Users Posts: 21,246 ✭✭✭✭Water John


    For any one who hasn't the resources to self insure, a fixed price that you can live with, that is straightforward and not convoluted, is a good idea.
    Don't think you in that bracket, mahoney, but if it makes you content, go for it.


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  • Closed Accounts Posts: 20,633 ✭✭✭✭Buford T. Justice XIX


    kevthegaff wrote: »
    Mine is in the bin filed in the appropriate place jerry :-)
    I fixed that for you, Kev:P


  • Banned (with Prison Access) Posts: 4,617 ✭✭✭Farmer Ed


    I'm afraid we will have to agree to disagree on this one. But surely the very principle of a Co Op is that everyone should be paid the same way for their milk? So in effect what fixed price schemes are doing is putting farmers betting against each other. If milk price goes up then the guy on the fixed price will be getting less so there will be more money to share amongst the people who didnt fix. If the milk price falls the Co Op will have to honor the fixed price, so there will be less money to pay for the milk that wasn't fixed. Either way the Co Op should only be able to pay the same net amount for their total pool of milk. My view is that these schemes are just an exercise in robbing Peter to pay Paul and make it even more difficult and complex for farmers to understand what the true price they are actually being paid is. They will not put one extra cent on average into farmers pockets, what they will do is make it a little less certain as to whose pockets the price paid for milk will end up in.
    If I want to gamble I would prefer to stick with Paddy Power, however whether I like it or not the future price for my milk will now be influenced by a bet with my fellow Co Op suppliers. I don't welcome this. A saving scheme when times are good would have been far more transparent than this casino approach.


  • Registered Users Posts: 11,144 ✭✭✭✭mahoney_j


    Farmer Ed wrote: »
    I'm afraid we will have to agree to disagree on this one. But surely the very principle of a Co Op is that everyone should be paid the same way for their milk? So in effect what fixed price schemes are doing is putting farmers betting against each other. If milk price goes up then the guy on the fixed price will be getting less so there will be more money to share amongst the people who didnt fix. If the milk price falls the Co Op will have to honor the fixed price, so there will be less money to pay for the milk that wasn't fixed. Either way the Co Op should only be able to pay the same net amount for their total pool of milk. My view is that these schemes are just an exercise in robbing Peter to pay Paul and make it even more difficult and complex for farmers to understand what the true price they are actually being paid is. They will not put one extra cent on average into farmers pockets, what they will do is make it a little less certain as to whose pockets the price paid for milk will end up in.
    If I want to gamble I would prefer to stick with Paddy Power, however whether I like it or not the future price for my milk will now be influenced by a bet with my fellow Co Op suppliers. I don't welcome this. A saving scheme when times are good would have been far more transparent than this casino approach.
    Ed your off on a rant again and missing whole point of fixed schemes as well as providing some security in price for your milk suppky


  • Banned (with Prison Access) Posts: 4,617 ✭✭✭Farmer Ed


    mahoney_j wrote: »
    Ed your off on a rant again and missing whole point of fixed schemes as well as providing some security in price for your milk suppky

    As I said we will have to agree to disagree on this. But if you think about this logically, you can't take away from the fact that this involves farmers betting against each other. The value the Coop can make out of our milk will not be changed. Who reaps the reward will.


  • Registered Users Posts: 126 ✭✭Fixture


    Farmer Ed wrote: »
    As I said we will have to agree to disagree on this. But if you think about this logically, you can't take away from the fact that this involves farmers betting against each other. The value the Coop can make out of our milk will not be changed. Who reaps the reward will.

    I think you may not fully understand how the Schemes work. For example Ornua/Dairy Board commit to a price for kerry gold butter or cheese for a year. Retailer in Germany signs up to the price for 12 months. Irish Processor converts it to a cpl price. It's a portion of my co op's product mix. I can take that price or leave it. Regardless of what happens Open market, my milk for Kerrygold Germany or wherever is staying at that fixed price. Where's Peter being robbed to pay me (Paul)?

    Last few years we've won big on fixed price. We lost a bit for a few years before that. I reckon that over 10 years we'll get the average price, no more, no less. But it was great to have it in 2016 and it certainly dilivered value to me.

    Fixed milk is not about beating the market - it's about managing volatility.


  • Registered Users Posts: 11,144 ✭✭✭✭mahoney_j


    Farmer Ed wrote: »
    As I said we will have to agree to disagree on this. But if you think about this logically, you can't take away from the fact that this involves farmers betting against each other. The value the Coop can make out of our milk will not be changed. Who reaps the reward will.

    I'm certainly not betting against other farmers ,I'm sitting down ,trying to asscess where I see milk price over 3 years and trying to hedge some of my milk to protect my income and business from the certain volatility which will occur ,


  • Banned (with Prison Access) Posts: 4,617 ✭✭✭Farmer Ed


    Fixture wrote: »
    I think you may not fully understand how the Schemes work. For example Ornua/Dairy Board commit to a price for kerry gold butter or cheese for a year. Retailer in Germany signs up to the price for 12 months. Irish Processor converts it to a cpl price. It's a portion of my co op's product mix. I can take that price or leave it. Regardless of what happens Open market, my milk for Kerrygold Germany or wherever is staying at that fixed price. Where's Peter being robbed to pay me (Paul)?

    Last few years we've won big on fixed price. We lost a bit for a few years before that. I reckon that over 10 years we'll get the average price, no more, no less. But it was great to have it in 2016 and it certainly dilivered value to me.

    Fixed milk is not about beating the market - it's about managing volatility.

    Whether Ornua commit to fix a price with the Co Op or not is a totally separate arrangement. The reality is up until now the money generated by the Co Op (at least in theory) was shared proportionately amongst all suppliers. If the Co Op had fixed with a purchaser then that was reflected proportionately across all milk supply. It was a bet between the Co Op and the purchaser of the end product. That is nothing new. The overall amount of money that the Co Op will have to share among farmers for their milk will not be affected by fixed price schemes for farmers. How this money is shared amongst farmers will be affected. That's what I mean when I compare it to robbing Peter to pay Paul. Beating volatility would be better achieved by putting money aside in good times for the rainy day. Not the same thing. Fixed price schemes will result in winners and losers.

    Are you suggesting that somehow milk that is signed up to a fixed price scheme with the farmer is somehow able to generate more income for the Co Op than the milk that is not? Chances are whether fixed price milk or not it will all end up in the same pound of butter or whatever the end product is.


  • Banned (with Prison Access) Posts: 4,617 ✭✭✭Farmer Ed


    mahoney_j wrote: »
    I'm certainly not betting against other farmers ,I'm sitting down ,trying to asscess where I see milk price over 3 years and trying to hedge some of my milk to protect my income and business from the certain volatility which will occur ,

    Ok so let's think about this. In the coming year the milk you have fixed will most likely be paid for at a lower rate than the milk that is not. The end result will be that the extra profit made by the Co Op by paying you less for that milk will be shared amongst other farmers. Possibly over the next couple of years as milk price falls the money the Co Op will have to pay you for your milk will result in the Co Op being able to pay farmers who have not fixed less for their milk.

    So what am I missing here? Call is hedging if you like but there will be winners and losers. That I think we can all agree on. This is a departure from the Co Op ethos of paying everyone the same way.


  • Registered Users Posts: 21,246 ✭✭✭✭Water John


    Those who don't fix will have a more volatile price than if there was no fixed price for anyone. I don't like it either but a lot of processors are going that way.
    So each farmer has to make his/her choice.
    Worse still some are convoluting it. Tying it to inputs, etc.


  • Registered Users Posts: 4,972 ✭✭✭alps


    Farmer Ed wrote: »
    Ok so let's think about this. In the coming year the milk you have fixed will most likely be paid for at a lower rate than the milk that is not. The end result will be that the extra profit made by the Co Op by paying you less for that milk will be shared amongst other farmers.

    Eureka.....

    That's the cause of of all the argument, right there....

    The coop don't make any extra profit from Mahoney's milk.....10% of Mahoney's milk has been sold for the next 3 years, to a buyer with ornua acting as the intermediary. Arrabawn will be paid , say 37c/l for this milk and will be able to pass this on to Mahoney less the processing cost.....

    All the rest of his milk, along with yours, will get sold through the normal channels, as usual...

    This scheme is clear cut....no backing against each other...

    I sell 30 Bull calves, to the same buyer, every year, for the same price... €130...this price is constant, and it has no effect on the price that I can get for the rest of the calves...the market can be above this or below this, but the fact that I sell a percentage of my calves at a fixed price, has no effect on the price of calves for anyone else...


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  • Registered Users Posts: 6,135 ✭✭✭kowtow


    Farmer Ed wrote:
    As I said we will have to agree to disagree on this. But if you think about this logically, you can't take away from the fact that this involves farmers betting against each other. The value the Coop can make out of our milk will not be changed. Who reaps the reward will.

    See below.

    alps wrote:
    That's the cause of of all the argument, right there....

    alps wrote:
    The coop don't make any extra profit from Mahoney's milk.....10% of Mahoney's milk has been sold for the next 3 years, to a buyer with ornua acting as the intermediary. Arrabawn will be paid , say 37c/l for this milk and will be able to pass this on to Mahoney less the processing cost.....

    Absolutely. As long as there is a matching fixed price up the chain... in other words between ornua or another processor and the coop. Farmers taking a portion of the fix are just opting in .. the coop is taking (i assume) a similar margin to normal and the farmers are taking the risk (deliberately, on this occasion, because the risk they are taking is of a price *rise* )

    But all that depends on a matching contract. If there isn't one, what Ed says is correct. The farmer ends up betting against his fellow members.... or worse still the coop goes out into the market offering fixed prices and writes betting slips on behalf of all the members.

    It's really important that we make the coops disclose clearly the presence of a matching contract, and also that we highlight the distortion caused by the preference to previous scheme suppliers. That has been a depressing feature of some otherwise sensible schemes. I have some sympathy if it is really needed to get people to dip a toe in the water but it should be ditched as soon as possible if they really want to get serious about this.

    It's not always possible to have a simple scheme because the terms have to work for the end buyer but it is, but making things totally transparent and leaving the choice open is definitely the best way to build confidence in these contracts.


  • Banned (with Prison Access) Posts: 4,617 ✭✭✭Farmer Ed


    kowtow wrote: »
    See below.


    Alps Co Ops forward selling is nothing new. What is new is the way the co ops will share the gains or losses as a result of that forward selling. The amount of milk fixed with the farmer has no relevance on the net amount the co op is paid for the end product.




    Absolutely. As long as there is a matching fixed price up the chain... in other words between ornua or another processor and the coop. Farmers taking a portion of the fix are just opting in .. the coop is taking (i assume) a similar margin to normal and the farmers are taking the risk (deliberately, on this occasion, because the risk they are taking is of a price *rise* )

    But all that depends on a matching contract. If there isn't one, what Ed says is correct. The farmer ends up betting against his fellow members.... or worse still the coop goes out into the market offering fixed prices and writes betting slips on behalf of all the members.

    It's really important that we make the coops disclose clearly the presence of a matching contract, and also that we highlight the distortion caused by the preference to previous scheme suppliers. That has been a depressing feature of some otherwise sensible schemes. I have some sympathy if it is really needed to get people to dip a toe in the water but it should be ditched as soon as possible if they really want to get serious about this.

    It's not always possible to have a simple scheme because the terms have to work for the end buyer but it is, but making things totally transparent and leaving the choice open is definitely the best way to build
    confidence in these contracts.

    Tanks Kowtow

    Would love to see someone with your level of knowledge on a Co Op board.

    As for there being a simpler system?

    Well ever since biscuit tins have been around people have been putting money in to them in good times and before biscuit tins they must have used something else. Possibly a hole in a ditch. it is just called putting a bit aside for a rainy day. It is not rocket science really. But instead of a rainy day fund we have been presented with a gambling fund and as the price we are paid for our milk is going to be effected whether we join or not. It's not even voluntary as such.

    On a positive note at least at this point the volumes are relatively small. Let's hope it stays that way.


  • Registered Users Posts: 4,854 ✭✭✭mf240


    alps wrote: »
    Eureka.....
    .

    I sell 30 Bull calves, to the same buyer, every year, for the same price... €130...this price is constant, and it has no effect on the price that I can get for the rest of the calves...the market can be above this or below this, but the fact that I sell a percentage of my calves at a fixed price, has no effect on the price of calves for anyone else...
    You sell 30 calves at market price and get 130 for 1 and a 1/4 calves . This is subject to you supplying calves for the next number of years . If you have been selling calves at a fixed price below market value you may get an extra calf allowance in any scheme that has a chance of being favourable.

    We may send texts and emails almost daily about so called special offers. But we will have to charge for the administration involved in settings up the fixed calf price scheme.

    *(No Nigerian reps were harmed in the making of this post)*


  • Registered Users Posts: 4,972 ✭✭✭alps


    Farmer Ed wrote: »
    Tanks Kowtow

    Would love to see someone with your level of knowledge on a Co Op board.

    As for there being a simpler system?

    Well ever since biscuit tins have been around people have been putting money in to them in good times and before biscuit tins they must have used something else. Possibly a hole in a ditch. it is just called putting a bit aside for a rainy day. It is not rocket science really. But instead of a rainy day fund we have been presented with a gambling fund and as the price we are paid for our milk is going to be effected whether we join or not. It's not even voluntary as such.

    On a positive note at least at this point the volumes are relatively small. Let's hope it stays that way.


    Biscuit tin is fine Ed, as long as the full price is passed on to you, and you organise your own. Risk is you know well, is that if the "company" organises the biscuit tin, chances are the contents will get squandered.

    Still like friesland campina system, where they organise a biscuit tin for the farmer and the company...


  • Banned (with Prison Access) Posts: 4,617 ✭✭✭Farmer Ed


    alps wrote: »
    Biscuit tin is fine Ed, as long as the full price is passed on to you, and you organise your own. Risk is you know well, is that if the "company" organises the biscuit tin, chances are the contents will get squandered.

    Still like friesland campina system, where they organise a biscuit tin for the farmer and the company...

    True but the thing about the biscuit tin is that it's a lot more transparent than complicated fixed price schemes. Actually you are correct it would possibly be a bad idea for the co ops to be too involved in organising the biscuit tin. But if a farmer did feel he could afford to put a bit aside for the rainy day. Possibly a direct debt set up with the bank and paid in to a savings account would do pretty much the same thing. I honestly think we would all be better served if such a practice was promoted rather than these complex fixed price schemes that involve us all betting against each other and make milk pricing even less transparent than it already is.


  • Registered Users Posts: 11,144 ✭✭✭✭mahoney_j


    Farmer Ed wrote: »
    True but the thing about the biscuit tin is that it's a lot more transparent than complicated fixed price schemes. Actually you are correct it would possibly be a bad idea for the co ops to be too involved in organising the biscuit tin. But if a farmer did feel he could afford to put a bit aside for the rainy day. Possibly a direct debt set up with the bank and paid in to a savings account would do pretty much the same thing. I honestly think we would all be better served if such a practice was promoted rather than these complex fixed price schemes that involve us all betting against each other and make milk pricing even less transparent than it already is.

    How complicated is it ed ,you fix 10% of supply and u know you are guaranteed to receive x price for that 10% for a defined period ,not rocket science .dont but your point re suppliers betting against one another ,its a simple decision for a supplier ,you decide to fix or you don't ,


  • Registered Users Posts: 6,572 ✭✭✭jaymla627


    Farmer Ed wrote: »
    True but the thing about the biscuit tin is that it's a lot more transparent than complicated fixed price schemes. Actually you are correct it would possibly be a bad idea for the co ops to be too involved in organising the biscuit tin. But if a farmer did feel he could afford to put a bit aside for the rainy day. Possibly a direct debt set up with the bank and paid in to a savings account would do pretty much the same thing. I honestly think we would all be better served if such a practice was promoted rather than these complex fixed price schemes that involve us all betting against each other and make milk pricing even less transparent than it already is.

    If a scheme akin to that operated in oz was brought-in where you can put money aside tax free into a account during good years that can be drew down In years like 2016 it would be brilliant, but given the myriad of regulations that exist created by our own law makers on top of the eu it would never see the light of day.....
    I really wouldnt be getting to caught up with the fixed priced schemes the amounts offered never make anyone up especially in glanbia unless you where in the schemes from the beginning, have went through 4 fixed schemes here and applied for well in excess of 600k litres and currently have only 80k of my supply fixed


  • Banned (with Prison Access) Posts: 4,617 ✭✭✭Farmer Ed


    mahoney_j wrote: »
    How complicated is it ed ,you fix 10% of supply and u know you are guaranteed to receive x price for that 10% for a defined period ,not rocket science .dont but your point re suppliers betting against one another ,its a simple decision for a supplier ,you decide to fix or you don't ,

    The way the co op pays for the milk is pretty simple. Just compare it to a cake. If one person gets more cake Someone else will get less cake. How can I put it any simpler than that? You can't have winners without losers.


    Jamala I agree the amounts involved are insignificant anyway. But I like the sound of the Australian scheme. No reason why something like that couldn't be introduced here if the political will was there to do it.


  • Registered Users Posts: 11,144 ✭✭✭✭mahoney_j


    Farmer Ed wrote: »
    The way the co op pays for the milk is pretty simple. Just compare it to a cake. If one person gets more cake Someone else will get less cake. How can I put it any simpler than that? You can't have winners without losers.


    Jamala I agree the amounts involved are insignificant anyway. But I like the sound of the Australian scheme. No reason why something like that couldn't be introduced here if the political will was there to do it.

    Of course there's winners and losers ,I don't share your view on this tho ,the decision rests with each supplier to access his her business and do the best they can to guarantee income ,fixing a portion helps this .as someone who will fix this year I'll loose and the guy who dosnt fix may imply he made a great decision ,next year roles could be reversed I'll win but no point in guy who didn't fix to be whinging .


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  • Registered Users Posts: 2,938 ✭✭✭cute geoge


    IMO it is not as clear cut as you mahony make out .
    For example kerry have a very small % fixed at very good price of 34 cent but farmers who had nothing fixed really suffered last year as kerry offset any costs of the fixed price against real price .It ended up with the farmers who had nothing fixed getting worst price in country and management dictating that any farmers complaining should have fixed price


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