Milk Price III

mahoney_j · 19-02-2017 02:01PM

cute geoge wrote: »

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

My question to u why didn't the non fixers fix ,

Water John · 19-02-2017 02:14PM

Well, in that case, the processor board fixes whatever % they want, say 10/20%. But this then applies to all their suppliers.
That would act almost the same as the rainy day fund. It would attempt to level the price out over time. Lower the modulations.
Asking each farmer to opt in or out, has the reverse effect. That increases the modulations.

pedigree 6 · 19-02-2017 02:53PM

Why can't Glanbia do what the other co-ops do and offer the schemes on a percentage of what you supplied last year?
Rather than this smoke and mirrors stuff.

Timmaay · 19-02-2017 03:15PM

mahoney_j wrote: »

My question to u why didn't the non fixers fix ,

I've fixed nothing here, no real plans to, I'm lucky enough to have been handed what I have, but I've also made the point of keeping borrowings low, low enough labour bill also. That's my insurance right there, I can stomach the low milk price years relatively well, so see no reason to get involved with complicated fixed price schemes that in my view are like an insurance policy which the processor certainly have their cut on also.

But what seems to be suggested here annoys me, that the likes of me should be pressured into fixing milk, simply because otherwise I'm going to be one of the idiots on the other side, receiving a lower milk price because the processor are balancing up the fixed price "winners" with a lower price for everyone else. That's if my interpretation of fixed price schemes is correct, I don't know if it is, but this is a big problem, we need more clarification and communication from the processors on what way the fixed price schemes work??

Farmer Ed · 19-02-2017 03:19PM

cute geoge wrote: »

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

That's exactly the way it works George. If a Co Op model at least, was working properly. The co op should have only a certain amount of money to pay the farmers for their milk each month. Up until now each farmer was paid the same way. But what will happen now is that if one group of farmers are paid more the other group of farmers will have to be paid less. That is how these milk price schemes work. Indeed that's how everything in a co op works. Every time a co op has to spend money. That means they have less money left to pay you for your milk. It's a very simple concept that sadly many people have difficulty grasping. That is why I have always believed we need to be sure our co op are not wasting any of our money.

Farmer Ed · 19-02-2017 03:34PM

Timmaay wrote: »

I've fixed nothing here, no real plans to, I'm lucky enough to have been handed what I have, but I've also made the point of keeping borrowings low, low enough labour bill also. That's my insurance right there, I can stomach the low mileage price years relatively well, so see no reason to get involved with complicated fixed price schemes that in my view are like an insurance policy which the processor certainly have their cut on also.

But what seems to be suggested here annoys me, that the likes of me should be pressured into fixing milk, simply because otherwise I'm going to be one of the idiots on the other side, receiving a lower milk price because the processor are balancing up the fixed price "winners" with a lower price for everyone else. That's if my interpretation of fixed price schemes is correct, I don't know if it is, but this is a big problem, we need more clarification and communication from the processors on what way the fixed price schemes work??

Unfortunately Tim even if you sign up to the fixed price scheme or not, going forward all our milk prices will be effected either or negatively or positively by these schemes. As I have said already. If you think of milk price as a cake that the co op has to share every month. If some other one gets a bigger slice, you have to get a smaller slice, or vice versa. The co ops as far as I can see are not increasing the size of the cake one bit by having these schemes. All they are doing is changing how they share the cake. In my view making the process less transparent as a result.

mahoney_j · 19-02-2017 04:09PM

Farmer Ed wrote: »

That's exactly the way it works George. If a Co Op model at least, was working properly. The co op should have only a certain amount of money to pay the farmers for their milk each month. Up until now each farmer was paid the same way. But what will happen now is that if one group of farmers are paid more the other group of farmers will have to be paid less. That is how these milk price schemes work. Indeed that's how everything in a co op works. Every time a co op has to spend money. That means they have less money left to pay you for your milk. It's a very simple concept that sadly many people have difficulty grasping. That is why I have always believed we need to be sure our co op are not wasting any of our money.

So your gripe is more with coop structure so ed than a fixed scheme ?????as I've said umpteen times already no one is forced to fix it's an option /insurance policy offered by a coop to its supplier ,I've signed up knowing I'll loose this year ,won't complain but your saying next year if fable turns you'll cry wolf if you loose even though you'll have creamed it this year .im happy and clear with my decision for the security it'll provide on a portion of my milk .someone posted earlier that probably over x period it'll balance out and I'll probably be no better off but I'll be damn glad of the cushion in a poor price year than what I'll loose in a year like this

Buford T. Justice XIX · 19-02-2017 04:14PM

jaymla627 wrote: »

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

I was really expecting a similar scheme to be introduced in the last budget but it looks like a moot point at this stage with an election likely in the next year.

You would imagine it should be simple enough to set up and enforce, even to partially tax the savings after, say, 5 or 7 years.

pedigree 6 · 19-02-2017 04:18PM

mahoney_j wrote: »

So your gripe is more with coop structure so ed than a fixed scheme ?????as I've said umpteen times already no one is forced to fix it's an option /insurance policy offered by a coop to its supplier ,I've signed up knowing I'll loose this year ,won't complain but your saying next year if fable turns you'll cry wolf if you loose even though you'll have creamed it this year .im happy and clear with my decision for the security it'll provide on a portion of my milk .someone posted earlier that probably over x period it'll balance out and I'll probably be no better off but I'll be damn glad of the cushion in a poor price year than what I'll loose in a year like this

What way do Arrabawn offer these schemes?
Is it say boxes with 10%, 20%, 30% and you tick a box.

Here you put in any figure you like and its up to management to decide what you get.

mahoney_j · 19-02-2017 04:24PM

pedigree 6 wrote: »

What way do Arrabawn offer these schemes?
Is it say boxes with 10%, 20%, 30% and you tick a box.

Here you put in any figure you like and its up to management to decide what you get.

10% of 2016 supply and you can apply to fix whatever after that depending on uptake

pedigree 6 · 19-02-2017 04:51PM

mahoney_j wrote: »

10% of 2016 supply and you can apply to fix whatever after that depending on uptake

That would never run here. Too transparent.

It's pointless filling out an application in pen here.
Might as well do it in pencil.

whelan2 · 19-02-2017 06:14PM

pedigree 6 wrote: »

That would never run here. Too transparent.

It's pointless filling out an application in pen here.
Might as well do it in pencil.

Did you apply to glanbias latest fixed price scheme?

pedigree 6 · 19-02-2017 06:57PM

whelan2 wrote: »

Did you apply to glanbias latest fixed price scheme?

Yep.
I was told I applied for too much.
I added on a 0 by mistake.

Edit: for real.

RightTurnClyde · 19-02-2017 07:58PM

The issue I have with the FP schemes is the lack of transparency. If the coops just came out an said we have a buyer that has given us a bid on X litres at Yc/L price for 3 years, so you have an option on % of you're supply.
It this sh1t of not knowing if you're hedging against another farmer or even the other 90% of your own milk pool, is where I have the issue. They are coops, we are shareholders, its our bet, we should know. Then let us take the bet, and on our heads be it. As it stands it's just a divide and conquer situation, with no one knowing weither it's the supplier next door or those around the oak table that are screwing them.
Give it a couple of years, nobody will be able to say what the actual price a coop is giving... all they need is a few suppliers either heavily fixed or heavily unfixed... and the can say "well John and Paddy are getting 40c/L, your fault your only getting 22, your tough sh1t"....coops get themselves off the hook

Keepgrowing · 19-02-2017 08:09PM

Buford T. Justice V wrote: »

I was really expecting a similar scheme to be introduced in the last budget but it looks like a moot point at this stage with an election likely in the next year.

You would imagine it should be simple enough to set up and enforce, even to partially tax the savings after, say, 5 or 7 years.

Should this scheme apply to farmers only or should it be available to all small business. Should farming companies be allowed partake?

Does income averaging not do this to some extent?

Buford T. Justice XIX · 19-02-2017 08:39PM

Keepgrowing wrote: »

Should this scheme apply to farmers only or should it be available to all small business. Should farming companies be allowed partake?

Does income averaging not do this to some extent?

Income averaging helps but tax still has to be paid on it all as a sole trader. The situation as regards tax last year paid in a poor income year for a high profit year the year before shows that something else is needed, IMO. The option should be open to all sole traders, not just farmers, and not companies as they have methods to shield revenues from taxation at 51%.

A designated account to hold a % of turnover in a good year with strict conditions attached would be very useful. If nothing withdrawn in a certain period then some would be eligible for taxation was one suggestion I heard at a meeting a while back.

Two advantages would be a large block of savings in Irish banks to help capital requirements for them and also a large block to help fund building/expansion on farms and to leverage lower interest rates from banks as risk is reduced.

It would require Revenue foregoing some revenue for a few years so I doubt that would get past them easily but I think it could be a massive help for farm financial security.

Farmer Ed · 19-02-2017 09:10PM

mahoney_j wrote: »

So your gripe is more with coop structure so ed than a fixed scheme ?????as I've said umpteen times already no one is forced to fix it's an option /insurance policy offered by a coop to its supplier ,I've signed up knowing I'll loose this year ,won't complain but your saying next year if fable turns you'll cry wolf if you loose even though you'll have creamed it this year .im happy and clear with my decision for the security it'll provide on a portion of my milk .someone posted earlier that probably over x period it'll balance out and I'll probably be no better off but I'll be damn glad of the cushion in a poor price year than what I'll loose in a year like this

That is the part you seem to have missed. If you lose someone else gains at your expense. If the price of milk falls below the fixed price, you win at the expense of the people who didnt fix. Either way we are betting against each other, even the people who didnt fix. If you feel you need a cushion would you not be better of just putting a bit of money aside for the rainy day whenever you can afford to do so?

This idea that this is directly connected to some kind of forward selling on the part of Ornua is misleading to say the least. The worrying part is, what other nonsense are we being fed that we don't properly understand? I am sorry if I come across as being negative. But I do start to lose confidence when people start to tell me stories that don't add up. I am not signaling out any co op here but clearly judging by some of the comments from people who have experience of these schemes. Not everyone seems to be happy with the way they have operated. The only positive thing I can say about them is that at least it is only 10%.

Keepgrowing · 19-02-2017 09:15PM

Buford T. Justice V wrote: »

Income averaging helps but tax still has to be paid on it all as a sole trader. The situation as regards tax last year paid in a poor income year for a high profit year the year before shows that something else is needed, IMO. The option should be open to all sole traders, not just farmers, and not companies as they have methods to shield revenues from taxation at 51%.

A designated account to hold a % of turnover in a good year with strict conditions attached would be very useful. If nothing withdrawn in a certain period then some would be eligible for taxation was one suggestion I heard at a meeting a while back.

Two advantages would be a large block of savings in Irish banks to help capital requirements for them and also a large block to help fund building/expansion on farms and to leverage lower interest rates from banks as risk is reduced.

It would require Revenue foregoing some revenue for a few years so I doubt that would get past them easily but I think it could be a massive help for farm financial security.

So it's for all non incorporated small business'?

Buford T. Justice XIX · 19-02-2017 09:31PM

Keepgrowing wrote: »

So it's for all non incorporated small business'?

I don't have all the answers, Kg, I was in an audience where it was being discussed by people who had more knowledge of the ins and outs of schemes like that but it struck me as being very applicable to farm businesses.

It's not possible to park any revenues, such as they are, as a sole trader so a reserve that could be pulled into circulation when milk/beef/weather/TB is poor would surely be an asset to a government who wouldn't have to continually have to be canvassed for funding during one of the frequent dips in prices and revenues?

Like I say, it just struck me as being a sensible policy and returns the onus onto farmers to safeguard their own businesses rather than expecting someone else to do it for us.

Anyways, we better get back to milk prices but I can pull out a few posts on this subject into a new thread if people want a thread to discuss it.

orm0nd · 19-02-2017 09:35PM

Farmer Ed wrote: »

That is the part you seem to have missed. If you lose someone else gains at your expense. If the price of milk falls below the fixed price, you win at the expense of the people who didnt fix. Either way we are betting against each other, even the people who didnt fix. If you feel you need a cushion would you not be better of just putting a bit of money aside for the rainy day whenever you can afford to do so?

This idea that this is directly connected to some kind of forward selling on the part of Ornua is misleading to say the least. The worrying part is, what other nonsense are we being fed that we don't properly understand? I am sorry if I come across as being negative. But I do start to lose confidence when people start to tell me stories that don't add up. I am not signaling out any co op here but clearly judging by some of the comments from people who have experience of these schemes. Not everyone seems to be happy with the way they have operated. The only positive thing I can say about them is that at least it is only 10%.

we didn't get to any area meetings where probarly the FP scheme was discussed, the single page application form we got in the post certainly did'nt tell us enough of the T&C to warrant applying.

I'm long time convinced that ploys like this are to benefit the co op other than the suppliers & I agree to a degree that it will rob peter to pay paul,

12 months too late in introduction & about 1.5c/ltr shy price wise for me anyhow.

mf240 · 19-02-2017 09:35PM

I keep a few bullocks. On a good year I might buy a few extra. On a bad milk year I can sell a few extra.

That and income averaging gets me along just fine.

A tax avoidance scheme for dairy farmers would be a fair hard sell to the general public.

Farmer Ed · 19-02-2017 09:41PM

mf240 wrote: »

I keep a few bullocks. On a good year I might buy a few extra. On a bad milk year I can sell a few extra.

That and income averaging gets me along just fine.

A tax avoidance scheme for dairy farmers would be a fair hard sell to the general public.

Hats off. Can't get a more transparent insurance scheme than that.:)

mahoney_j · 19-02-2017 09:44PM

orm0nd wrote: »

we didn't get to any area meetings where probarly the FP scheme was discussed, the single page application form we got in the post certainly did'nt tell us enough of the T&C to warrant applying.

I'm long time convinced that ploys like this are to benefit the co op other than the suppliers & I agree to a degree that it will rob peter to pay paul,

12 months too late in introduction & about 1.5c/ltr shy price wise for me anyhow.

Can u honestly see milk averaging over 32 cent for next 3 years ???,

mahoney_j · 19-02-2017 09:51PM

Farmer Ed wrote: »

That is the part you seem to have missed. If you lose someone else gains at your expense. If the price of milk falls below the fixed price, you win at the expense of the people who didnt fix. Either way we are betting against each other, even the people who didnt fix. If you feel you need a cushion would you not be better of just putting a bit of money aside for the rainy day whenever you can afford to do so?

This idea that this is directly connected to some kind of forward selling on the part of Ornua is misleading to say the least. The worrying part is, what other nonsense are we being fed that we don't properly understand? I am sorry if I come across as being negative. But I do start to lose confidence when people start to tell me stories that don't add up. I am not signaling out any co op here but clearly judging by some of the comments from people who have experience of these schemes. Not everyone seems to be happy with the way they have operated. The only positive thing I can say about them is that at least it is only 10%.

We suppliers all have a choice so in no way do I see it as betting against one another .its a choice and decision we have to make no point crying either way if at a time it works against u ,both sides will loose and gain at some point

orm0nd · 19-02-2017 10:05PM

mahoney_j wrote: »

Can u honestly see milk averaging over 32 cent for next 3 years ???,

Unlike you I don't think it will hold for this year, longer term who knows

I seriously think MJ you need to get the wool outa your eyes with this

lets say milk drops to to 28, you have 10% fixed at 30.5, do you think you will get 28 for your 90% ?

you will in your whole , most likely you'll get 27.85 or there abouts & i bet you will be blowing your trumpet about your 10% fixed

mahoney_j · 19-02-2017 10:12PM

orm0nd wrote: »

Unlike you I don't think it will hold for this year, longer term who knows

I seriously think MJ you need to get the wool outa your eyes with this

lets say milk drops to to 28, you have 10% fixed at 30.5, do you think you will get 28 for your 90% ?

you will in your whole , most likely you'll get 27.85 or there abouts & i bet you will be blowing your trumpet about your 10% fixed

Be blowing my hole hopefully about 20% fixed !!
I see a very strong year for milk this year on. Back of a few things namely stable oil price well above 50 dollars and the fact the the lines of the kiwis etc got such a roasting over last few years and are predicted to be back over 5% .nail my colours to Mast and predict milk price average for this year of 32/33 cent and won't shock me of higher also on what assumption to you make it that if base is 28 for amount of milk not fixed I won't get it .i know a glanbia supplier who has been in all fixed schemes to date and after numerous chats on pros and cons with him I've made my decision

Farmer Ed · 19-02-2017 10:16PM

mahoney_j wrote: »

We suppliers all have a choice so in no way do I see it as betting against one another .its a choice and decision we have to make no point crying either way if at a time it works against u ,both sides will loose and gain at some point

I am not crying. I am just stating a fact. If you get paid more it will be at the expense of people who have not fixed getting paid less and vice versa if the people who haven't fixed get paid more than you. This is a new departure from to co op ethos of using the same formula to pay everyone. That and the red herring that these schemes are somehow connected to a forward sales deal done by Ornua is the bit that worries me.

K.G. · 19-02-2017 11:12PM

I read this story lately and think its very apt for this thread at the moment.
An old man and his grandson were going to town one day but they only had one donkey so thexold man left his grandson ride the donkey.along the way they met some people who said that the old man should ride the donkey as the boy would be young and fit so they swapped.they then met more people who said that it was unfair to the boy to do that so granddad got down and walked as well.they then met more people who said it was stupid to not use the donkey so they both got up.they then met more who complained it was cruel to the donkey so they decided to carry the donkey.they then came to a bridge and when they were crossing the the bridge they got a wobble and the donkey fell into the river and was drowned.the moral of the story is that if you listen to every old b#ll#cks you meet along the way you will end losing your ass in the end

pedigree 6 · 19-02-2017 11:18PM

An easier and shorter anecdote would have been "Do your own thing".

kowtow · 20-02-2017 11:07AM

mahoney_j wrote: »

My question to u why didn't the non fixers fix ,

It doesn't work if everyone fixes.

Hedging is a zero sum gain, you need someone to take a loss so that you can protect yourself from a loss (make a notional gain).

This applies to the factory making the butter or whatever) just as it applies to the farmer.

It would be a very dangerous idea to have the co-op drafting everyone into fixed price (i.e. hedging the risk on members behalf). It needs to be a conscious opt in / opt out and it needs to be transparent so that the loser (if the fixer is the winner) is the manufacturing end client NOT the other farmers in the shape of the co-op.

Milk Price III

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