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Fixed Price Milk Contract discussion.

  • 25-01-2018 06:45PM
    #1
    Mooooo
    Registered Users, Registered Users 2 Posts: 8,570 ✭✭✭


    Dairygold offering fixed price of 31.25 incl vat for 3 years. Options of 5 or 10% of 2017 supply figure. Just seen tweet on it. Dunno will I bother as 17 supply is well back on my own case so it won't add much either way for me. Will see when the letter comes out


    Mod note:I've move the fixed price contract discussion into its own thread. Please keep fixed price discussion to this thread and general milk price discussion to the other thread.

    Milk Price thread here..

    https://www.boards.ie/vbulletin/showthread.php?p=101612404

    Buford T. Justice.


«1

Comments

  • #2
    alps
    Registered Users, Registered Users 2 Posts: 5,379 ✭✭✭alps


    Mooooo wrote: »
    Dairygold offering fixed price of 31.25 incl vat for 3 years. Options of 5 or 10% of 2017 supply figure. Just seen tweet on it. Dunno will I bother as 17 supply is well back on my own case so it won't add much either way for me. Will see when the letter comes out

    That's a savage price relative to what your Captain is predicting...


  • #3
    freedominacup
    Registered Users, Registered Users 2 Posts: 7,920 ✭✭✭freedominacup


    alps wrote: »
    That's a savage price relative to what your Captain is predicting...

    It'd put you thinking wouldn't it?


  • #4
    Mooooo
    Registered Users, Registered Users 2 Posts: 8,570 ✭✭✭Mooooo


    No sure but i think take up on the last one wasn't great. I think the others were only 18 months, first one was anyway not sure on second one, I think it was also


  • #5
    Farmer Ed
    Banned (with Prison Access) Posts: 4,617 ✭✭✭Farmer Ed


    alps wrote: »
    Mooooo wrote: »
    Dairygold offering fixed price of 31.25 incl vat for 3 years. Options of 5 or 10% of 2017 supply figure. Just seen tweet on it. Dunno will I bother as 17 supply is well back on my own case so it won't add much either way for me. Will see when the letter comes out

    That's a savage price relative to what your Captain is predicting...

    Captain can't lose either way. Its only for something like10% max so the other 90% will make up the balance regardless. But meanwhile who ever signs up for this will effectively have signed another 3 year contract and can't move to a better paying purchaser.


  • #6
    mahoney_j
    Registered Users, Registered Users 2 Posts: 12,172 ✭✭✭✭mahoney_j


    Farmer Ed wrote: »
    Captain can't lose either way. Its only for something like10% max so the other 90% will make up the balance regardless. But meanwhile who ever signs up for this will effectively have signed another 3 year contract and can't move to a better paying purchaser.

    No 1 if scheme is undersubscribed and u apply to fix 30% you’ll probably get it
    No 2 what other coop bar strathroy would take u in at the moment ??


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  • #7
    Farmer Ed
    Banned (with Prison Access) Posts: 4,617 ✭✭✭Farmer Ed


    mahoney_j wrote: »
    Farmer Ed wrote: »
    Captain can't lose either way. Its only for something like10% max so the other 90% will make up the balance regardless. But meanwhile who ever signs up for this will effectively have signed another 3 year contract and can't move to a better paying purchaser.

    No 1 if scheme is undersubscribed and u apply to fix 30% you’ll probably get it
    No 2 what other coop bar strathroy would take u in at the moment ??
    No3 even it you could get 30% then the reminder of the milk will still have to make up the balance.
    No 4 Competition is good for farmers. Big mistake for us to go signing our rights away when non of us are sure what opportunities could be around the corner.


  • #8
    Wildsurfer
    Registered Users, Registered Users 2 Posts: 1,715 ✭✭✭Wildsurfer


    Dairygold fixed milk price forms out today. 31.25 incl vat for 3 years, 10% max of 2017 supply. What do ye think? Some would say the average price over 3 years works out over 30c anyways so no benefit.


  • #9
    mahoney_j
    Registered Users, Registered Users 2 Posts: 12,172 ✭✭✭✭mahoney_j


    Wildsurfer wrote: »
    Dairygold fixed milk price forms out today. 31.25 incl vat for 3 years, 10% max of 2017 supply. What do ye think? Some would say the average price over 3 years works out over 30c anyways so no benefit.

    I’d fix 10% and more if I could


  • #10
    alps
    Registered Users, Registered Users 2 Posts: 5,379 ✭✭✭alps


    CIT putting together a course for dairy farmers to help in their decisions about taking part in these fixed price schemes, or futures if those products become available in Europe..

    Will post here if I get news on dates...


  • #11
    kowtow
    Registered Users, Registered Users 2 Posts: 6,135 ✭✭✭kowtow


    alps wrote: »
    CIT putting together a course for dairy farmers to help in their decisions about taking part in these fixed price schemes, or futures if those products become available in Europe..

    Will post here if I get news on dates...

    Be interesting to hear what they have to say on that course.

    One thing that worries me is the number of these courses and seminars which are given by futures brokers. There is also a tendency to over simplify a lot of things when presented to farmers and that is dangerous where speculative markets are concerned.

    If everyone comes out of a presentation wanting to take up a fixed price offer or start selling forward then I'd be suspicious of the presenter!


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  • #12
    Mooooo
    Registered Users, Registered Users 2 Posts: 8,570 ✭✭✭Mooooo


    The 10% for me won't make much odds either way, I guess it's greater bearing would be if another scheme comes out next year where you would then have this 10% + whatever is allowed in the next one. The way I'm thinking twill go price wise, could well be wrong, is this year will be in or around the 30c, next could well be lower depending on weather etc, and then rise again the following year as it has more or less done in a cyclical nature for years. So having schemes in or around the 30c is much of a muchness obviously once you can get thru the low year which is the key issue. What I am happy with is that participation is not dependant on previous participation so thats a positive imo.


  • #13
    kowtow
    Registered Users, Registered Users 2 Posts: 6,135 ✭✭✭kowtow


    Mooooo wrote: »
    What I am happy with is that participation is not dependant on previous participation so thats a positive imo.

    Absolutely. Vital move towards sensible mechanisms.


  • #14
    alps
    Registered Users, Registered Users 2 Posts: 5,379 ✭✭✭alps


    Mooooo wrote: »
    What I am happy with is that participation is not dependant on previous participation so thats a positive imo.

    So important that they stay that way....

    These schemes now take over from the enforcement of MSA's as each time you commit your 10% or 5% for 3 years, you effectively (by the small print) commit your total supply for the same period...

    Will the schemes in time, and as they build in volume, hide the true efficiency of each coop, as a current quoted milk price will never be indicative of the efficiency relative to current markets...

    My concern in deciding to take part in the schemes, is what is likely to happen the pool of milk that is not fixed..

    If for example we arrived at a position where 50% of the pool was fixed, how volatile will the remaining portion of the pool be...? When trading is done over a smaller pool, you would expect greater volatility...

    Current peaks to troughs are running near 40%. What could that ratio be if only half the milk pool was being traded?

    I would therefore be concerned about exposure to that type of volatility, and might colour my view on taking up the offers as they go along....

    However, Coops need their milk price to appear middle ground, and no CEO will risk tying up so much of their pool, allowing so much volatility that from time to time their quoted milk price would be non aligned to neighbouring norms..

    And on this, I can't see coops allowing much more than 30% to be fixed at any one time...

    Mooo...that's no help to you in sure....


  • #15
    freedominacup
    Registered Users, Registered Users 2 Posts: 7,920 ✭✭✭freedominacup


    alps wrote: »
    CIT putting together a course for dairy farmers to help in their decisions about taking part in these fixed price schemes, or futures if those products become available in Europe..

    Will post here if I get news on dates...

    I'll go as long as kt is the one giving the lectures.


  • #16
    Water John
    Registered Users, Registered Users 2 Posts: 21,916 ✭✭✭✭Water John


    Why would you pay for his advice? You can get it here, for free.


  • #17
    kowtow
    Registered Users, Registered Users 2 Posts: 6,135 ✭✭✭kowtow


    Water John wrote: »
    Why would you pay for his advice? You can get it here, for free.

    I prefer to think of it as "accurately priced"!


  • #18
    K.G.
    Moderators, Society & Culture Moderators Posts: 3,776 Mod ✭✭✭✭K.G.


    I cringe now when i see the words "fixed milk price"here.the angst , the preaching,the conspiracey theories.you make a call,you win you lose.


  • #19
    Farmer Ed
    Banned (with Prison Access) Posts: 4,617 ✭✭✭Farmer Ed


    alps wrote: »
    CIT putting together a course for dairy farmers to help in their decisions about taking part in these fixed price schemes, or futures if those products become available in Europe..

    Will post here if I get news on dates...

    Suggested course material.https://www.youtube.com/watch?v=WsN7CqzaE6A May help in the understanding of fractions and that no matter how something is divided the total sum of what is being divided will still remain the same. KG is correct under theses new fixed price schemes you can win or lose. This is a major departure form the Co Op ethos of everyone being paid the same way.


  • #20
    tibrok
    Registered Users, Registered Users 2 Posts: 42 ✭tibrok


    A very good run through on options for managing volatility. "You hedge to survive, not to profit"

    https://www.youtube.com/watch?v=LAEPyfoIS0M&t=2s


  • #21
    Farmer Ed
    Banned (with Prison Access) Posts: 4,617 ✭✭✭Farmer Ed


    tibrok wrote: »
    A very good run through on options for managing volatility. "You hedge to survive, not to profit"

    https://www.youtube.com/watch?v=LAEPyfoIS0M&t=2s

    That's all very well. But all our current fixed price schemes are doing it taking from one pocket and putting in to the other. Dairy products have always been forward sold. That is nothing new to Irish Co Ops. All that is new is the idea of subsidising one portion of the milk pool with the remaining portion of the milk pool.
    Your man seemed to me more concerned that Co Op management were getting a bit of stick rather than the low milk price.


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  • #22
    Buford T. Justice XIX
    Closed Accounts Posts: 20,621 ✭✭✭✭Buford T. Justice XIX


    I can only comment on the Kerry fixed price scheme so it may or may not be relevant to other schemes.

    Kerry agree a contract with a purchaser for a quantity of product to be supplied to them over the length of the scheme. They translate this quantity and price into Xc/l over a fixed time and farmers are allowed to apply for a certain percentage of their supply at that price.

    That product and price has little or no relevance to the rest of the products that Kerry supply. It may replace a percentage of the rest of the supply but that would be sold at a variable price in the market so it could return more, or less, that the agreed price.
    The advantage for the farmer is a guaranteed minimum price for a period.
    The advantage for Kerry is a guaranteed price and customer for a period.
    The advantage for the buyer is a guaranteed price and quantity for a period.

    The rest of the buying/selling continue on as normal with no impact on the fixed portion.


  • #23
    Farmer Ed
    Banned (with Prison Access) Posts: 4,617 ✭✭✭Farmer Ed


    Buford T. Justice V wrote: »
    I can only comment on the Kerry fixed price scheme so it may or may not be relevant to other schemes.

    Kerry agree a contract with a purchaser for a quantity of product to be supplied to them over the length of the scheme. They translate this quantity and price into Xc/l over a fixed time and farmers are allowed to apply for a certain percentage of their supply at that price.

    That product and price has little or no relevance to the rest of the products that Kerry supply. It may replace a percentage of the rest of the supply but that would be sold at a variable price in the market so it could return more, or less, that the agreed price.
    The advantage for the farmer is a guaranteed minimum price for a period.
    The advantage for Kerry is a guaranteed price and customer for a period.
    The advantage for the buyer is a guaranteed price and quantity for a period.

    The rest of the buying/selling continue on as normal with no impact on the fixed portion.

    But the thing is Kerry have always being fixing agreed prices with customers that is nothing new.
    We are being sold a stone age tool repackaged as space age innovation.


  • #24
    mahoney_j
    Registered Users, Registered Users 2 Posts: 12,172 ✭✭✭✭mahoney_j


    Farmer Ed wrote: »
    But the thing is Kerry have always being fixing agreed prices with customers that is nothing new.
    We are being sold a stone age tool repackaged as space age innovation.

    Ok ed we get it u don’t like fixed schemes ,don’t fix and deal with the volatility up and down whatever way u wish ,there’s an option for us that want to protect a portion of our income ,we’ll win well loose i for one accept that not really bothered wether anyone else fixes or not same option is there for us all no point gloating when ur good side or whinging when your the other side


  • #25
    Farmer Ed
    Banned (with Prison Access) Posts: 4,617 ✭✭✭Farmer Ed


    mahoney_j wrote: »
    Farmer Ed wrote: »
    But the thing is Kerry have always being fixing agreed prices with customers that is nothing new.
    We are being sold a stone age tool repackaged as space age innovation.

    Ok ed we get it u don’t like fixed schemes ,don’t fix and deal with the volatility up and down whatever way u wish ,there’s an option for us that want to protect a portion of our income ,we’ll win well loose i for one accept that not really bothered wether anyone else fixes or not same option is there for us all no point gloating when ur good side or whinging when your the other side

    I am not gloating at all! I am just pointing out the obvious. And whether I fix or not, because of this new departure in the way milk is paid for the price I get paid for milk will be impacted either way. Alps called it correctly. Fixing a portion of they milk only exposes the remainder of the milk to more volatility. Actually if 100% the Co Ops milk could be fixed I wouldn't have a problem with it, but this 3 card trick serves no one except muddy the actual milk price.


  • #26
    mahoney_j
    Registered Users, Registered Users 2 Posts: 12,172 ✭✭✭✭mahoney_j


    Farmer Ed wrote: »
    I am not gloating at all! I am just pointing out the obvious. And whether I fix or not, because of this new departure in the way milk is paid for the price I get paid for milk will be impacted either way. Alps called it correctly. Fixing a portion of they milk only exposes the remainder of the milk to more volatility. Actually if 100% the Co Ops milk could be fixed I wouldn't have a problem with it, but this 3 card trick serves no one except muddy the actual milk price.

    Yes but it’s optional and why be so worried about other suppliers


  • #27
    Farmer Ed
    Banned (with Prison Access) Posts: 4,617 ✭✭✭Farmer Ed


    mahoney_j wrote: »
    Farmer Ed wrote: »
    I am not gloating at all! I am just pointing out the obvious. And whether I fix or not, because of this new departure in the way milk is paid for the price I get paid for milk will be impacted either way. Alps called it correctly. Fixing a portion of they milk only exposes the remainder of the milk to more volatility. Actually if 100% the Co Ops milk could be fixed I wouldn't have a problem with it, but this 3 card trick serves no one except muddy the actual milk price.

    Yes but it’s optional and why be so worried about other suppliers

    Because it affects the price I get.


  • #28
    mf240
    Registered Users, Registered Users 2 Posts: 4,928 ✭✭✭mf240


    The honey moon is over ed. Ya may move again.


  • #29
    Farmer Ed
    Banned (with Prison Access) Posts: 4,617 ✭✭✭Farmer Ed


    mf240 wrote: »
    The honey moon is over ed. Ya may move again.

    Didn't know we had got married MF?


  • #30
    mf240
    Registered Users, Registered Users 2 Posts: 4,928 ✭✭✭mf240


    Farmer Ed wrote: »
    Didn't know we had got married MF?

    Was speaking metaphorically. :D


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  • #31
    Farmer Ed
    Banned (with Prison Access) Posts: 4,617 ✭✭✭Farmer Ed


    mf240 wrote: »
    Farmer Ed wrote: »
    Didn't know we had got married MF?

    Was speaking metaphorically. :D

    As long as I'm in a happy in my relationship I'm going no where. That said I don't like it when people threaten my relationship my filling my partners head up with all sort's of silly ideas.


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