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Milk Price- Please read Mod note in post #1

delaval

24/6/16

Recently we saw three posters close their accounts over disagreements in the dairy threads. While there is a lot of frustration and discontent with current milk prices and the processing industry, the recent tendency for dairy threads to become tit-for-tat arguments isn’t tolerable for those not involved.

All farming sectors go through difficult periods and during such times there may need to be changes in how threads are moderated.

Dairy threads are going to be more closely monitored and subject to stricter moderation for a while.

To that end we won’t tolerate baiting of posters, constantly reviving old arguments, posters with agendas or crusading for a cause.

Whether it’s discussion of the business or politics of the dairy or other sectors, we expect civility and tolerance toward each other and other opinions as diversity of opinion is needed as a source of different ways of looking at a situation.

"The aim of argument, or of discussion, should not be victory, but progress." - Joseph Joubert

Also please be aware that what you may post as light-hearted banter can be read totally differently by someone adversely affected by the subject matter and evoke a reaction you hadn’t intended.

The ‘Off-Season’ forum, and its anonymous posting, is available for anyone to chat about their situation.

The Mod Team.

I was wondering would it be a help if we posted our milk prices. I would hope that if someone is low that help could be given, on the other hand if high perhaps your tips could help us all.

I would suggest posting your processors base inc Vat for comparison
Post your Nett price for others to help or be helped
I think that solids should be included.
I suggest any seasonal/liquid contract price be excluded or seperated.

I feel that we as farmers do a lot of bitching about processor prices and rightly so IMO. I also feel that we should not worry about it as we can do nothing about base price but we certainly do something about it at farm level.

What do you all think?

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degetme

were you expecting to get that much temp leasing mahony _j?
waiting on Kerry yet to announce temp leasing allocations

mahoney_j

degetme wrote: »

were you expecting to get that much temp leasing mahony _j?
waiting on Kerry yet to announce temp leasing allocations

Coop is over 9% over at moment so was expecting a couple of hundered ltrs at most as every second lad u talk to around here is 30 to 60 k plus ltrs over.under 350 lads got 10500 ltrs.dont know where it all came from

Mulumpy

Got 10500 temp lease here. Very pleased with that. Will only be around 3% over now.

mf240

When will us glanbia lads know if we got flexi or not?

milkprofit

mf240 wrote: »

When will us glanbia lads know if we got flexi or not?

April or may

mf240

milkprofit wrote: »

April or may

Sorry meant temperary leasing??

frazzledhome

Glanbia
49.11 for Dec milk
5 bf
3.86 p
Average price for 14 was 42c for all milk delivered. This doesn't inc .5c topup due if passed at SGM

This would have been higher if I had no fixed price. The fixed price will come into its own this year. The fixed milk will have a premium of 3.11c per litre.

Greengrass1

frazzledhome wrote: »

Glanbia
49.11 for Dec milk
5 bf
3.86 p
Average price for 14 was 42c for all milk delivered. This doesn't inc .5c topup due if passed at SGM

This would have been higher if I had no fixed price. The fixed price will come into its own this year. The fixed milk will have a premium of 3.11c per litre.

What % of your supply is in fixed?
We lost on the first scheme a good bit. I kind of thought it might help in 15

Coonagh

frazzledhome wrote: »

Glanbia
49.11 for Dec milk
5 bf
3.86 p
Average price for 14 was 42c for all milk delivered. This doesn't inc .5c topup due if passed at SGM

This would have been higher if I had no fixed price. The fixed price will come into its own this year. The fixed milk will have a premium of 3.11c per litre.

I'm watching my own processor closely to see will they make any move to offer a fixed price scheme, if they don't I will be changing to supply glanbia.

frazzledhome

Coonagh wrote: »

I'm watching my own processor closely to see will they make any move to offer a fixed price scheme, if they don't I will be changing to supply glanbia.

How much would you consider prudent to fix

We're on 30%. Took a hit in 14 but will make it up in 15. The good thing about the GIIL scheme is that's its linked to inputs. It's a fixed margin as opposed to fixed price

just do it

frazzledhome wrote: »

Glanbia
49.11 for Dec milk
5 bf
3.86 p
Average price for 14 was 42c for all milk delivered. This doesn't inc .5c topup due if passed at SGM

This would have been higher if I had no fixed price. The fixed price will come into its own this year. The fixed milk will have a premium of 3.11c per litre.

Ave yield?

Coonagh

frazzledhome wrote: »

How much would you consider prudent to fix

We're on 30%. Took a hit in 14 but will make it up in 15. The good thing about the GIIL scheme is that's its linked to inputs. It's a fixed margin as opposed to fixed price

Amount be fixed I suppose would depend on market conditions at the time. As a tool to manage volatility it's the only thing out there and like you said what you lost in 14 your looking likely to gain in 15,. The way I see it the fixed price scheme is providing stability to your business and will allow you to plan ahead with some level of certainty. If you are a taking a long view (which I think we all should) the fixed price scheme is a no brainer.

mahoney_j

Coonagh wrote: »

Amount be fixed I suppose would depend on market conditions at the time. As a tool to manage volatility it's the only thing out there and like you said what you lost in 14 your looking likely to gain in 15,. The way I see it the fixed price scheme is providing stability to your business and will allow you to plan ahead with some level of certainty. If you are a taking a long view (which I think we all should) the fixed price scheme is a no brainer.

What price is fixed scheme set at????.also on 15 price with droughts down under and yanks slow/reluctant to open the taps ,gdt auctions slowly rising and Chinese to return to market 15 might not be that bad.also On Fixed scheme if the fixed portion ifvyour milk is at sat 32 cent is that 32 cent base plus solids or just 32 base??.no such scheme here in Arrabawn but currently we are paying a price over 32 cent per ltre ,1/2 cent ahead ofvthe posse

frazzledhome

just do it wrote: »

Ave yield?

430 kgs ms

Greengrass1

frazzledhome wrote: »

430 kgs ms

Reckon we lost 20 kilos per cow by having to dry off early.
Won't happen again ðŸ˜Š

frazzledhome

mahoney_j wrote: »

What price is fixed scheme set at????.also on 15 price with droughts down under and yanks slow/reluctant to open the taps ,gdt auctions slowly rising and Chinese to return to market 15 might not be that bad.also On Fixed scheme if the fixed portion ifvyour milk is at sat 32 cent is that 32 cent base plus solids or just 32 base??.no such scheme here in Arrabawn but currently we are paying a price over 32 cent per ltre ,1/2 cent ahead ofvthe posse

It's +solids +bonus +coop payment with a top up based on agri inflation to cover inputs

It's a volatility mgt tool and that why I wouldn't recommend putting all milk in. It guarantees margin on a portion of milk.

stanflt

43,70 for December

whelan2

stanflt wrote: »

43,70 for December

41.61 here

loveta

Lakeland base price for Dec was 30.530 put another 5 cent to that if you get the winter bonus which basically is 45% or more of your may supply of that year

milkprofit

frazzledhome wrote: »

How much would you consider prudent to fix

We're on 30%. Took a hit in 14 but will make it up in 15. The good thing about the GIIL scheme is that's its linked to inputs. It's a fixed margin as opposed to fixed price

What is the fixed margin

kowtow

frazzledhome wrote: »

It's +solids +bonus +coop payment with a top up based on agri inflation to cover inputs

It's a volatility mgt tool and that why I wouldn't recommend putting all milk in. It guarantees margin on a portion of milk.

It's only a volatility management tool if it is transparent all the way through to the final purchaser....

the question you have to ask here is who is going to be losing, if you end up gaining on the contract? If it's a single block of milk specifically (and transparently) hedged in the marketplace - if the co-op has acted as your agent, in effect - then there is no problem, useful tool. If OTOH the co-op stands to lose or gain if the market runs against the fixed price pool we are getting into very dangerous territory... either the co-op is in danger and doesn't know what it is doing or they do, and it's a contract not worth having.

mahoney_j

Gdt auction today showed 1% rise across all products,the slow steady rise continues

billie holiday

35.2 cpl with winter bonus
4 fat
3.22 protein

Milked out

Received 32.77c/L for dec milk excluding bonus. @ 3.42p and 4.21bf

Averaged 40.81 for year at 3.52p and 3.98bf. Hopefully this year won't be as bad as it's making out to be price wise and mother nature plays ball

just do it

kowtow wrote: »

It's only a volatility management tool if it is transparent all the way through to the final purchaser....

the question you have to ask here is who is going to be losing, if you end up gaining on the contract? If it's a single block of milk specifically (and transparently) hedged in the marketplace - if the co-op has acted as your agent, in effect - then there is no problem, useful tool. If OTOH the co-op stands to lose or gain if the market runs against the fixed price pool we are getting into very dangerous territory... either the co-op is in danger and doesn't know what it is doing or they do, and it's a contract not worth having.

My take on this is it's a bit like fixing the interest rate on a mortgage. Banks hire highly qualified actuaries to predict future interest rates. Based on this the bank offers a fixed interest rate which factor in a safety margin for the bank but yet appeal to the risk adverse customer. There is just no way the average customer will out wit actuaries.

I can't see that it is any different with fixed price for milk. There is no way the co-op are going to pay more than they think they have to.

Now of course if you need a guaranteed level of cashflow then the fixed price premium is probably worth it. Overall though the corporate entity will be main benefactor.

frazzledhome

kowtow wrote: »

It's only a volatility management tool if it is transparent all the way through to the final purchaser....

the question you have to ask here is who is going to be losing, if you end up gaining on the contract? If it's a single block of milk specifically (and transparently) hedged in the marketplace - if the co-op has acted as your agent, in effect - then there is no problem, useful tool. If OTOH the co-op stands to lose or gain if the market runs against the fixed price pool we are getting into very dangerous territory... either the co-op is in danger and doesn't know what it is doing or they do, and it's a contract not worth having.

It's on a fixed amount of milk to one customer. The customer wants a guaranteed amount at a price. The coop del with the customer. As things stand the customer could get milk cheaper today than the fixed price but stay in as quality and quantify is guaranteed. Swings and roundabouts. There is no futures market in EU, well certainly no developed one.

frazzledhome

just do it wrote: »

My take on this is it's a bit like fixing the interest rate on a mortgage. Banks hire highly qualified actuaries to predict future interest rates. Based on this the bank offers a fixed interest rate which factor in a safety margin for the bank but yet appeal to the risk adverse customer. There is just no way the average customer will out wit actuaries.

I can't see that it is any different with fixed price for milk. There is no way the co-op are going to pay more than they think they have to.

Now of course if you need a guaranteed level of cashflow then the fixed price premium is probably worth it. Overall though the corporate entity will be main benefactor.

The benefit of this is customer knows exactly what milk is costing for 3 yrs so no volatility and the coop knows its margin no effort into renegotiating price and the farmer is guaranteed a price with a top up if Ag inflation dictates.

So rather than as you suggest the corporate winning, we all know where we are going.

I stress I'd not be putting all my milk into this scheme. If a farm is highly borrowed surely its prudent to build in a margin to cover repayments in case of a year like this?

frazzledhome

milkprofit wrote: »

What is the fixed margin

You know your costs, you know your price and Ag inflation is topped up therefore you've a fixed margin

Dawggone

frazzledhome wrote: »

The benefit of this is customer knows exactly what milk is costing for 3 yrs so no volatility and the coop knows its margin no effort into renegotiating price and the farmer is guaranteed a price with a top up if Ag inflation dictates.

So rather than as you suggest the corporate winning, we all know where we are going.

I stress I'd not be putting all my milk into this scheme. If a farm is highly borrowed surely its prudent to build in a margin to cover repayments in case of a year like this?

+1. Excellent tool.
It's just risk management. Farmers would be well advised to learn how to use it wisely.

kowtow

just do it wrote: »

My take on this is it's a bit like fixing the interest rate on a mortgage. Banks hire highly qualified actuaries to predict future interest rates. Based on this the bank offers a fixed interest rate which factor in a safety margin for the bank but yet appeal to the risk adverse customer. There is just no way the average customer will out wit actuaries.

I can't see that it is any different with fixed price for milk. There is no way the co-op are going to pay more than they think they have to.

Now of course if you need a guaranteed level of cashflow then the fixed price premium is probably worth it. Overall though the corporate entity will be main benefactor.

It's even simpler than that - banks trade the whole yield curve all the time, and despite economists and actuaries they have no better idea most of the time of the timing and size of rate changes than you do.

Banks will lend at a fixed rate for a fixed time to you on any day when they can borrow in the markets at a better fixed rate for a better fixed time.. that way a profit on the loan is locked in and made on the day the loan is given.

They spend money advertising ("helping the customer") with fixed rates at times when such loans are particularly profitable for them - often when they can borrow longer and cheaper all of a sudden, as the curve is shifting.