Milk Price- Please read Mod note in post #1

freedominacup · 18-02-2016 11:09AM

patsy_mccabe wrote: »

As my Father used to say, 'There's no point being mad unless you can prove it'.

Anyway and with money is not mad, mad with money is eccentric.

Timmaay · 18-02-2016 11:37AM

WheatenBriar wrote: »

If the economy outside farming continues to grow, do you think those young lads in 100 cow + operations are going to want to milk cows 7 days a week with all the unsociable hours that entails for say 25k a year (if that) take home pay versus the average industrial wage++ weekends off,less worry etc elsewhere ?
Their wives will have to pay for everything with the current outlook
Tbh,unless theres a marked change,I'd be sending for the lads in white coats for anyone thinking of starting out today

Most would be reasonable well established already, with the land to push closer to 200cows, but agreed to a point, utterly nothing guaranteed in this life, and the youth of today need to accept this, who's to say that dairying won't go the way of beef in 5years time, and they need to accept this reality, especially when it comes to things like land purchases etc which tie you down long term.

Timmaay · 18-02-2016 11:43AM

whelan2 wrote: »

3 of the lads who got out of dairying would only be a few years older than me. Would have been under 40 years of age when they stopped milking

2bh I've no idea what I'll be at when I'm tipping in towards 40 ha, other than I definitely don't plan on still being in the milking parlour 24/7 ha, life too short for that, if I can't grow numbers and improve efficiency enough here to sustain a good enough income to afford being able to hire a milker for a decent part of the year then I'd happily consider an alternative use for our land. One of them local young dairy farmers might consider a partnership etc for heifer rearing/silage ha, equally so a long term tax free lump sum for leasing would be very nice!

kevthegaff · 18-02-2016 01:25PM

patsy_mccabe wrote: »

Funny but I was only thinking last night that now would be the ideal time to get into Dairying. Far better to get in at the bottom of the price curve than the top.

I'll be looking out for a 20 unit parlour...

Dawggone · 18-02-2016 01:48PM

freedominacup wrote: »

What size do you call small?
Only about 6 farm families with children in the school. We as farmers have our place around here but no more than any other industry. The point about the fundraiser is that there's cash around despite the fact that farmers make up less than 10% of the population in this rural area.
.

You either live in a very small parish or farmers have large holdings Free...
What I call family farms are those that farm full time and have no hired labour and about 60 - 80 cows, and depend on contractors to do 'field' work...the kind of family that would be part timers if doing any other line of farming...

* Kowtow, please don't dissect the above generalisation!

kowtow · 18-02-2016 01:51PM

patsy_mccabe wrote: »

Funny but I was only thinking last night that now would be the ideal time to get into Dairying. Far better to get in at the bottom of the price curve than the top.

You could be right. On the other hand there has never been a market so cheap that it couldn't fall by another 50%.

My own view would be that - when the market does eventually bottom & settle - the difficulty will be forecasting a sensible working cost base and minimum viable scale as there are some good reasons to believe that prices may only recover to a moderate level - in other words we may not see the highs of 13/14 in real terms again.

This may be less of a problem for someone going into dairy with low borrowings on existing paid for land, as you would have a bit of time on your side, even then it might be something of a risky venture. Equally a long cheap long lease in the face of a depressed land price might be a profitable long shot, but I'm not sure were anywhere near that yet?

At the moment there is little sign - from where I am sitting anyway - that heifers or replacements are anything near good value, nor yet land, which is the usual reason for getting in at the "bottom" of a cycle.

Is it possible that everyone thinks we're already at the bottom and is sh**t scared of being left out of the rising prices to come?

Dawggone · 18-02-2016 02:15PM

Dawggone wrote: »

Off now to an EGM of Coop re quotas...lovely.

Update.
There was a good attendance last night.

As there are no 'production rights' (quotas) with our processor, they are under governmental pressure to curb supply...
I was encouraged when it was put to a vote...resounding yes to tell the government to p1ss off!

We don't make any products that are traded into world commodity market. Everything is sold into the EU market.(Bar baby formula to China)
Cheese has taken a bit of a kicking since the Russian market was closed. Still good demand for butter into Italy etc. etc.

Price to remain at 29/30cpl for next 3to6mts.
They were pushing organic as the next big growth...

Seems the lads in Brittany are suffering because of a number of factors...small farms, expensive to buy production rights, land price expensive etc etc

Struck up a good rapport with a bunch of lads that are organic and processing and marketing their own produce. Will be visiting soon and will update.

kowtow · 18-02-2016 02:16PM

There's a pretty straightforward analysis of the growing importance of powder and the GDT to the Irish milk price in the Journal this week, makes for important reading I think and puts some clear numbers on a lot of the commentary which appears in this thread.

http://www.farmersjournal.ie/powder-to-weigh-on-dairy-200962/

The article makes for somewhat depressing reading in the present climate, but at least it highlights a potential risk.

And interesting - encouragingly - GIIL are pushing up industrial Cheese production which I suspect is as good a hedge as any when you have a shafted powder market and tankers full of milk.

keep going · 18-02-2016 02:18PM

kowtow wrote: »

You could be right. On the other hand there has never been a market so cheap that it couldn't fall by another 50%.

My own view would be that - when the market does eventually bottom & settle - the difficulty will be forecasting a sensible working cost base and minimum viable scale as there are some good reasons to believe that prices may only recover to a moderate level - in other words we may not see the highs of 13/14 in real terms again.

This may be less of a problem for someone going into dairy with low borrowings on existing paid for land, as you would have a bit of time on your side, even then it might be something of a risky venture. Equally a long cheap long lease in the face of a depressed land price might be a profitable long shot, but I'm not sure were anywhere near that yet?

At the moment there is little sign - from where I am sitting anyway - that heifers or replacements are anything near good value, nor yet land, which is the usual reason for getting in at the "bottom" of a cycle.

Is it possible that everyone thinks we're already at the bottom and is sh**t scared of being left out of the rising prices to come?

dont ever wait for the bottom or the top[,go when the figures stack up for you

darragh_haven · 18-02-2016 03:48PM

kowtow wrote: »

You could be right. On the other hand there has never been a market so cheap that it couldn't fall by another 50%.

Just picking the first paragraph of you post kowtow

No one knows if we are skipping along the bottom atm. We could only be half way there.
I do think we are skipping along the bottom, or very very close to it...... but as I'm not a dairy farmer, I'm betting with someone else's money

freedominacup · 18-02-2016 04:07PM

Dawggone wrote: »

You either live in a very small parish or farmers have large holdings Free...
What I call family farms are those that farm full time and have no hired labour and about 60 - 80 cows, and depend on contractors to do 'field' work...the kind of family that would be part timers if doing any other line of farming...

* Kowtow, please don't dissect the above generalisation!

Actually thinking about it again there are 7 with kids in the school. The guy I forgot is part time. He finished around 900 between cows and ho bulls last year. Farms not that big really. Around 150 certainly no more than 200 owned acres on average. Some would be covering a lot more with rented land. Definitely a lot less farms in the area since I was a child. Tbh I can't see a smaller average size of holding being sustainable.

10% of the population making up 10% of the parents in the school. We'll have kids in the school as long as anyone and it will still only be for 16 years. Parish would have traditionally been regarded as a bad stand for a pp. Too small to throw off good revenue.

freedominacup · 18-02-2016 04:24PM

darragh_haven wrote: »

Just picking the first paragraph of you post kowtow

No one knows if we are skipping along the bottom atm. We could only be half way there.
I do think we are skipping along the bottom, or very very close to it...... but as I'm not a dairy farmer, I'm betting with someone else's money

Can't link to it. So a you tube search for Danny DeVito Other People's Money beginng speech. One of kts top five inspirational videos.

kowtow · 18-02-2016 05:59PM

freedominacup wrote: »

Can't link to it. So a you tube search for Danny DeVito Other People's Money beginng speech. One of kts top five inspirational videos.

Haha.

If that were the case then pulling teats is some penance!

Dawggone · 18-02-2016 07:26PM

kowtow wrote: »

There's a pretty straightforward analysis of the growing importance of powder and the GDT to the Irish milk price in the Journal this week, makes for important reading I think and puts some clear numbers on a lot of the commentary which appears in this thread.

http://www.farmersjournal.ie/powder-to-weigh-on-dairy-200962/

The article makes for somewhat depressing reading in the present climate, but at least it highlights a potential risk.

And interesting - encouragingly - GIIL are pushing up industrial Cheese production which I suspect is as good a hedge as any when you have a shafted powder market and tankers full of milk.

Can't read the link.
Is there any chance you would write one of your excellent synopses of the article?

No power point presentations...

Thanks!

Dawggone · 18-02-2016 07:37PM

kowtow wrote: »

You could be right. On the other hand there has never been a market so cheap that it couldn't fall by another 50%.

Disagree.
The market may dive another 50%, but governments will step in to interfere.
Governments can, and will, put a floor on milk.
Just like CB's are now the 'Gods' of your so called 'free' markets...Yellen and Draghi etc are the soothsayers of sentiment...

Dawggone · 18-02-2016 07:42PM

freedominacup wrote: »

Actually thinking about it again there are 7 with kids in the school. The guy I forgot is part time. He finished around 900 between cows and ho bulls last year. Farms not that big really. Around 150 certainly no more than 200 owned acres on average. Some would be covering a lot more with rented land. Definitely a lot less farms in the area since I was a child. Tbh I can't see a smaller average size of holding being sustainable.

10% of the population making up 10% of the parents in the school. We'll have kids in the school as long as anyone and it will still only be for 16 years. Parish would have traditionally been regarded as a bad stand for a pp. Too small to throw off good revenue.

+1. Good post.
Love the "good stand for a PP"! So true.

Americae was, and still is, the goldmine for the collared ones.

freedominacup · 18-02-2016 08:00PM

Dawggone wrote: »

+1. Good post.
Love the "good stand for a PP"! So true.

Americae was, and still is, the goldmine for the collared ones.

A grand uncle of mine who had no family gave a couple of mil in cash to various institutions in the years before his death. They have a serious machine for separating the right clients from their money. He was never going to be short but I'd say a few of the American cousins were a bit disappointed.

kowtow · 18-02-2016 08:26PM

Dawggone wrote: »

Disagree.
The market may dive another 50%, but governments will step in to interfere.
Governments can, and will, put a floor on milk.
Just like CB's are now the 'Gods' of your so called 'free' markets...Yellen and Draghi etc are the soothsayers of sentiment...

I didn't make my point very well I think, actually didn't mean to suggest that milk could fall another 50% or anything like it barring a blip of utter madness. I suspect that we are at or near some fairly important lows in milk, and perhaps also in other commodities for the time being. I'd be much more concerned about the average price over the next three or five years than exactly where the low might be.

Ireland's price of course, adjusted for currency, may have some more to go to converge with the GDT.

My caution was a general one against catching falling knives.. .. the point is you can keep taking 50% off any price ad-infinitum, there is always room for another 50% fall, because the 50% gets smaller every time. It's an antidote to the knee-jerk reaction that makes you think a stock is so cheap it can only go up.

You are quite right on the Fed & the Central Banks - for some time this has been a game where the referees kick the ball more than the teams. Not a good thing for any market, and can only take us to disaster in the long term.

Weaning from QE / ZIRP is going to be politically, economically, socially perhaps militarily very painful indeed.

Dawggone · 18-02-2016 09:07PM

kowtow wrote: »

I didn't make my point very well I think, actually didn't mean to suggest that milk could fall another 50% or anything like it barring a blip of utter madness. I suspect that we are at or near some fairly important lows in milk, and perhaps also in other commodities for the time being. I'd be much more concerned about the average price over the next three or five years than exactly where the low might be.

Ireland's price of course, adjusted for currency, may have some more to go to converge with the GDT.

My caution was a general one against catching falling knives.. .. the point is you can keep taking 50% off any price ad-infinitum, there is always room for another 50% fall, because the 50% gets smaller every time. It's an antidote to the knee-jerk reaction that makes you think a stock is so cheap it can only go up.

You are quite right on the Fed & the Central Banks - for some time this has been a game where the referees kick the ball more than the teams. Not a good thing for any market, and can only take us to disaster in the long term.

Weaning from QE / ZIRP is going to be politically, economically, socially perhaps militarily very painful indeed.

Thanks.
Take a bow.
Post of the year.

McWilliams beware!

kowtow · 19-02-2016 10:57AM

I see from the article at Agriland that Arla publish a "performance price" - explained by them as follows:

The performance price, which measures the value Arla has generated from each kilo of milk supplied by the farmer-owners, was 33.7c/kg with a total volume of owner milk of 12.5 billion kg in 2015 (compared to 41.7c/kg with a total volume of owner milk of 11.7 billion kg in 2014).

Shouldn't we be pressurising our co-ops to publish a similar figure on a regular basis? It's vital that there is transparency regarding any balance sheet support included as part of the milk price. The idea that a farmer is a businessman making investments for the future and dealing with volatility is a bit of a nonsense if his own co-op doesn't believe he is grown up enough to know how much is in his savings account and how much his milk fetches.

Co-ops will probably plead the usual commercial confidence nonsense but that isn't really their role. It's vital that we have this clarity - actually GIIL, Glanbia et al are at least to be congratulated on being forthright about it as I have said here before.

alps · 19-02-2016 12:12PM

kowtow wrote: »

IThe idea that a farmer is a businessman making investments for the future and dealing with volatility is a bit of a nonsense if his own co-op doesn't believe he is grown up enough to know how much is in his savings account and how much his milk fetches.

Kowtow, with all due respect.....you are here long enough to realise that the Coop board and management are the businessmen.....The farmer should supply all his product at whatever price and buy all his inputs at whatever price and leave the business up to the businessmen. ...

Farmer Ed · 19-02-2016 01:29PM

alps wrote: »

Kowtow, with all due respect.....you are here long enough to realise that the Coop board and management are the businessmen.....The farmer should supply all his product at whatever price and buy all his inputs at whatever price and leave the business up to the businessmen. ...

Funny thing is most of hem have no qualification in business. They just have degrees in dairy science. Sure they know how to make skim milk powder. But have absolutely no idea how they are going to sell it.
But your correct they should not be questioned by people of a lower caste

atlantic mist · 19-02-2016 03:13PM

see also arla are dropping their margin to help farmers out, can our processors not take a leaf out of their book?

in gii case they are not funding the milk price from gii balance sheet, the additional top up is coming from an investment in a plc where a small proportion on shares were sold to create this fund to keep those dairy farmers quite as we only make up 4500 of 16500 members, its being done to ensure that gii stays within margin not to impact the plc performance on the stock exchange, you wouldnt see them dropping the margin like arla, no favours what so ever, their actually on about investing 35m in extra cheese processing, have they markets for this extra cheese dont build the factory and go looking then like they have with belview

the drive to show transparency in price i would imagine will be jumped on when powered starts production (and not a minute earlier, they will be for right with the information then as it will suit) as according to the farmers journal powder which is targeted to international markets (really a worrying vision for the future of our industry) and this will out way all other product sold so they will want to show "look how transparent the price we are paying you now that half of product is on international market",

we dont have that now as the higher valued products have arnt being returned in milk price paid to farmers e.g all our cheese sold in ireland is sold by consumer foods who have a very nice margin which doesnt filter back to us, so our processor also has their margin +consumer foods have theirs thats about 10% wasted from our perspective on the notion of a margin before we even look at base price, farmers are not in control of any finished product the added value is all in the plc (in our case) and gii is set up modeling fonterra which i think is a huge mistake as the farmers on the ground dont buy into the nz model, icbf figures proved that

our current ceo background is science, to my absolute amazement he didnt actually understand corporate ownership and control in the first meeting i attended....trying to give the man a chance but he hasnt won me over on a science individual for ceo of dairy processor

Farmer Ed · 19-02-2016 05:32PM

atlantic mist wrote: »

see also arla are dropping their margin to help farmers out, can our processors not take a leaf out of their book?

in gii case they are not funding the milk price from gii balance sheet, the additional top up is coming from an investment in a plc where a small proportion on shares were sold to create this fund to keep those dairy farmers quite as we only make up 4500 of 16500 members, its being done to ensure that gii stays within margin not to impact the plc performance on the stock exchange, you wouldnt see them dropping the margin like arla, no favours what so ever, their actually on about investing 35m in extra cheese processing, have they markets for this extra cheese dont build the factory and go looking then like they have with belview

the drive to show transparency in price i would imagine will be jumped on when powered starts production (and not a minute earlier, they will be for right with the information then as it will suit) as according to the farmers journal powder which is targeted to international markets (really a worrying vision for the future of our industry) and this will out way all other product sold so they will want to show "look how transparent the price we are paying you now that half of product is on international market",

we dont have that now as the higher valued products have arnt being returned in milk price paid to farmers e.g all our cheese sold in ireland is sold by consumer foods who have a very nice margin which doesnt filter back to us, so our processor also has their margin +consumer foods have theirs thats about 10% wasted from our perspective on the notion of a margin before we even look at base price, farmers are not in control of any finished product the added value is all in the plc (in our case) and gii is set up modeling fonterra which i think is a huge mistake as the farmers on the ground dont buy into the nz model, icbf figures proved that

our current ceo background is science, to my absolute amazement he didnt actually understand corporate ownership and control in the first meeting i attended....trying to give the man a chance but he hasnt won me over on a science individual for ceo of dairy processor

No way on earth are some of these guys worth what they are being paid. Some of them seem to know very little about business and the ones that do have had to learn on the job. It can't be such hard work risking other people's money

Milked out · 19-02-2016 07:22PM

DG base 25.5.
Received 28.582 @ 3.46p and 4.29bf excluding winter bonus.

Milked out · 19-02-2016 07:33PM

Deadline for fixed price scheme is March 4th. If anyone is applying

kowtow · 19-02-2016 07:51PM

alps wrote:

Kowtow, with all due respect.....you are here long enough to realise that the Coop board and management are the businessmen.....The farmer should supply all his product at whatever price and buy all his inputs at whatever price and leave the business up to the businessmen. ...

Forgive me you are perfectly correct I must have overstepped myself.

I'll go back to boiling the silage and straightening the bulls teeth.

Dawggone · 19-02-2016 08:18PM

Was in Quimper in Brittany today to view a machine. The dairy and pig farmers are really p1ssed (Brittany is also intensive in pigs),with every third or fourth roundabout and carriage way used to dump a mix of muck, tyres and plastic. It honestly looks like the farmers are using the road network to clean out their farms. I was taken aback as the French countryside is usually very clean.
Then about 50km from Quimper I witnessed some real blackguarding. An Aldi truck was in the process of being wrecked and looted. Tyres were being let out by farmers with hammers blowing out the air valves and the trailer contents were being given out to motorists in the traffic jam. Shameful carryon and police just let them at it.

There was an uncomfortable atmosphere of anger.

alps · 20-02-2016 12:53PM

Milked out wrote: »

Deadline for fixed price scheme is March 4th. If anyone is applying

You probably should....at current prices worth .45 across your 2105 supply, and Dairygold board members talking the price down very hard, so that .45 for the next couple of months could be worth quiet a lot more. No mention of the revolving fund in the contract, but board member expects that it will not be applied on this, until it kicks in on overall milk price.

On a slightly different topic....how come suppliers with higher than coop average fat and protein, grade a1 milk, full bonus points, no fines/deductions, get less than the coop average milk price? Saw one this month, top 10% for far and protein, all bonuses yet outside top 10% milk price? No fixed contracts to complicate issues...

Milked out · 20-02-2016 01:35PM

alps wrote: »

You probably should....at current prices worth .45 across your 2105 supply, and Dairygold board members talking the price down very hard, so that .45 for the next couple of months could be worth quiet a lot more. No mention of the revolving fund in the contract, but board member expects that it will not be applied on this, until it kicks in on overall milk price.

On a slightly different topic....how come suppliers with higher than coop average fat and protein, grade a1 milk, full bonus points, no fines/deductions, get less than the coop average milk price? Saw one this month, top 10% for far and protein, all bonuses yet outside top 10% milk price? No fixed contracts to complicate issues...

I'll take the full 15 alright. If I'm complaining in 18 months it cost me money it won't be a bad thing.
On that price is it possible its an error? My price above is the average I think, was just above with protein and below with fat.don't have statement to hand. Don't understand how price could be below coop average if protein and fat are above it and no penalties?. Scorecard only accounts for 0.4c/L so not a massive amount. Did they contact milk manager?

Milk Price- Please read Mod note in post #1

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