Milk Price- Please read Mod note in post #1

jaymla627 · 04-05-2016 04:55PM

Farmer Ed wrote: »

Is that 2 c in total of is it another 1.5 to 2 for may on top of the April cut ? If carberry don't drop your looking at a huge gap opening up

Factor in that alot of glanbia supplier will be paying back superlevy fines aswell which could account for 1-2 cent of their base price it's looking pretty hairy if these cuts do take place

Water John · 04-05-2016 04:57PM

Ed, you brought up this morning about product mix and its reflection in the price paid to the farmer. This has been a huge issue with a long time.
IFA seem to never have done their research on this.
Making WMP is simply dumping excess milk. The value return on other products has been kept 'for commercial reasons' like the third secret of Fatima.

A simple example is that DG had a €20M bonus each year for the product they produced for Danone. DG did not tell us, you can be sure.
They banked on it continuing but the premium is no longer there.
Yet, Danone sell a premium grass based Infant Formula but the farmer gets none of that benefit.
Hence Danone profits going up, farmer margin going down. DG going nowhere but the managers are still drawing the salaries.

The mix of each processor should be analysed and its likely return, based on the info available. Only be each processor being put individually under the microscope can transparency on price to the farmer be assured.

kowtow · 04-05-2016 05:34PM

Exactly.

The problem is that processors will always cite commercial confidentiality because of the proprietary nature of the contracts..... and that's when they stop looking like farmers coops and become a big bad buyer on the other side of the fence.

I actually have some sympathy for the confidentially argument, but I wonder if things couldn't be turned on their head a little by farmers forcing their coops to publish the amount of wmp, smp etc. Sold by them at commodity prices. If we had the figures on a monthly or quarterly basis for what was going out as surplus we'd have more chance of judging what value was really being added to our milk and whether each of our processors were partners or vultures.

Transparency of this sort is really the minimum that must be offered if we are expected to adhere to MSA'S of the type that have been demanded.

It wouldn't be impossible to demand retrospective change, if everyone was of a like mind.

Farmer Ed · 04-05-2016 05:41PM

kowtow wrote: »

Exactly.

The problem is that processors will always cite commercial confidentiality because of the proprietary nature of the contracts..... and that's when they stop looking like farmers coops and become a big bad buyer on the other side of the fence.

I actually have some sympathy for the confidentially argument, but I wonder if things couldn't be turned on their head a little by farmers forcing their coops to publish the amount of wmp, smp etc. Sold by them at commodity prices. If we had the figures on a monthly or quarterly basis for what was going out as surplus we'd have more chance of judging what value was really being added to our milk and whether each of our processors were partners or vultures.

Absolutely. At the moment we are just constantly reminded of world prices when they want to drop the price and then we are all told about the high value added space age products they are producing when management want to go on a spending spree or make themselves look good.
They can't have it both ways surely?

keep going · 04-05-2016 07:13PM

Farmer Ed wrote: »

Is that 2 c in total of is it another 1.5 to 2 for may on top of the April cut ? If carberry don't drop your looking at a huge gap opening up

carbery should drop 4 cent according to dairy product returns but they hope to subsidise by 1.5 to 2 cent

Water John · 04-05-2016 08:55PM

I can't get my head around the notion of a coop, saying it's subsidising milk price. Is this saying they are returning more than its making. In my simple language that is called a loss.
Do I not get accounting?

BTW I don't want any processor to operate at a loss. That would be very short termism and detremental to its interests.

mf240 · 04-05-2016 09:11PM

It's making a compliment of paying a poor price. That's all really .

kowtow · 04-05-2016 10:33PM

There's an article by pat o toole in the journal under the headline "coop bosses cost â‚¬25 per cow per year"...

A figure which is allegedly 10x that of New Zealand and 5x that of the Netherlands.

A timely article, although I am not convinced by the implication that consolidating the coops is the solution for Ireland. Those kind of corporate actions tend to be an excuse for more executive pay not less.

The great and the good are always telling us that we must be hyper efficient before we dream of expansion. The coops would do well to follow the same rule.

Farmer Ed · 04-05-2016 10:39PM

kowtow wrote: »

There's an article by pat o toole in the journal under the headline "coop bosses cost â‚¬25 per cow per year"...

A figure which is allegedly 10x that of New Zealand and 5x that of the Netherlands.

A timely article, although I am not convinced by the implication that consolidating the coops is the solution for Ireland. Those kind of corporate actions tend to be an excuse for more executive pay not less.

The great and the good are always telling us that we must be hyper efficient before we dream of expansion. The coops would do well to follow the same rule.

Amen

We thought the old health boards were bad until we got the Hse. We should be careful what we wish for

Water John · 04-05-2016 10:46PM

There just might be a clue in the journalist's name.
IFJ have been angling on this for a while. That is why they are publishing renumeration figures.
Not to seek reasonable salaries and board member payment. Its to condition farmers to seek amalgamations and mergers. The ICOS solution again.

WheatenBriar · 04-05-2016 11:03PM

Water John wrote: »

I can't get my head around the notion of a coop, saying it's subsidising milk price. Is this saying they are returning more than its making. In my simple language that is called a loss.
Do I not get accounting?

BTW I don't want any processor to operate at a loss. That would be very short termism and detremental to its interests.

Aye it's total board room bubble arrogance to suggest a co op's respectable profits are 'subsidising' milk price ie that they'd make higher profits if only they could get away with making farmers losses bigger

Dairy Co op's & plc's always the fcucker's making the farmer the fcukee

keep going · 04-05-2016 11:21PM

If carbery milk price was based solely on the returns from manufacturing dairy products it would be in the region of 21 cent.in fact in my opinion many of the coops are doing a super job in the current climate

Water John · 04-05-2016 11:21PM

Well. the next time a CEO or rep of a processor spouts that sh**e, the journalist should ask for a detailed explanation to the scutter they have just spouted.

Water John · 04-05-2016 11:22PM

What else are Carbery making?
Are they making products for which milk isn't the base?

Unless a processor has some thing else going and the profits are being clearly used to prop up the dairy function, i don't buy it.

keep going · 04-05-2016 11:34PM

Water John wrote: »

What else are Carbery making?
Are they making products for which milk isn't the base?

They are involved in business that have nothing to do with milk and are involved in secondry processing of dairy products from milk that dosent come from west cork but I will say that management have a way of segregating the business which hides some the return frommilk but dont worry we tell them that we are aware of it.but if you take cheese, whey powder, cream, milk powder , alcohol, or what ever, the market is currently paying 21 to 22 cent

Water John · 04-05-2016 11:40PM

So they play little games with the info to board members and Carbery is the best in the country. What are the rest up to?

I know the 4 coops have each their own businesses. I accept in these tight times they may be using some of this to prop up milk price.

You are saying the mix of products is returning 20/21 cent.
So what is WMP retuning ATM, any one?

Thanks Keep Going.

atlantic mist · 04-05-2016 11:44PM

i do think our situation is different to the mainstream coops left in country, as now supplying a limited company, so they can be the big bad buyer, thats what they need to do to achieve the business goal, our coop top up are because they know we have a bit of a raw deal and they are trying to keep suppliers content while maximising share value as they see this as the main objective of our coop now and this in turn will put more money in suppliers pockets, drip fed, admin costs for coop eat up a tidy number every year, dont think it will in long run

from a volatility point of view suppliers and processors should be in partnership like a good supply chain, where by we as suppliers can react to changes in our processors sales portfolio and visa versa, we have the processing facilities to be able to move with or reduce supplies when and where market opportunities exist, maximising opportunities and reducing risk, waiting for a monthly meeting, we dont know what gets sold, for what prices and what regions, whats still sitting in stock, whats the production cost of each product, the weakening of euro is helping us some bit id be worried if it strengthens, gii did not expect this low a milk price but they were pushing sales so they havent helped us too much either prepared to drop quick for sales, all fixed price schemes with us were contracts and while im sure confidential we were told about the buyer and price, dont know if they have other contracts could be just the few by looks of it

were producing product every day not knowing the price were going to get paid (ok fixed price and liquid lads know a bit better) and processors are processing it not knowing what price they will be paid, tis a crazy world we do be livin in, at least we know what it retails for all round the world

farmers getting subsidised milk prices and in return subsidising the limited company/coop to ensure they meet their margin, these subsidies are great

keep going · 05-05-2016 12:12AM

atlantic misis wrote: »

i do think our situation is different to the mainstream coops left in country, as now supplying a limited company, so they can be the big bad buyer, thats what they need to do to achieve the business goal, our coop top up are because they know we have a bit of a raw deal and they are trying to keep suppliers content while maximising share value as they see this as the main objective of our coop now and this in turn will put more money in suppliers pockets, drip fed, admin costs for coop eat up a tidy number every year, dont think it will in long run

from a volatility point of view suppliers and processors should be in partnership like a good supply chain, where by we as suppliers can react to changes in our processors sales portfolio and visa versa, we have the processing facilities to be able to move with or reduce supplies when and where market opportunities exist, maximising opportunities and reducing risk, waiting for a monthly meeting, we dont know what gets sold, for what prices and what regions, whats still sitting in stock, whats the production cost of each product, the weakening of euro is helping us some bit id be worried if it strengthens, gii did not expect this low a milk price but they were pushing sales so they havent helped us too much either prepared to drop quick for sales, all fixed price schemes with us were contracts and while im sure confidential we were told about the buyer and price, dont know if they have other contracts could be just the few by looks of it

were producing product every day not knowing the price were going to get paid (ok fixed price and liquid lads know a bit better) and processors are processing it not knowing what price they will be paid, tis a crazy world we do be livin in, at least we know what it retails for all round the world

farmers getting subsidised milk prices and in return subsidising the limited company/coop to ensure they meet their margin, these subsidies are great

Have no doubt there is s##t loads of dairy products in storage in ireland.someone here mentioned that a ceo wants to bring milk to 17 cent but id say if you told most ceos that we are all drying off the cows no more milk for the rest of the year, they d all breath a huge sigh of relief

Bass Reeves · 05-05-2016 12:55AM

keep going wrote: »

Have no doubt there is s##t loads of dairy products in storage in ireland.someone here mentioned that a ceo wants to bring milk to 17 cent but id say if you told most ceos that we are all drying off the cows no more milk for the rest of the year, they d all breath a huge sigh of relief

I do not think they would. Truth is they make they cover costs and make a margin no matter how much dairy farmers lose. This is the big lie, it is the same right across agriculture. If a farmer produces grain it is immaterial to the miller whether it is profitable to the farmer or not, the miller adds his processing costs and his margin and extracts that from the market.

Milk is no different except it is a more perishable product. If every farmer dryed off the cows in the morning the dairy processors would still have operating costs they would be way lower but he would be unable to extract these costs from a product.

It is a bit like the farmer if he dry's off the cows he still has operating costs. They want that milk at the lowest price they can get away with paying so as to add there operating costs to the salable product

keep going · 05-05-2016 01:00AM

Bass Reeves wrote: »

I do not think they would. Truth is they make they cover costs and make a margin no matter how much dairy farmers lose. This is the big lie, it is the same right across agriculture. If a farmer produces grain it is immaterial to the miller whether it is profitable to the farmer or not, the miller adds his processing costs and his margin and extracts that from the market.

Milk is no different except it is a more perishable product. If every farmer dryed off the cows in the morning the dairy processors would still have operating costs they would be way lower but he would be unable to extract these costs from a product.

It is a bit like the farmer if he dry's off the cows he still has operating costs. They want that milk at the lowest price they can get away with paying so as to add there operating costs to the salable product

Fair enough if that is what you think, just try getting some cold storage or any kind of warehouse at the moment and come back to me then

alps · 05-05-2016 02:14AM

keep going wrote: »

Fair enough if that is what you think, just try getting some cold storage or any kind of warehouse at the moment and come back to me then

What balance sheet is this product showing up on? Is it showing in the accounts of the coops?

Has this product gone through to some holding company as a sale?

Can co ops set up such holding companies without the showing up on the parent company's books?

I'm very suspicious...

kowtow · 05-05-2016 07:11AM

keep going wrote:

They are involved in business that have nothing to do with milk and are involved in secondry processing of dairy products from milk that dosent come from west cork but I will say that management have a way of segregating the business which hides some the return frommilk but dont worry we tell them that we are aware of it.but if you take cheese, whey powder, cream, milk powder , alcohol, or what ever, the market is currently paying 21 to 22 cent

If that is the case aren't you actually thanking carbery for being...

1. Your milk processor and
2. Your combined investment adviser + fund manager?

Is that an appropriate role for a coop in these professional times?

Why not get Carbery to sell the non core assets and return the funds so you can stick them in a hedge fund?

I'm a bit surprised because until now I thought Carbery returns were from the various premium brands including cheese which they are able to turn a margin on?

Bass Reeves · 05-05-2016 08:14AM

keep going wrote: »

Fair enough if that is what you think, just try getting some cold storage or any kind of warehouse at the moment and come back to me then

Most Co-op, Milk processors etc would store processed milk for no longer than 2-3 weeks. Some milk products such as fresh milk and yogurt has very limited shelf life. Others such as cheese has a longer shelf life but customer wants to see a 30+ best before date when buying. When processors make such products they do not intend to store for longer than 3-4 weeks and for some it is only days.

Issue lies with milk powder but again I expect that in normal production processors do not plan to have more than a month or 6 weeks product in storage. Again it has a shelf life and end user will have preferred shelf life when buying.

Yes storage may be an issue at present, however that storage may always be an issue at this time of year as milk supply takes off. Having to store milk product for even 2-3 days longer at max milk demand would challenge most processors. that should not be taken to mean that they would prefer that suppliers dryed off cows.

freedominacup · 05-05-2016 08:47AM

keep going wrote: »

Have no doubt there is s##t loads of dairy products in storage in ireland.someone here mentioned that a ceo wants to bring milk to 17 cent but id say if you told most ceos that we are all drying off the cows no more milk for the rest of the year, they d all breath a huge sigh of relief

If that was the case why aren't we given a price for the coming months now? If they don't want the milk tell us with a forward price and let us make out own minds up from there. All very fine to tell us after they've taken the milk about the huge favour they're doing us and how we should really be paying them for looking after us so well.

whelan2 · 05-05-2016 08:52AM

freedominacup wrote: »

If that was the case why aren't we given a price for the coming months now? If they don't want the milk tell us with a forward price and let us make out own minds up from there. All very fine to tell us after they've taken the milk about the huge favour they're doing us and how we should really be paying them for looking after us so well.

Dawg can post here what price he is getting months in advance, why cant we be told, its no secret Glanbia know what they are paying in advance wouldnt kill them to let us know

Farmer Ed · 05-05-2016 08:53AM

alps wrote: »

What balance sheet is this product showing up on? Is it showing in the accounts of the coops?

Has this product gone through to some holding company as a sale?

Can co ops set up such holding companies without the showing up on the parent company's books?

I'm very suspicious...

Alps has someone been talking out of school?

freedominacup · 05-05-2016 08:55AM

alps wrote: »

What balance sheet is this product showing up on? Is it showing in the accounts of the coops?

Has this product gone through to some holding company as a sale?

Can co ops set up such holding companies without the showing up on the parent company's books?

I'm very suspicious...

No balance sheet for GII, no p&l either. However we were shown a massive increase in borrowings on a presentation last month without any mention of product in storage to balance it. It must be great to get accounts for the businesses you own.

patsy_mccabe · 05-05-2016 08:58AM

Got thinking about this thread last night. Kinda follows on from Bass reeves said about thinking outside the box.
The way I see it, its survival mode now in Dairying. What was Gospel up to now is gone out the window.

I'd be thinking along the lines of major steps like reducing cow numbers, scrapping AI and buying a bull, Slash fertiliser use, less nitrogen, living off the P and K already in the soil. Once a day milking and getting an off farm part time job. Stuff you really wouldn't have considered up to now. Anyone thinking along these lines.... Anyone ????

whelan2 · 05-05-2016 09:00AM

freedominacup wrote: »

No balance sheet for GII, no p&l either. However we were shown a massive increase in borrowings on a presentation last month without any mention of product in storage to balance it. It must be great to get accounts for the businesses you own.

Is the co-op agm on today?

keep going · 05-05-2016 09:11AM

freedominacup wrote: »

If that was the case why aren't we given a price for the coming months now? If they don't want the milk tell us with a forward price and let us make out own minds up from there. All very fine to tell us after they've taken the milk about the huge favour they're doing us and how we should really be paying them for looking after us so well.

Be cause the intervention runs that were expected to do the year are filling up faster than expected and nobody khows whats go to happen then at the moment.there is even a voluntry scheme to reduce cheese production in ireland at the moment by 10 % but unfortunately all that has hapoened is even more milk is going into mp, butter etc

Milk Price- Please read Mod note in post #1

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