Milk Price- Please read Mod note in post #1

Dawggone · 25-05-2016 07:30AM

Water John wrote: »

Boards is a sort of quirky Irish thing. Tried launching it in some other countries, never took on, I think.

There's an excellent French forum for tillage and machinery.
Just found out on it now that the nuclear power stations are out on strike now.

Boards can be good for the dairy side of things.

Farmer Ed · 25-05-2016 08:55AM

Dairygold farm safety walks kick-off today as risk of accidents heightens @agrilandIreland http://www.agriland.ie/farming-news/dairygold-farm-safety-walks-kick-off-today-as-risk-of-accidents-heightens/

My be a depressing thing to say but the biggest threat to farmers wellbeing at the moment is milk price

jaymla627 · 25-05-2016 09:05AM

Farmer Ed wrote: »

Dairygold farm safety walks kick-off today as risk of accidents heightens @agrilandIreland http://www.agriland.ie/farming-news/dairygold-farm-safety-walks-kick-off-today-as-risk-of-accidents-heightens/

My be a depressing thing to say but the biggest threat to farmers wellbeing at the moment is milk price

Very true and not just from a mental health perspective, things like fixing a broken hand -brake/replacing a pto shaft will all be put off due to lack of funds....
It's a serious case of bad timing to rolling out mandotory bord bia dairy compliance, if you end up getting a prick of a inspector who lands in and presents you with a list of things needed rectified that run into thousands where are lads ment to pull this from when they are already on their knees.
Theirs a serious lack of joined up thinking from the higher ups who simply seem hell bent on piling on pressure on farmers already at breaking point

einn32 · 25-05-2016 10:21AM

https://theconversation.com/murray-goulburn-saga-has-roots-in-deregulation-59607

Some sort of rally in Melbourne tomorrow. Lot of media hype surrounding milk price. I've heard stories of farms shutting down and suicides from people but who knows how accurate they are. Only milk in the shops is shop branded stuff with some of it going for 50 cent! No restocking of other brands as far as I saw.

On the ground I was chatting to an organic guy in pub last week seems to be going strong. Another guy I know is milking 200 but pushing for 300. Just bought in 150 in calf heifers. Lining up a couple for farm takeover. Cows getting wheaten straw mix and bales here on the feed pad after milkings then pushed to paddock. Dry year not helping but raining tonight.

Farmer Ed · 25-05-2016 10:23AM

jaymla627 wrote: »

Very true and not just from a mental health perspective, things like fixing a broken hand -brake/replacing a pto shaft will all be put off due to lack of funds....
It's a serious case of bad timing to rolling out mandotory bord bia dairy compliance, if you end up getting a prick of a inspector who lands in and presents you with a list of things needed rectified that run into thousands where are lads ment to pull this from when they are already on their knees.
Theirs a serious lack of joined up thinking from the higher ups who simply seem hell bent on piling on pressure on farmers already at breaking point

Very valid points. If the political will was really there and the minister really wants to do something to reduce pressure on farmer's. It would be a welcome gesture to stop farm inspections until farm incomes recover. The move on the board bia inspections has to be welcomed as a step in the right direction.

Also if a payment of €15k per farm could be secured for a temporary drop in output. Maybe it should not n ruled out without having a look at the proposal. A lot of farmers may be forced to cut back production anyway as cows are culled to pay bills and feed is reduced to cut costs.

Water John · 25-05-2016 10:48AM

Very simple, Keep Going, if you have a problem with me, or some imaginary infringement by me, you should report it.

My concern is dairy farmers, esp those of DG and Glanbia have been taken for a ride. By both the management of these coops and worse still their board members.
The bottom line is farmers losing money and working harder. You supply West Cork, if DG farmers were paid your price, it would mean €25/30M extra to DG farmers.
Solids are higher on DG suppliers and that is being used to camoulage the poor price by DG and they quoting the KPMG milk price audit.
That's a real problem to be concerned about. Don't be chasing shadows.

alps · 25-05-2016 11:31AM

Was at quiet an interesting meeting this week to do with milk price....A presentation by "A lady with charts" which had the information which"sure we know that already" and some stuff we wouldn't know about.
Some attendees had done their bit of research and one gave recent examples where our coops undercut an Ornua rep in the sale of mp's. The examples were specific and worrying.
When uou look at the waft of levies, and the level of renumeration involved you must really question are we the farmers being best served. There was mention of course of coop effeciencies and cutting costs but the return on this is nothing compared to the loss incurred in undercutting our own product. The MP in question was undercut by 200/tonne and simple enough this equates back to a farm difference of 2c/l....

Much more important for us to have joined up marketing than joined up processing...

Most interesting suggestion however was that when we listened to the causes of our delima.: overproduction, reduced buying power of consumer, low fuel and cereal prices, it is clear and obvious that we can in no way effect most of these symptoms.
We could address one of them...Overproduction. .

A relatively small overproduction has rendered the whole of our output equal in value to the last marginal litre. Vegetable growers will, if they have a situation of overproduction, destroy product so as not to let the surplus bring down the better price for the rest. Stock farmers often have access to free potatoes and veg, that can be dyed so as to ensure it does not make it yo yhe marketplace...A short sharp shock is required. ...One which the farmers can control....

Answer...everyone dump a weeks milk...apologise to the world for over producing and tell them we are taking corrective measures....surplus eradicated in one week...message to buyers the world over that we as farmers can control price...

Make out what one weeks milk is worth at 22c...and work out how much you are down in revenue for a whole year of this terrible price....

There is very little on the horizon to effect the causes of low milk prices. ..maybe the farmers should effect the one they can control...

kowtow · 25-05-2016 12:21PM

alps wrote: »

A relatively small overproduction has rendered the whole of our output equal in value to the last marginal litre.

There are two things I'd like to see a lot more mature and sensible research on from the dairy industry in Ireland.

The first is the point you raise above - How much irish over production does it take to slide prices down from the top end of the product spectrum towards the bottom - this is something farmers need to understand as it has a big impact, IMO, on their likely view of future consolidation / pricing regimes in the co-ops. If a farm adds a million litres of production, but those million litres will only find the marginal lowest powder price, then on the present model that expansion is being subsidised by small farmers effectively having to share out the benefit of premium products which were always there. That's not necessarily a bad thing, but I think it's something which needs to be understood and clear to all.

The second is for some real market research to determine to what extent Irish production methods really generate premium value in the powder market. Obviously where the higher margin products are concerned, grass based family farms are part of the picture, and that value is transmitted - but is there, realistically, any prospect of the "green" image being remunerated in the bulk powder market? One reason I raise this is that bulk powder production, indeed overproduction, could potentially have a negative effect on the overall image of Irish dairy and therefore on those products - like Kerrygold - which have actually managed to capitalise on our farming systems. It would be foolish to hurt our image by producing larger and larger amounts of something which doesn't reflect or transmit the value of it.

Both these points are subtle and would need some serious, objective, and informative study. I wonder whether any of our levy funded bodies have the integrity and intellectual rigour to do them, and share the results fully, as should really have happened prior to the hype of Harvest 2020?

kowtow · 25-05-2016 12:28PM

Just to underline alps' point above, the powder storage in Europe situation is really frightening. I quote the www.agriland.ie article below.

Sales of Skimmed Milk Powder (SMP) into intervention has reached 216,791t since the start of the year and is now almost over the already extended limit of 218,000t.

At the rate powder is being sold into intervention it will break the 300,000t mark in June. To put that into context 300,000t is as much as 75% of New Zealand’s annual production.
On Monday of this week alone, almost 7,500t of SMP was offered to public intervention with Ireland leading the charge on the day, offering some 55% of the product on the day.

Dawggone · 25-05-2016 12:30PM

Wouldn't European overproduction be a better metric?
Is Europe not the biggest producer of milk?
For your other points re the image of Irish product...I can't really agree with you.

Milked out · 25-05-2016 01:04PM

According to agriland there could be 300000t of powder in intervention by June, equivalent to 75% of nz production. There'll be fun when that has to find a home. This is going to be drawn out even if production is cut

Farmer Ed · 25-05-2016 01:13PM

kowtow wrote: »

There are two things I'd like to see a lot more mature and sensible research on from the dairy industry in Ireland.

The first is the point you raise above - How much irish over production does it take to slide prices down from the top end of the product spectrum towards the bottom - this is something farmers need to understand as it has a big impact, IMO, on their likely view of future consolidation / pricing regimes in the co-ops. If a farm adds a million litres of production, but those million litres will only find the marginal lowest powder price, then on the present model that expansion is being subsidised by small farmers effectively having to share out the benefit of premium products which were always there. That's not necessarily a bad thing, but I think it's something which needs to be understood and clear to all.

The second is for some real market research to determine to what extent Irish production methods really generate premium value in the powder market. Obviously where the higher margin products are concerned, grass based family farms are part of the picture, and that value is transmitted - but is there, realistically, any prospect of the "green" image being remunerated in the bulk powder market? One reason I raise this is that bulk powder production, indeed overproduction, could potentially have a negative effect on the overall image of Irish dairy and therefore on those products - like Kerrygold - which have actually managed to capitalise on our farming systems. It would be foolish to hurt our image by producing larger and larger amounts of something which doesn't reflect or transmit the value of it.

Both these points are subtle and would need some serious, objective, and informative study. I wonder whether any of our levy funded bodies have the integrity and intellectual rigour to do them, and share the results fully, as should really have happened prior to the hype of Harvest 2020?

Was reported last week that one co op gave nearly half a million for such advice, just in 2015 alone. If I was them I'd be looking for my money back. But you are 100% dead right. There badly needs to be a broader look taken at this. I never liked quotas but more is not always better either .great post.

kowtow · 25-05-2016 01:28PM

Dawggone wrote: »

Wouldn't European overproduction be a better metric?
Is Europe not the biggest producer of milk?
For your other points re the image of Irish product...I can't really agree with you.

Well yes, and my initial reaction to alps' suggestion would be what difference would it make, Ireland is a drop in the Ocean... and other European producers will keep gunning supplies until their variable cash costs exceed the marginal litre.. and sometimes beyond.

But with the changed commodity landscape the gap is closing between the fully equipped and costed UK or Dutch intensive producer and the low cost Irish producer (particularly if the Irish producer has to fund expensive land & wages)... on a cash basis our system might ensure we are the last man standing, but in today's global climate we could lose a lot of limbs while we wait for the others to fall over.

Notwithstanding the agriland article, incremental Irish production probably doesn't make much difference to the world price - but additional milk, sold as plain powder, does dilute the domestic return to all farmers from those Irish products which are able to capture the "Irish premium"... at least on present co-op pricing models...

keep going · 25-05-2016 02:07PM

Water John wrote: »

Very simple, Keep Going, if you have a problem with me, or some imaginary infringement by me, you should report it.

My concern is dairy farmers, esp those of DG and Glanbia have been taken for a ride. By both the management of these coops and worse still their board members.
The bottom line is farmers losing money and working harder. You supply West Cork, if DG farmers were paid your price, it would mean €25/30M extra to DG farmers.
Solids are higher on DG suppliers and that is being used to camoulage the poor price by DG and they quoting the KPMG milk price audit.
That's a real problem to be concerned about. Don't be chasing shadows.

And right on que was the thank from ed.look lads post away , knock yourself out, everyone is entitled to their own opinion but in my opinion based on the info avaiable to me ye are lucky to be getting even that money.i made the comment that processors would be nearly happier if every cow in ireland was dried off right now because it is so hard to find a home for any product and alot of lads disagreed but things are screwed, really screwed and the only way out of it is for prices to go so low that guys give up.yes you can come up with new products and technology but they will only add a little fat to your price its the value of the main commodities will dictate the price.this is the new reality and dairy production in ireland will always be export driven which means a huge relliance on commodity prices.the difference between west cork and dg ismore down to the structures in place and highly paid good management where decisions were taken to retain value within carbery and the coops which may come into play now but as I said before if it was relying and market returns the price in west cork would be roughly 21.5 cent

Water John · 25-05-2016 02:38PM

I suppose we should be ordered to give to them for free.

Well aware of market conditions. Reality is milk price is low. That makes it all the more critical that the last cent that can be got is delivered back to the farmer. I repeat again, the diff is, if Dg had positioned themselves over the last number of years as Carbery have done, it would be worth €25/30M to DG farmers this year.
That may be the diff between a farm family surviving or going under. All down to processor mis-managment.

kowtow · 25-05-2016 02:38PM

keep going wrote: »

as I said before if it was relying and market returns the price in west cork would be roughly 21.5 cent

Agree completely with your post above - but just on the market returns figure of 21.5c, as you see it, does that include all products manufactured by / sold by Carbery.. cheese etc.?

In other words, despite their product portfolio (which unless I am mistaken is one of the better of the co-ops) they are unable to produce a return of more than a half cent higher than intervention?

And if so - is that because of the volume of Carbery milk going to powder, much of it perhaps even below intervention price, or because market prices for their own products have suffered alongside powder?

Hindsight is a wonderful thing but I have a feeling many farmers would look back at the rush into "white gold" and feel that with all the plc share talk and expansion and a high milk price they didn't really get to grips with who actually buys our milk, and what different product groups contribute to the average milk prices paid ... I have a feeling that you are in a better position to shed light on this than many of us here.

Edit: I know you have something of a penchant for statistics, perhaps (only slightly tongue in cheek) what we need is an EBI system for the co-ops, with sub-indexes for the quantity, quality, and price of products grouped they are equipped to produce and sell. High production / high volatilty and exposure to world markets vs. smaller, high solids, limited markets....

We could merge them annually in an attempt to breed better ones. They like a merger.

greenfield21 · 25-05-2016 02:43PM

Load on more cows lads and let's keep blowing the ceiling on intervention, the quicker milk hits 15c the better. The future is bright the future is white.

Farmer Ed · 25-05-2016 03:21PM

greenfield21 wrote: »

Load on more cows lads and let's keep blowing the ceiling on intervention, the quicker milk hits 15c the better. The future is bright the future is white.

At 15c the future would be ****e and a lot of milking parlours and milk dryers would be quite. But anyone on a db pension would still be alright.

Farmer Ed · 25-05-2016 03:58PM

keep going wrote: »

And right on que was the thank from ed.look lads post away , knock yourself out, everyone is entitled to their own opinion but in my opinion based on the info avaiable to me ye are lucky to be getting even that money.i made the comment that processors would be nearly happier if every cow in ireland was dried off right now because it is so hard to find a home for any product and alot of lads disagreed but things are screwed, really screwed and the only way out of it is for prices to go so low that guys give up.yes you can come up with new products and technology but they will only add a little fat to your price its the value of the main commodities will dictate the price.this is the new reality and dairy production in ireland will always be export driven which means a huge relliance on commodity prices.the difference between west cork and dg ismore down to the structures in place and highly paid good management where decisions were taken to retain value within carbery and the coops which may come into play now but as I said before if it was relying and market returns the price in west cork would be roughly 21.5 cent

I would have to agree with you that West cork management are doing a far better job than the big boys and at much more modest wage levels too I would suspect. Again evidence that the higher salaries don't nessacerily give better results.
In fact the opposite would seem to be the case.
But the valid questions that has been raised here is how much does the ratio of cheap powder to more high end value added product effect the overall price?

browned · 25-05-2016 05:41PM

Farmer Ed wrote: »

I would have to agree with you that West cork management are doing a far better job than the big boys and at much more modest wage levels too I would suspect. Again evidence that the higher salaries don't nessacerily give better results.
In fact the opposite would seem to be the case.
But the valid questions that has been raised here is how much does the ratio of cheap powder to more high end value added product effect the overall price?

That's strange because According to the farmers journal carberys management remuneration is €4.7m while dairygolds is only €2.7m.

Water John · 25-05-2016 05:50PM

Browned, I think that depends on who and how many are filed as Senior Management. I know the numbers varied with diff processors.
A figure for the CEO of each would not go amiss.
I've no problem paying anyone who is doing the business. Others I would gladly, give away.

To take the two figures given DG 2.7 Carbery 4.7 Diff 2M

DG milk price to farmers 25/30M less than Carbery.
That's a good return on the extra 2M on Carbery 15:1

alps · 25-05-2016 06:04PM

browned wrote: »

That's strange because According to the farmers journal carberys management remuneration is €4.7m while dairygolds is only €2.7m.

Was there a pretty substantial performance bonus paid in Carbery lately? It could account for such a high figure...

keep going · 25-05-2016 06:31PM

kowtow wrote: »

Agree completely with your post above - but just on the market returns figure of 21.5c, as you see it, does that include all products manufactured by / sold by Carbery.. cheese etc.?

In other words, despite their product portfolio (which unless I am mistaken is one of the better of the co-ops) they are unable to produce a return of more than a half cent higher than intervention?

And if so - is that because of the volume of Carbery milk going to powder, much of it perhaps even below intervention price, or because market prices for their own products have suffered alongside powder?

Hindsight is a wonderful thing but I have a feeling many farmers would look back at the rush into "white gold" and feel that with all the plc share talk and expansion and a high milk price they didn't really get to grips with who actually buys our milk, and what different product groups contribute to the average milk prices paid ... I have a feeling that you are in a better position to shed light on this than many of us here.

Edit: I know you have something of a penchant for statistics, perhaps (only slightly tongue in cheek) what we need is an EBI system for the co-ops, with sub-indexes for the quantity, quality, and price of products grouped they are equipped to produce and sell. High production / high volatilty and exposure to world markets vs. smaller, high solids, limited markets....

We could merge them annually in an attempt to breed better ones. They like a merger.

Without nailing exact figures, carbery produce something over 35 ktons of cheese with roughly 1200 tons sold as branded.this cheese is going into the market currently at 2150 a ton which according to a rule of thumb used innthe industry returns 21.5 cent.now they are involved in further processing which does give some fat but alot of the difference in the milk price comes from stuff that has nothing to do with milk.

keep going · 25-05-2016 06:38PM

But when stand back and look at things , theres no difference really between quota years and now .unless you were born with a silver quota spoon in your mouth someone else had to give up for you to survive in the milk game

kevthegaff · 25-05-2016 06:41PM

Interesting times ahead A large possibility, half of us could be on the beef/suckler thread down the line. My land is too hilly for tillage:-( imo a better lifestyle with no slaving seven day weeks!

Farmer Ed · 25-05-2016 06:42PM

keep going wrote: »

Without nailing exact figures, carbery produce something over 35 ktons of cheese with roughly 1200 tons sold as branded.this cheese is going into the market currently at 2150 a ton which according to a rule of thumb used innthe industry returns 21.5 cent.now they are involved in further processing which does give some fat but alot of the difference in the milk price comes from stuff that has nothing to do with milk.

I think most farmers wouldn't care if they made the money backing horses. The fact is year after year they have managed to deliver the best milk price. From what I hear a board member in west cork gets about 130 euro per meeting. Dairygolds starting pay is something like 35k per year plus expenses plus quangos. For some reason the west Cork boys don't seem to do as well either when jobs on national quangos are being given out?

When it comes to delivering for board members. Yes I would guess west cork must be way down on the league table.

Farmer Ed · 25-05-2016 07:07PM

browned wrote: »

That's strange because According to the farmers journal carberys management remuneration is €4.7m while dairygolds is only €2.7m.

My apologies I didn't realize Carbery executives were so well paid.

In terms of remuneration, the 2015 accounts shows the group’s 14 senior executives shared €2.69m in salaries, with performance-related payments of €1.18m, plus employer social insurance, pensions and other benefits.

This translates into an average pay package of almost €300,000 per executive.

At 300k each that's the exact same pay level as Dairygold. If you don't take in to account the 488k they had to pay for advice on top of that.

Shocking how Carbery haven't head hunted some of the Dairygolds management.
For some reason Jim was more concerned about losing them to Apple our Pepsi.

browned · 25-05-2016 07:12PM

alps wrote: »

Was there a pretty substantial performance bonus paid in Carbery lately? It could account for such a high figure...

Honestly I haven't a clue. Just going off the figures published in the journal a couple of weeks ago.

kowtow · 25-05-2016 07:26PM

keep going wrote:

Without nailing exact figures, carbery produce something over 35 ktons of cheese with roughly 1200 tons sold as branded.this cheese is going into the market currently at 2150 a ton which according to a rule of thumb used innthe industry returns 21.5 cent.now they are involved in further processing which does give some fat but alot of the difference in the milk price comes from stuff that has nothing to do with milk.

So does it follow that carbery is a net subtraction from the ornua ppi... Unless I am misunderstanding.

What products nationwide are generating higher returns?

Farmer Ed · 25-05-2016 07:40PM

kowtow wrote: »

So does it follow that carbery is a net subtraction from the ornua ppi... Unless I am misunderstanding.

What products nationwide are generating higher returns?

How much is the whey worth to Carbery? I'm assuming the 21.5 c would only be the 10% cheese yield. Assuming it's all going in to something like cheddar. I would imagine the yield would also be much higher for the likes of mozzarella.

Milk Price- Please read Mod note in post #1

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