Talulah:
Liquid (fresh) markets are less affected by world prices, but more by domestic production which was down last year, causing prices to hold/go up. Lots of fresh price dictated (Tesco in particular) by a consultancy company who look at cost of production, so as energy costs go up so too does the price paid to farmers, and passed on to consumer. Liquid:Processing volumes are about 50:50.
Works beautifully until some retailer does 2 litres for 99p and then the whole thing goes to pot!
Which most farmers are against, but have been given no option but to sign up to, or face a lower milk price. This ‘cost plus’ system is worked out on an average of all producers, so your big 500 cow man who can make savings of scale will win, and your smaller man will lose. It all depends what the public want. The way it is going at the minute is that there will soon be no dairy farms milking less than 150 cows as it will not be viable.
By the way the current average farm gate price is 25ppl before any transport deduction ect…
Henrys cat:
The way it is going at the minute is that there will soon be no dairy farms milking less than 150 cows as it will not be viable.
Seeing it now. Most weekly editions of the “Carmarthen Journal” have at least one dispersal sale in the auctions section. Problem is, as you know all too well HC, experienced farmers are getting out and very few new ones are getting in; it mirrors the problems in this industry.
Henrys cat:
big 500 cow man who can make savings of scale will win, and your smaller man will lose. It all depends what the public want. The way it is going at the minute is that there will soon be no dairy farms milking less than 150 cows as it will not be viable.
By the way the current average farm gate price is 25ppl before any transport deduction ect…
Don’t totally agree with you there - what savings of scale?
I would argue that alot of farmers at 120 - 150 cows are currently profitable, and although the logical next step is to scale up production this often means big capital expenditure - need another/new shed, bigger parlour etc - so their cost isn’t automatically lower than the average - but they may be saving cost because their systems are better - in short they’re better farmers in the first place.
The guys who are profitable at 500 cows are also usually the guys who were profitable at 120 - and scale up production to make more money, justify the the new kit/shed they’re after. ALot of the producers who’re not making money with 120 cows at 25ppl probably still wouldn’t be making money with 400 cows at 30ppl IMO.
Maybe I am bitter then, but in a few years time 150 cow herds will be classed as a small herd. We got driven out the industry because of the hoops we were made to jump through to be allowed to supply our milk. Hoops that are not enforced as rigorously to the big men ( I know cos I have been to these farms and seen the state of them first hand).
Ok they have bigger overheads than we did, but they also benifit from cheaper inputs because of their buying power, and also a better overal milk price due to achieving a certain litreage/day gaining them between 1-2ppl volume bonus.
The point I was trying to make was Tesco will take the most cost driven farmers figures and apply them to everyone. That would work if everyone could buy their input for the same price. Take cattle cake for example, we used to buy it in 5 ton loads, our neighbour who milked 60 cows bought it in 15 ton loads and saved 20quid/ton over what we paid.His cost of production is about 18ppl ours is 19ppl and a average 300cow man may be about 17ppl. Now tesco takes the figures from around the country and work out that the average cost of production is say 17ppl, then they add a bit for reinvestment and profit and set the milk price at 20ppl. In the end we get about 2700quid, the neighbour gets 10800quid, and the 300 cow man 81000quid all for reinestment and profit. Thats how the tesco system will work and put the smaller man out, because he can’t buy his inputs as cheaply.
Hope your all still awake, sorry if I have bored you. ATEOD someone is making a killing with the milk, and it ain’t the farmer.
Henrys cat:
Maybe I am bitter then, but in a few years time 150 cow herds will be classed as a small herd. We got driven out the industry because of the hoops we were made to jump through to be allowed to supply our milk. Hoops that are not enforced as rigorously to the big men ( I know cos I have been to these farms and seen the state of them first hand).
Ok they have bigger overheads than we did, but they also benifit from cheaper inputs because of their buying power, and also a better overal milk price due to achieving a certain litreage/day gaining them between 1-2ppl volume bonus.
The point I was trying to make was Tesco will take the most cost driven farmers figures and apply them to everyone. That would work if everyone could buy their input for the same price. Take cattle cake for example, we used to buy it in 5 ton loads, our neighbour who milked 60 cows bought it in 15 ton loads and saved 20quid/ton over what we paid.His cost of production is about 18ppl ours is 19ppl and a average 300cow man may be about 17ppl. Now tesco takes the figures from around the country and work out that the average cost of production is say 17ppl, then they add a bit for reinvestment and profit and set the milk price at 20ppl. In the end we get about 2700quid, the neighbour gets 10800quid, and the 300 cow man 81000quid all for reinestment and profit. Thats how the tesco system will work and put the smaller man out, because he can’t buy his inputs as cheaply.
Hope your all still awake, sorry if I have bored you. ATEOD someone is making a killing with the milk, and it ain’t the farmer.
And it aint the haulier because they always wanted maximum weight loads or it wasnt worth us picking it up. But as you say Tesco and the others are making mega profits from cream and anything else the farmer supplies to them.
I used to work at fole dairy on the shop runs a few years ago, great bunch of lads when i was there, the job was hard enough and the lads pay was crap, but we had fun whilst we did it then they got shafted when DFB took over there pensions and it now looks like there going to get shafted again, i heard at the time of the take over that CO OP lent DFB the money to buy it!! typical farmers, trying to get something for nothing then mess it up and end up closing it down to stem the losses, on another note best wishes to all the lads at fole, Dave Adams,Russell moore, Pete and tony, popa-dom, Alan, Wayne Clancy, Steve Scortch, Chris and all the others including Russell and Stroller, the most laid back transport managers i ever came across!!
I used to run into to fole every friday to pick up empty milk cages that were our’s.
Used to be ACC (Co-op). Well at the time of me going in there they were still switching the wagons over, they still had the ACC curtainsiders and still had the Erf Day Cabs.
Used to love taking photos down there some cracking wagons !
DFB were a big supplier to a lot of tesco’s, thats why i was in there on fridays cause theyd deliver to tesco’s and take our empty cages back !
Henrys cat:
Hope your all still awake, sorry if I have bored you. ATEOD someone is making a killing with the milk, and it ain’t the farmer.
Steve most of the small farmers over here dont sell to companies they sit outside the shops or in the market places selling the milk in pop bottles Lol but at least they get 50 stotinkies a litre which is about 22p a litre, the milk in the supermarkets is around the 75p a litre mark but believe me you can tell the difference in the taste between the 2, I buy 1.5 litres a day from the local farmer the only drawback is the skin materialising on top of a cuppa tea . As for cream and yogurts its a lot cheaper in the shops here than the UK although cheese is a lot more expensive than the UK unless you buy the local white stuff which is ok in small amounts lol
Dairy Farmers of Great Britain closed their Blaydon Creamery 2 years ago, and funny enough the locals were saying back then that they were on their way out as they’d took on more than they could handle.
I can never understand these stories. Surely milk products are relatively unaffected by recession, and cows still produce the same amount of milk? It seems more likely that they have lost the contract to somebody else- Arla, Dairy Crest etc- and the same amount of milk will still be moved, but by a different haulier to a different dairy.
Harry Monk:
I can never understand these stories. Surely milk products are relatively unaffected by recession, and cows still produce the same amount of milk? It seems more likely that they have lost the contract to somebody else- Arla, Dairy Crest etc- and the same amount of milk will still be moved, but by a different haulier to a different dairy.
Thats exactly what happened, DFOB lost the co-op contract to wisemans . The co-op kept the DFOB going and once that ended that was the end for them too.
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