Unhappily, it seems DFoB's fate has finally been sealed. Here is the text of an official statement issued by PriceWaterhouseCoopers this afternoon.

03/06/2009 16:30

Dairy farmers of Britain - in receivership

Stephen Oldfield, David Kelly and Ian Green were appointed joint receivers and managers of Dairy Farmers of Britain (DFOB) on 3 June 2009. DFOB is an agricultural milk cooperative that employs 2,200 at its sites in the South West, the Midlands and the North East. It has 1,800 farmer members across Great Britain who supply over 1 billion litres to the food and drink industry, comprising 10% of UK milk production. Stephen Oldfield, joint receiver and partner at PricewaterhouseCoopers LLP, said: "Dairy Farmers of Britain (DFOB) has experienced very challenging trading conditions in its liquids business. Efforts to sell the liquids businesses continue, but the DFOB Board were unable to identify a viable way forward given the trading losses and the inability to pay an economic milk price. As such, they were left with no option than to invite the appointment of receivers." "My team and I will be focusing all of our initial efforts in working with the DFOB key suppliers and customers to keep the daily collection and supply of milk flowing. This will not be easy, but with the help of key hauliers and our customers I hope to be able to collect and distribute the vast majority of DFOB milk. I will also be focusing on the sale of the Groups' hard cheese and liquids businesses to seek to try to secure the significant number of jobs in those businesses". Lord Grantchester, Chairman of the Board of DFOB, said: "In recent months, the Board has been working tirelessly to restructure the business and provide its members, employees and customers with certainty going forward. Clearly, the decision to invite receivers is not an easy one, but the board was unfortunately left with no alternative. "What is most important now is that the supply chain is maintained through to our consumers, that jobs are saved, and that there is a home for our members' milk. We will do whatever is appropriate to assist the receivers in achieving this outcome. On behalf of the Board, I would like to thank all of those members, employees, suppliers and customers who have shown their support for DFOB through these extremely difficult times."

 

I'm not a dairy farmer and know very little about milk production but as an arable farmer I would not sell my grain to a bankrupt merchant, nor one in receivership. I can store my grain for an indefinite period unlike the dairy farmer.

 Do any contracts still apply in this situation and how easy is it to switch to supplying a different processor ?

This is going to hurt a lot of farmers who supply DFB especially if they owe a lot of money and I feel very sorry for you all however don't dis pare as the best thing you can do is find another contract today or as soon as possible don't wait around either it could be hard work to do especially at this time of year. Also ask your bank if you can use the short term loans from the government that was set up in the budget as you are entitled to them.

But for the rest of us we are, I think, are going to feel the shock waves from this as I can see some of the traders we trade with are going to ask for some of there monies  back a lot sooner which in turn could put us under pressure also.

Any DFB suppliers who are also NFU members and are after advice are being told to ring Call First on 0870 845 8458. An NFU Q&A will appear on its website later today.

It seems the position over contracts could be quite complicated for some members, dependng on what arrangement they had. More from the NFU is expected soon.

However, I am being told that producers who need to get someone to buy their milk, could go ahead and organise a deal with another milk buyer straight away - as the de facto position is that any action against them from DFoB's administrators would be extremely unlikely.

 A note from William Neville, partner in legal firm Burges Salmon and a specialist in milk contract law:

 The pure legal position is simple. The appointment of joint receivers has no effect on the milk supply contracts which remain in place. There is speculation that the receivers will not pay for milk at the contract price, and if that happens, milk suppliers probably will be able to move on if they can find alternative purchasers.

 

Ian Ashbridge:

speculation that the receivers will not pay for milk at the contract price, and if that happens, milk suppliers probably will be able to move on if they can find alternative purchasers

 

Ian Ashbridge:

failure to collect milk will mean that milk suppliers can find alternative purchasers.

Any idea of how much time must elapse before a dairy farmer can 'assume' that DFB has broken its contract with the supplier?

Thanks

Ian ,

     I would have to have a little Callenge on your Legal Begal's interpretation of the Contract Law.I thought if one Party was Bankrupted or Liquidated that Contract was now Void.I would have thougt some of the Milk Suppliers would get together and make a silly offer for the Assetts,not difficult to make money if Overheads are low.

You would think a new Co-op could buy those assets they want at a sensible price which would give them a fair start,as BB says.

Anyone attending one of the three meetings for farmer suppliers?

 Just to be clear - DFoB is not technically bankrup or liquidated. It has appointed PWC as receiver-managers, which isn't quite the same thing. They now have to carry out the day-to-day running of a business that is still trading while they work out what to do with it, so contracts will still stand - for now.

Just spoken to someone on TWitter who made the following observation: "It all seems very sad, wonder what the outcome would be in France for example, govt bail out perhaps ?"

Interesting thought.

 

Dear all DFOB members

i am very sory to hear the news about Dairy Farmers of Britain

However i have been studying the situation and i would like to make contact with any one who would be intrested in putting together a consortium to purchase some or all of the existing buisness from recievership.  

i would be greatfull if you could supply a few details about yourselves and contact numbes to the folowing e mail adress

hapywanderer@hotmail.com

Many thanks

Stephen Horn

Whilst I wish you luck, if I was a DFoB member, I doubt if I would want to invest a ha'penny more even if I  had the cash.

Well, we have some serious thinking to do! We only found out today about it all and that was through the paper and farmers weekly!

 

We are a smaller farm with only 3 or 4 other milking farms in the area, one is with arla who my dad rung today and they are unfortunatly not recruiting in the area we are in, the other farms are with dfob but are retailers also, so most wont touch them with a barge pole!!!!

 

The news is making my dad seriously think about what the future holds, especially with the nvz rules about 5 month muck storage aswell.

It worries me to think of my dad packing milking in really because i know he loves it, hes done it all his life and me being 19 have worked on the farm with him since i was small, and i believe i have inherited the passion he has for our animals.

 

I just think that its disgusting that the big wigs still get there "milk Cheque! " where as us real workers get sod all!!!!!!!!!

 

IT really makes me wonder if there will be any dairy farms left in 10 or even 5 years time!! Beacuse we all know what the other companies will do take the bigger farms on straight away, and leave us smaller ones to find us own, i hope this isnt the case but we will see soon enough!

 

 

 

 

Gregory,

          A couple of little things come to mind: One is dont put yourself down and two if other companies were paying more for the Raw Milk and still making a Profit someting was going wrong in between.To rectify this will take someone who can analyse the situation and see where the problem is and put a solution in place.This problem must either be in the processing or the General Overheads or a combination of the two.The answer has to be ruthless and fast but the Assets should be purchased cheaply now if the killing is to be made.

 

If DFB are not insolvent, then they must pay for the milk they have had.If they are insolvent, they must cease trading and be wound up.

Why, therefore has Stephen Oldfiled advised that our accountants should write off the money owed for May and the first few days of June in his online blog?

DFoB are claiming that they are solvent and yet they were unable to meet their contractual obligations with regard to paying members for milk supplied in May and the first three days of June. Surely this means that they have broken their contract with the supplying members. Is the advice that contracts are still valid correct? I doubt it! The new contract published by the receivers looks very suspicious as does the 'offer' by Mr Oldfield to allow a window of 12 days for members to cancel the contracts. DFoB have cancelled the contracts by breach of payment terms. No one can be bound to a contract to supply a product with no price which the receiver appears to be asking members to sign up to. DFoB misled its members and this spring converted members investment into 'shares' on a share per £ invested basis which had a value of 10p. These are now worthless. We have been robbed. I along with many others have lost years of investment and the management have walked away scot free.

Jaipur Express,

  If you feel strongly about your situation as a Creditor and you can gain others to join you then you can ask to be recognised as a Creditors Commitee.That would severly restrict the Receiver in who and for what he sells the Business for and you could negotiate a Deal to help yourselves i.e.Tell the Receiver to only Trade the Profitable parts and to use the Revenues from those parts to pay the Farmers and other Creditors then when Trading succesfully again have a Deal whereby you would take over the Shares again.I have been a Member of a Creditors Committee and I have experienced a little of these issues and if I might say dont have any thoughts that the Receiver is working for the Creditors.They like the rest of the so called Establishment are just as MP's Banker's,Plc Company Ceo's out for themselves.Looking back to when I was on this Creditors Committee we were too slow in getting organised and that allowed the Receiver to run up Costs before we were in control,he also drew up a list of Preferential Creditors and did not check their Security, we did our own Searches and found that one had not Registered the Loan at Companies House therefore it was not a preferential claim.We then made the Receiver put some land on the open Market instead of a Mickey Mouse Deal with the Director of the Company in Liquidation for a lot more Money.

  I cannot stress enough that speed is of the essence as once the Receiver gets a hint that there may be a Creditors Committee he will try and sell off or run up costs for his own ends not yours.The Shareholders could take this back if they act now and if you want help go to the local Offical Receivers Office who will tell you how to set up the Committee and what you can and cant do.I cannot stress enough how powerfull a Creditors Committee is and these Flash boys hate them because they cannot rook the Business.

 I went to the recievers meeting at Stoke today.The farmer directors have been negligent in letting our former chairman and his cronies destroy our co-op.I thought Stephen Oldfield was a good bloke but we must make sure this disaster is properly investigated.

Just had an alert saying there will be a written ministeral statement in parliament about DFB later today.

The situation for the small producers up in the hills is looking pretty desperate,if we lived in France or Austria they would be having plenty of help.Alot of farmers signed contracts in haste last week,now Milk Link are on the scene things are looking better.There has been too much scaremongering by so called ''industry commentators''and farmers have been panicked into decisions they will regret.

Ian,

     Are you saying that DFOB are in Administration or Liquidation, Bankruptcy is for Indivduals.I f they are in Administration the Administrator is looking for a way of saving the Company i.e. More Capial to be injected.What seems strange is that DFOB changed from a Cooperative to a limited company and then went into Administration or whatever.

Just had this letter in to us which the author asked me to share online too:

I am writing this letter due to the catastrophic situation the dairy industry is facing at the moment.

Eighteen years ago I emigrated to the England from Israel. Born and raised on a dairy farm in Israel

I started my life as a child working with dairy cows and have also been educated in dairy farm management which helped me to get where I am today.

My first introduction to British farming was a bit of a culture shock. In the late 80's dairy farming in the UK were still way behind market leaders, Very traditional and oldfashioned, not open to new systems and ideas, working under a very unsupportive government and agriculture representatives. On the other side I was impressed with milk quality production, animal welfare and the lovely open space and green grass available to cows.

I have entered the life of dairy farming in the UK working across the industry in various positions and enjoyed every minute of this life style even through the hard times which seems to be going on too often. Still thinking one day it will change.

Farmers have done their bit for a change since, they have open their eyes to changes and adapted to modern farming which are more effective and were able to compete at world level.

But Government have done NOTHING! They dismantled the Milk Marketing Board and left the producers open with no protection which enabled the supermarkets to take control on prices and costs.

Under this Government there has never been a Minister of Agriculture that come from an agricultural background, so how can we expect them to really understand farming.

The government don't promote  milk and other dairy products to the public especially to young children. They do the opposite!  They bring research on how bad dairy products are for all of us. Forgetting that dairy products are so essential for the growing and developing of the human being.

The Government needs to limit the percentage ratio of imports of any food, let alone a vital staple like milk. We need to support are own grown and produced food! Otherwise in a few years time we will have nothing produced at home and we will be totally relying on other countries for our existence!

Government, processors and supermarkets need to be responsible and accountable to the way we are living now and change quickly the way they operate so we can live tomorrow.

I can go on and on as I have a lot more to come, but I believe those issues above are some of the basics the general public should be exposed to.

Tough times are ahead for the industry but without support from the public and especially from the Government this industry is doomed! It is time for some action now and not just words.

Joel Landsman

The BBC website has done a piece pointing out to consumers that some farmers aren't making a margin on their milk. Good to see something so public.

http://is.gd/176V5