Ex DFoB member swooned by First Milk only to find a price drop after 2 months then blackmailed into membership one day then cut off at the short and curlies the next with another drop in price . Sounds all too familiar with having to borrow money then announcing a loss for the past year !  Some of us have been there before.

Cloud 9,

           I am not in the Milk Business but I do have a Brother who is and I get my feedback from him. There seems to me a nasty little plot by the Supermarkets to get the Milk suppliers down to two or three Suppliers so that there is very little room for Producers to find other Markets. Firstly Supermarkets make huge Profits out of Milk Sales.They also realise that their Punters come in to buy Milk as an everyday necessity and will buy extra or all of their weekly needs at this point of sale.DFOB was a typical example of a Company that could not see the Wood from the Trees.They lost their Contract with the Coop because Wiseman undercut them without the Milk to supply on the Contract.If DFOB had played Hardball Wiseman could have been in real trouble and I would think that First Milk is the next in the game.First  Milk should stand up to this Commercial Bullying and Farmers in general should realise that they are next on the List.The best Defence for the Farmer is to cut production.Every Farmer in the Land has been brought up on Produce ,produce,produce.The Farmer has the Trump Card if only he realised it and that is to cut inputs and take the lower price offered for now . Milk is needed the £ is very low so importing is a Dodo. Empty Shelves in any Super Market is the Kiss of Death for Day to day shoppers and Opertunist shoppers and the SuperMarkets are all to aware of this.

  Get ready.

cloud9:

Ex DFoB member swooned by First Milk only to find a price drop after 2 months then blackmailed into membership one day then cut off at the short and curlies the next with another drop in price . Sounds all too familiar with having to borrow money then announcing a loss for the past year !  Some of us have been there before.

 First Milk won't go the same way as DFoB. If there were any danger of that it would effectively signal a free market failure and you'd be back at the MMB's before you could say 'merde creek sans paddle' (or a hasty merger would be arranged with another business) since here is no commercial organization that could fulfill the role that the Co-ops play in the industry.

You haven't been blackmailed you've been offered Hobson's choice. What you should find therefore is if there is little competition in your area between milk buyers your return on capital (ROC) will be little different from areas where there is a lot of competition. Assuming fixed costs (ie fuel, fertilizer, labour etc) are approximately the same your elastic costs (ie land rental/purchase) will adjust lower to reflect lack of demand with your ROC trending to the same level as direct suppliers. Best not to try and explain this to direct suppliers however, it just upsets them.

I wouldnt be too sure, i was speaking to some upper management in lactalis and they seem to think that first milk are making the same sort of signals that dfob made two years ago. They havent exactly had a fantastic year, one point they seemed to think they did well was refinancing even more borrowing. The cheese market is still extremely tough with large volumes of cheap cheese being dumped on the market and of cousre the good old supermarket promotion. It would be pretty disasterous if first milk went like dfob, it would just turn the market upside down again.

2600326:

I wouldnt be too sure, i was speaking to some upper management in lactalis and they seem to think that first milk are making the same sort of signals that dfob made two years ago.

 I don't think FM and lactalis exactly see eye to eye these days so this doesn't surprise me. With their milk price at 22.4/23.4 and cheese prices at £2500 /ton (ie  equivalent to 25ppl and costs of transport/processing/packaging/distribution between those figures ) they're probably feeling the pain too.....