First Milk brings boost to members
First Milk has announced a package of benefits for its suppliers, worth nearly £9,000.
The “double boost” for members includes a new preference share allocation plus a return on investment, worth a combined total of around £8,900 to an average one million-litre supplier.
This comes as many processors step up their offerings to help boost supplier numbers leading up to the end of milk quotas in 2015. Other processors, such as Dairy Crest, have already announced new contracts.
In April, members will receive the allocation of the gain on the sale of First Milk’s shareholding in Wiseman to Muller last year in the form of new preference shares.
These shares have been allocated to each member based on the amount of capital already contributed to the business.
The First Milk board will pay a 5% per annum return on these shares for at least five years, it said.
The company will also pay out a 3% return on capital invested in First Milk.
These measures were discussed with nearly 800 members at 40 farmer forums around the country, said First Milk vice-chairman Tom Campbell, with the overwhelming majority supporting them.
“We have set out a clear direction to invest more heavily in added value as we look to transform the margins we receive,” he said.
“This will insulate us to some extent from the commodity product dogfight, particularly in the run-up to the removal of quotas in 2015.
“Along the way, we recognise that it’s critically important for members to see regular returns on their investment coming through and their capital balances growing. This is a path that is already well-trodden by a number of successful farmer-owned businesses like FrieslandCampina and Fonterra.”
The meetings also contained discussions about how non-members, such as employees can invest in the business.
“A number of employees have already expressed a wish to do this, and we’ve had plenty of calls from producers over the last few weeks who are interested in routes for themselves and their family to invest too,” said Mr Campbell.
“Farmers will ultimately choose the future shape of the British dairy industry. The route we’ve set out at First Milk is for producers to seize the opportunities to collaborate and invest in their own added value processing, rather than lining someone else’s pockets.”
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