First Milk producers to vote on changing member loans to shares

First Milk farmers will be asked to approve the controversial conversion of their invested capital to shares next week.

At a special general meeting on 1 July, co-op members will vote on the change, which will dramatically improve the business’ balance sheet.

The switch divided opinion when first proposed in March. Farmers who had left the co-op and were waiting for payouts were disappointed, but many current members, interested in First Milk’s short-term health, backed the measure.

See also: First Milk farmers to lose millions in tax relief

How much those shares will be worth is yet to be announced, as the last set of full accounts only runs to 31 March 2015.

In that year members’ capital contributions, taken over time from milk cheques, totalled more than £50m. But First Milk’s assets only reached £6m.

Departing farmers will be able to sell shares to remaining producers, as will those wanting to cash in up to half of their capital.

A farmer wanting to reach his or her 7p/litre capital contribution target quicker could also buy shares from a selling producer too.

Full face value 

A First Milk spokesman confirmed to Farmers Weekly that what those shares are worth in cash terms will be thrashed out by the buyer and seller. But they will retain their full face value in the First Milk capital account.

“This is the final part of the jigsaw and we are now moving on to focus on the future,” he said.

“The business is much more stable and much more successful.”

 Last month First Milk started paying farmers a bonus, not linked to market prices, to reflect the co-op’s turnaround.

The so-called “business performance supplement” is worth 2p/litre and will be paid in stages to reflect the co-op’s progress. Farmers have been receiving 14.94-16.74p/litre for their “A” litres in June.

Earlier this spring First Milk said it expected to turn an operating profit of £4m for the year to 31 March, compared with a £20m loss in 2013-14.

The turnaround plan, under new chief executive Mike Gallacher, included job cuts, factory sales and a revamp to the milk payment structure.