Farmer-owned dairy co-operative First Milk has recorded a strong year for milk price, turnover, profit and overall financial stability.
In its annual report and accounts for the year ending 31 March 2020, published on Wednesday (15 July), the co-op reveals its turnover increased by 4% to £282.8m, compared with £272.3m the previous year.
Operating profit also grew by 4% from £7.2m to £7.5m, and pre-tax profit was up from £3.209m in 2019 to £5.014m.
The group’s net debt decreased by 20% to £33.1m (£41.1m in the previous year) and its net assets were up by 25% to £39.8m.
It has about 700 members and handles more than 800m litres of milk, with no resignations for more than 18 months, according to the report.
Separately, there has been a small number of genuine retirements through the year from members that have given up milk production.
Of the total, 175m litres were recruited in the year to March 2020 and, during this period, the co-op has strengthened its relative milk price.
Progress is measured through its milk price index, which tracks the group’s milk price against those of its competitors.
In April 2020, the co-op paid its first year’s member premium of 0.25p/litre for all litres consigned in the year to 31 March 2020. This will increase to 0.5p/litre from April 2020, with payment due to members in April 2021.
After year-end, First Milk completed refinancing with Wells Fargo, agreeing extended lending facilities to 31 July 2024, which the group said demonstrates its financial stability.
During the 12 months covered by the report, the group has grown its UK cheese sales and significantly increased its overseas cheese business, now supplying more than 26 countries.
It has started a new sales and distribution partnership with Havero Hoogwegt for the co-op’s whey protein production, as well as continuing partnerships with Nestle, Yeo Valley and McQueens.
A £6m investment project has been completed at its Haverfordwest Creamery, which the group said has unlocked additional capacity and improved operating efficiency.
However, the Arran Creamery site has been shut down as a buyer could not be found, and the Campbeltown Creamery site was sold in a post-year-end transaction.
Also after year-end, First Milk bought Lake District Biogas, which operates an anaerobic digester supplying gas to the national grid, located at the co-op’s Lake District Creamery. Lake District Biogas had gone into administration.
Delivering ‘dairy prosperity’
Shelagh Hancock, First Milk chief executive, said: “The year ending 31 March 2020 saw us deliver business growth and development, further strengthening our financial position, while continuing to return value to our farmer members, who own the business. We have also launched our First4Milk Pledge – a broad commitment to sustainable dairy and a celebration of the leading standards on our members’ farms.
“Despite the uncertainties around the ongoing Covid-19 pandemic and with Brexit looming, First Milk is well placed for the future, as a business that has strong collaborative partnerships and the scale to be relevant in the marketplace, while remaining agile and adaptable. Our vision for the future remains resolute – we are working together to deliver dairy prosperity.”