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First milk drops A and B pricing structure

It has also said it was expecting to announce a price rise in August


Alex   Black

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Alex   Black
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First milk drops A and B pricing structure #teamdairy

First Milk has announced it will discontinue its A and B pricing system following a review of its pricing schedules.

 

All milk will be paid using a single rate for each milk pool from September 1.

 

It said with demand from customers growing it needed to encourage extra milk production with nearly all of its milk volumes now directly connected to long term contracts.

 

Uncertainty

 

But it said its review had shown the uncertainty of B pricing was a strong disincentive for milk production.

 

It has also introduced a production bonus of 0.5ppl for all litres provided the farm’s production is equal to or exceeds the volume produced in the same month the previous year.

 

Other changes included a charge of £10 per additional collection over its Every Other Day Collection.

 

Shelagh Hancock, Chief Executive, said: “I attended all the member meetings in March and took note of the feedback from members.

 

“Ensuring that our price schedules are aligned with the needs of the whole business is very important.

 

Consultation

 

“I think the review and its outcome is a sign that we are taking member concerns into account and shows we are actively listening. We also consulted throughout with the Member Council and I am pleased that they have given these changes their full endorsement.”

 

In a note to members she also said the cooperative was expecting to deliver a price rise in August.


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Changes

Removal of A and B pricing

  • All litres produced from September 1 will be paid using a single rate for each milk pool
  • Price will still reflect compositional and hygienic milk quality, volume and profile
  • The individual transport charge has been removed for all members where it currently applies

Production bonus from September 1

  • All litres produced in each month will attract a 0.5ppl bonus if production is equal to or exceeds the volume produced in the same month the previous year
  • Members will automatically be eligible for this bonus

Every Other Day Collection (EODC) from April 1 2018

  • Charges of £10 per additional collection will be made whenever tank capacity is not sufficient to enable EODC to occur unless a farm’s average daily volumes exceed 3500 litres in the month

Profile adjustment scheme (PAS)

  • There are no current changes to PAS

Commitments:

  • To continue to appropriately reward the commercial benefits of autumn/winter milk production as well as recognising the higher costs of production
  • To give at least 12 months notice before any changes to PAS
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