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First Milk raises September milk price and October increase 'likely'

 

First Milk will increase its September milk prices by up to 1.25ppl.

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In a letter to members today (Friday), chairman Clive Sharpe said it was the third month running the processor had raised its prices. He also signalled there would be a further increase in October, with details announced at a series of member meetings later in September.

 

Mr Sharpe said: "With the market recovering and having exited our loss making activities, returns are flowing directly through to our milk price. At the same time we are bringing forward the delivery of the business performance supplement, which comes from continuing improvements in our own efficiency.

 

“Last month we forecast a 0.5ppl increase for our manufacturing pools from September 1, however with further advances in the market we will actually deliver a 1ppl increase.

 

"As well as increased cheese returns, we are now starting to see price movement from some of the major liquid processors, which directly benefit our balancing pools. There will be further price lifts for October and we will confirm the level of this during September once we get a full view on market changes."

 

Supplement

 

Additionally, there will be a 0.25ppl Business Supplement Payment for all members due to ’stronger than budgeted business performance’.

 

Mr Sharpe added: "This is the money that comes not from market changes - which now flows through directly - but from our own planned improvements such as removing loss making divisions; improving our commercial and quality performance; and cutting our costs. This supplement was at 0.75ppl and will now increase by 0.25ppl from September to 1ppl. Further increases in this supplement are budgeted and will follow shortly to cover the initial 2ppl that we have committed to deliver."

 

Chief executive Mike Gallacher added: “While it has been pleasing to announce these milk price increases over the last few months, we recognise that they do not yet return members to sustainable prices.

 

"However, with future market prices for commodities forecast to be around the mid-20s, members can be confident that as the market continues to rise in line with this forecast; so will our milk price. In addition, we will continue to deliver on our Business Performance Supplement commitment."

 

Table below with price increases by pool:

 

Milk pool

Sept price increase (ppl)

Sept business performance supplement (ppl)

Total Sept price increase (ppl)

Sept A price (ppl)

Sept B price (ppl)

Price rise since June for combined A&B (ppl)

Scottish Mainland

0.75

0.25

1.00

17.73

20.00

2.36

Lake District

1.00

0.25

1.25

18.46

20.00

2.94

Midlands & East Wales

0.52

0.25

0.77

16.96

20.00

2.15

Haverfordwest

1.00

0.25

1.25

19.521

20.00

3.10

1 Includes Tesco cheese group payment estimated at 0.94ppl for Sept

 


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