Following a series of meetings with First Milk members and customers across the UK, Alex Black spoke to the processor’s chief executive Shelagh Hancock about her vision for the future of the co-operative.
First Milk needs to concentrate on creating long-term relationships with customers and members if it wants to build on its turnaround and reduce volatility, according to chief executive Shelagh Hancock.
Ms Hancock was brought in as chief executive in March, replacing Mike Gallacher who had overseen the turnaround of the co-operative.
She joined First Milk following a spell at Medina Dairy as managing director and has also worked for Milk Link and Glanbia.
She said the business was already in a better place when she joined and she was now looking to use her experience in the industry to push it forward.
“The change in direction was right, focusing on core activities of cheese and milk. I think we are financially in a much more stable place,” she said.
“With milk supply and customer demand we are very much balanced. There are opportunities around the interest to develop more business."
Ms Hancock has been meeting with suppliers and customers following her appointment and there have already been changes including First Milk dropping its A and B pricing structure.
She hoped these changes would allow them to pass the right signals on to producers if they gain more business.
She added the reception to the changes had, for the most part, been positive.
“Talking to members there is a recognition the business is in a better state. But I am not under any illusion there is more road to be travelled.”
With volatility a major concern, Ms Hancock said one of their focuses was looking to build long-term relationships with customers.
“Rather than just a trading partnership it is about how we can work together,” she said.
“That will help protect the business. The market will always be the market, we have to find a way to plough through the middle.”
She added it was not just the members who wanted to reduce volatility.
“There is always a party which wins and loses as part of the highs and lows. Some customers would welcome more stability,” she said.
“Brexit wise, between currency and the potential of import tariffs, another area we are looking at is import substitution. A number of customers are talking to us about it. A lot of our customers are multinational and will be considering the implications.”
With futures contracts in the spotlight as Muller launches its first phase, Ms Hancock said it was a scheme worth considering.
“It is well established in the grain markets," she added.
"It is relatively new on the dairy side and the range of products will develop.”
However, she noted it would only ever be part of the solution.
“They are useful and I think they have a place. I think they will become more prominent.”
Looking forward, Ms Hancock said the markets were currently looking strong for the rest of 2017 and into 2018.
“It can only be a positive for farmers to be able to recoup some of the losses. Let us not forget inputs will be rising for feed and fertiliser. Let us hope we continue to have this strength.”
Responding to comments from NFU Scotland milk policy manager George Jamieson, who called for processors to stop waiting for others to put their prices up, Ms Hancock said it had happened throughout history.
“There is an element of a need to remain competitive," she added.
"It is something which is pretty well established.
“With farmer co-operatives, there is a value there which has always gone back to members. That creates enough pressure to make a move.”