Promar News

Arla Milk Link Rise

Fri, 24 May 2013 00:00:00 +0100

Arla Milk Link producers are set to see a 1.7 ppl price rice from the start of June.

This will raise prices to 31.91 ppl.

Since the end of April producers have received an additional 2.76 ppl on their standard litre.

30% Milk Production Growth in Ireland

Wed, 22 May 2013 00:00:00 +0100

Milk production growth in Ireland is set to be closer to 30% by 2020 rather than the earlier forecasted 50%. This is according to the Irish Agriculture and Food Development Agency.

The 50% forecast was described as 'challenging'.

Significant investment has been made in the country in order to increase milk production when quotas end, as well as support from government and processors.

Dairy Crest lose Starbucks contract

Mon, 20 May 2013 00:00:00 +0100

In the UK Starbucks have switched their milk supply contract from Dairy Crest to Arla's Cravendale milk.

Arla will now supply 16 million litres a year to the coffee giant's UK outlets.

Starbucks have previously been sourcing a range of ready to drink chilled coffee from Arla and were impressed with the quality of the Cravendale milk brand.

Northern Ireland Food Strategy

Thu, 16 May 2013 00:00:00 +0100

A Northern Ireland agri-food strategy has been unveiled with plans to increase the sector's value from £5 billion to £7 billion by 2020.

The strategy contains over 100 recommendations designed to drive growth in the sector.

"Agri-food has immense potential to contribute to economic recovery and longer term prosperity in Northern Ireland" stated first minister Peter Robinson.

Recently the sector has profited from Tesco increasing the volume of meat they source from Northern Ireland. Chicken supplied by Moy Park increased 250%, beef from Foyle Food Group increased 50%, and Karro have seen their pork supplies to Tesco increase 200%.

Drought problems for Fonterra

Wed, 15 May 2013 00:00:00 +0100

The recent drought in New Zealand resulted in a 16% fall in milk deliveries in March to the country’s dairy co-op Fonterra. The drought is set to cost the equivalent of £1.1 billion and is threatening national economic growth.

In some areas, rain was down c. 80% compared to March averages. Many farmers had dried off their cows in order to wait for enough rain to fall to get pastures growing again. Rain did begin to fall during April in some regions, but it was ‘too little and too late’ to impact milk flows at the end of the season.

The drought has meant that milk collections in 2012/2013 will be similar to the 1.5 million tonnes collected in the previous season. Some analysts believe there could even be a fall from last season’s volume.

In March, most North Island farms in NZ produced c. 30% less milk than normal for that month. The 7% increase in production recorded in the spring has been virtually wiped out by the summer drought. It will take time to restore the pastures damaged by the drought.

5 billion litres of milk used for Fonterra’s exported dairy products is now sourced from outside of New Zealand, accounting for some 20%. This figure is set to increase to nearly 50% in the future if the co-op is to meet its growth goals.

Fonterra now has farms and joint ventures in China, Indonesia, Burma, Sri Lanka, Latin America, India and the UK. 2013 is also set to see the co-op go ahead with a partnership with the Dutch food group A-ware.

As a result of the increasing number of milk and milk products sourced abroad, a change to labels may be needed in the future. With ‘made by’ used as opposed to ‘made in’ New Zealand.

Arla buys control of Russian dairy

Mon, 13 May 2013 00:00:00 +0100

Arla purchased the remaining 25% of its Russian dairy Artis, making it a fully owned Arla subsidiary.

Russia is one of three strategic growth markets for Arla with plans to further increase its presence there in the future.

Sales volume and revenue have increased annually at Artis at an average rate of 20%, since a 75% share was purchased in the company in 2007.

The former owner of Artis will continue to lead Arla's activities in Russia.

Belton Cheese increase farmer milk price

Fri, 10 May 2013 00:00:00 +0100

Belton Cheese is set to increase the milk price paid to their farmers by 1 ppl from the 1st June.

This will being the standard litre cost to 30.05 ppl and the manufacturing litre price to 31.21 ppl.

Meadow Foods raise prices

Wed, 08 May 2013 00:00:00 +0100

Meadow Foods will increase the price they pay for milk by 1.25 ppl from the start of June.

This will take the standard price to 31.25 ppl.

Meadow Foods is the UK's largest independently owned dairy group and currently handles over 500 million litres of milk per year. Milk is sourced from farmers across the North West, Midland and Wales.

Price rise at First Milk

Mon, 06 May 2013 00:00:00 +0100

First Milk is increasing their liquid milk pool price by 1 ppl to 30.65 ppl. The increase will take place in two stages with a 0.5 ppl increase in July and a further 0.5 ppl in August.

The manufacturing pool price will remain at 28.9 ppl

They are also set to launch a new commodity contract designed to maximise opportunities in the market.

The contract will be market driven with a price tracker mechanism based on quoted Dutch prices.

Arla's Milk Price Increase

Fri, 03 May 2013 00:00:00 +0100

Arla is set to raise its milk price for its Arla Foods Milk Partnership (AFMP) farmers and direct suppliers from the 1st June.

Standard milk will increase by 1.25 ppl, and 2 ppl for organic milk.

This will take milk prices to:

AFMP - 31.63 ppl
Arla Milk Link Direct - 31.25 ppl
Arla Foods Direct - 31.27 ppl

A growth incentive has also been introduced whereby farmers will be paid 5 ppl on any additional litres produced over and above their 2012 monthly volumes between July and December 2013.

The incentive will be open to the AFMP and both groups of direct suppliers not on a retailer aligned pricing model.

Germany Close to Quota Limit

Wed, 01 May 2013 00:00:00 +0100

Milk production in Germany nearly reached quota limit in 2012/2013.

Production was 99.8% of the national quota, helped by a reduction in supplies during March as a result of the cold weather.

In the previous season the country had seen a marginal overshoot of 0.1%, the equivalent of 37,000 tonnes, and equal to a fine of €10 million.

In the EU as a whole milk quota will be under used. Many Eastern European countries increased their milk production but this offset declines in other EU countries such as the UK.

EU Milk Deliveries Down in 2013

Mon, 29 Apr 2013 00:00:00 +0100

EU milk deliveries fell 3% year on year with the steepest declines in the UK and Ireland as a result of heavy unseasonal snowfall.

In the UK milk intake in January-February was 7% down compared to last year and 8% down in Ireland over the same period.

The reduction in milk supplies has had a knock on effect on dairy products. With the exception of cheese all other dairy products production was down in the EU. Skimmed milk powder (SMP) production was hit the hardest with a 13% fall compared to last year.

UK Dairies Raise Farmgate Milk Price

Fri, 26 Apr 2013 00:00:00 +0100

Arla and Dairy Crest announced plans to increase farmgate milk prices as a result of rising commodity costs.

Arla are increasing their price to suppliers by 1.06 ppl to 30.21 ppl.

Dairy Crest will be adding an additional 1.5 ppl raising prices to 31.5 ppl.

Rain in New Zealand

Wed, 24 Apr 2013 00:00:00 +0100

Rainfall in New Zealand last weekend (20th/21st April) put a halt to the country's drought.

However this is not enough to have any uplifting effect on the country's milk production levels.

Industry sources expect little change on production levels compared with last season, with some fearing there may even be a lower volume. Fonterra stated that the 7% production increase witnessed in spring had almost been wiped out by the summer drought forecasting just a 1% increase in production from last season.

Most North Island farms produced 30% less milk than normal last month with others drying off their cows early.

Farmers for Action Target Morrisons

Tue, 23 Apr 2013 00:00:00 +0100

Sunday night (20th April 2013) saw Farmers for Action (FFA) blockade two Morrisons’ depots to protest against First Milk's price cuts.

Depots in Middlewich, Cheshire, and Wakefield in Yorkshire were targeted by protestors blockading lorries coming in and out of the facility until gone midnight. Earlier in the week the FFA targeted a Co-op distribution depot near Derby.

The protests were the result of First Milk's warning that they will be forced to cut the price of milk for cheese contracts by 1.5 - 2 ppl from June unless price rises can be secured from customers such as Morrisons and the Co-op.

An FFA co-ordinator stated that cheese purchased from First Milk would continue to be targeted until the price cuts have been averted.

Poor Results for Nestl�

Mon, 22 Apr 2013 00:00:00 +0100

Nestlé has reported its slowest Q1 revenue growth since 2009.

Sales growth increased 5% to €18 billion in the quarter. Trading conditions between countries varied with an 8% growth in emerging markets and 0.9% in developed ones.

European sales saw a 2% growth as a result of weaker economies, and poor ice cream sales due to the late arrival of Spring.

Looking ahead to 2013 the company believes full-year sales growth will be c. 5-6%.

UK Milk Production Lowest Since 2009/2010

Fri, 19 Apr 2013 00:00:00 +0100

UK milk production in 2012/13 was at its lowest level since 2009/10.

Total wholesale milk dleiveries in the season reached 12.97 billion litres, a reduction of 4% from the 2011/12 season.

The wet weather had the main affect on production levels with production in March 2013 falling 8% year on year to a low of just 1.1 billion litres as a result of the snow.

Pig Production Increase in China

Wed, 17 Apr 2013 00:00:00 +0100

Pig production in China is set to increase by 3% in 2013 to 53.8 million tonnes, as a result of a rise in sow numbers to 50.5 million head.

Chinese state aid packages have also been put in place to help improve sow units and animal health productivity.

Throughout the year 730,000 tonnes of pork is set to be imported of which the EU could benefit as in 2012 600,000 tonnes was shipped to China from the EU.

Tulip's Scottish Investment

Mon, 15 Apr 2013 00:00:00 +0100

Tulip are set to invest £4 million into a specialist pig processing plant in Scotland if a 40% EU processing and marketing grant is secured.

Without the government support, the investment is not seen to be viable for the company.

Tulip currently leases the plant, but wish to increase slaughtering capacity at the unit from 4,000 to 8,000 pigs a week.

India's Growing Milk Sector

Fri, 12 Apr 2013 00:00:00 +0100

India's largest dairy brand Gujarat Cooperative Milk Marketing Federation increased sales revenue by 18% in 2012/2013, to the equivalent of £1.7 billion.

Over the last five years the company has grown at a compound annual growth rate of 20%.

During 2012/2013 a 19% increase occurred in total milk procurement, with further investments planned over the coming 3 years to boost processing capacity by setting up a further nine plants in the country.

Liquid milk accounted for 50% of the dairy's turnover with all dairy product categories witnessing growth over the period.

Drought declared in New Zealand

Wed, 10 Apr 2013 00:00:00 +0100

Drought has officially been declared in the North Island of New Zealand.

As a result, DairyNZ forecast that milk output is to be cut by 545 million litres in the first three months of 2013. The drought is now starting to affect the South Island causing further concerns.

Banks in the country are forecasting a 2% fall in milk output for the current 2012/2013 season. The best case scenario is seen as being able to equal last year’s production levels.

Estimated lost farm income is set to reach the equivalent of £332 million with an effect on the economy as a whole of £719 million

Despite the drought the New Zealand dairy co-op Fonterra have produced strong first half earnings.

Rabobank - Global Dairy Industry Q1 2013

Mon, 08 Apr 2013 00:00:00 +0100

A recent Rabobank report which considered the global dairy industry in Q1 2013 produced a number of key points which are summarised below:

Demand for dairy products remained weak in the EU and US, with both countries not likely to see an increase in dairy consumption during the first half of 2013.
Global dairy importers continued to search for increased quantities as a result of a surge in Chinese buying.
The end of the Southern Hemisphere season has been poor – further hindered by drought conditions in New Zealand. This will result in total milk production across key export regions in the first half of 2013 to fall below previous year levels.
Lower milk production will reduce international supply availability. Chinese buying will begin to slow in the coming months as other import regions look for additional supplies to top up local market requirements.
Additional supply needs will produce a tight global market environment through Q2 and Q3 2013, with Q4 seeing lower prices as a result of easing feed prices and a new Southern Hemisphere season.

Raconteur - Sustainable, Agriculture and Food Security

Thu, 04 Apr 2013 00:00:00 +0100

This supplement from The Times (25th March 2013) includes an article on page 12 from Promar's John Giles (Divisional Director) on the importance of good farms in the small versus large debate.

Raconteur - Sustainable, Agriculture and Food Security

Increased Profts for Fonterra

Wed, 03 Apr 2013 00:00:00 +0100

Fonterra raised its payout to New Zealand dairy farmers following a 33% increase in half year profits.

Increased profit levels were driven by:

• A strong performance of its New Zealand milk products division which saw a 9% increase in volumes to 1.5 million tonnes

• Strong sales from its Asian and Latin American brands: growth in the Asian foodservice and consumer brands business particularly in China, Indonesia, Malaysia, the Middle East and Vietnam providing a 13% increase in sales volume to 186,000 tonnes; an 11% volume growth in Latin America with strong performance across all product categories, particularly liquid milk and mature cheese.

FrieslandCampina Increase Milk Price

Tue, 02 Apr 2013 00:00:00 +0100

The Dutch dairy company FrieslandCampina increased their guaranteed milk price by 8% to their members for the whole of 2013 following increased Fonterra product prices.

Farmer members will now receive the equivalent of 30.9 ppl for their milk from last year’s 28.7 ppl.

Heler's Whey Investment

Wed, 27 Mar 2013 00:00:00 +0100

Cheshire cheesemaker Joseph Heler completed a £750,000 investment in a whey processing facility. The investment is in partnership with the dairy nutrition business Volac.

Customers will start receiving supplies at the end of March.

Fonterra's Innovative Light Blocking Milk Bottle

Wed, 27 Mar 2013 00:00:00 +0100

Fonterra have developed a 100% light proof milk bottle which claims to lock in the nutritional properties of fresh milk that can be affected by light.

The design adds two additional layers to the existing milk bottle design. The inside and outside layers are opaque white while the middle layer is black which blocks out 100% of the light.

The innovative bottle is set to provide consumers in New Zealand with a better tasting milk.

Suspension on US Milk Production Reports

Mon, 25 Mar 2013 00:00:00 +0100

US government budget cuts will result in milk production reports being suspended.

The suspension by the USDA's National Agricultural Statistics Service (NASS) is set to last for six months until October 2013.

A number of dairy organisations (Dairy Foods Association, and the National Milk Producers Federation) are upset over the postponement believing that the reports have helped to improve transparency in the sector.

German Investment outside Europe

Fri, 22 Mar 2013 00:00:00 +0100

€8 million is to be invested by DMK, Germany's largest dairy company to focus on growing cheese sales outside of Europe.

A large majority of the investment (€5 million) will be put towards boosting annual cheese production at their Dargun facility from 30,000 tonnes to 40,000 tonnes. The remaining €3 million will be spent on efficiency improvements, innovation, and energy-saving.

Although consumption of milk and dairy products is stagnating in Germany, DMK's managing director believes there is growing demand in non-European countries.

Increase in US Milk Production

Wed, 20 Mar 2013 00:00:00 +0100

US milk production forecasts increased 1% in March to a 2013 forecasted total of 91.2 million tonnes, from February's volume.

The increase comes as a result of slower paced herd reductions and a higher milk output per cow expectancy.

Dairy product prices for butter and whey in the country have been lowered due to increased production expectations and moderate demand.

Drought Affects New Zealand Milk Production

Mon, 18 Mar 2013 00:00:00 +0100

Milk production in New Zealand is set to be cut by c. 545 million litres in the first three months of 2013 as a result of drought.

The drought in the North of the country is starting to spread into the South meaning the milk production estimate of 18,584 million litres could still change.

Milk output from the beginning of January to the end of May traditionally accounts for c. 40% of New Zealand's total production.

With ever increasing drought pressures in the future many farmers are being told to adapt to the situation.

UK Cheese Export Initiative

Fri, 15 Mar 2013 00:00:00 +0100

Dairy UK is set to launch a Cheese Exporters Group for British cheese makers.

The main objectives of the group (which has been given full backing by DEFRA) will involve:

Examining opportunities for collaborative activity - including product development and market intelligence sharing

Encouraging British cheese makers to focus on export markets

Slowing Growth for EU Milk Production

Wed, 13 Mar 2013 00:00:00 +0100

EU milk production is set to grow over the next couple of years but at a slower pace than previously seen according to the European Commission (EC).

Unfavourable weather conditions are still having an impact on milk prices and margins in some regions.

Milk output in the EU increased <1% in 2012 to 152 million tonnes. The largest producers were Poland, Germany, Denmark, and Hungary. Growth over 2013 is set to slowdown to 0.1%, and increase to 0.4% in 2014 to potentially reach an output level of 153 million tonnes.

Dairy cow yields are also set to increase this year by 2%, which would counter balance the contraction in herd size.

Saputo Exit Europe

Mon, 11 Mar 2013 00:00:00 +0100

The Canadian dairy company Saputo saw only a marginal increase in its revenue and profit for Q3 ending December 2012. Net profit in the quarter reached the equivalent of £83.8 million a <1% increase from the £83.2 million achieved in the same period a year ago.

The slight increase was due in part to higher than average US cheese prices and higher selling prices designed to offset the high cost of raw milk. In order to regain growth and remain competitive Saputo plan to implement cost cutting measures across its Canadian, US, and Argentinian divisions, as well as focus on acquisitions.

In the US, the company aim to build on their recent acquisition of Dean Foods’ Morningstar division in January 2013 which produces a number of both dairy and non-dairy extended shelf life products.

Saputo also announced they will be closing their cheese manufacturing operations in the UK and Germany and stepping out of the European market for the first time in seven years.

The decision comes as the company fails to see any short to mid term opportunities for profitability within the sector. They believe their money and time can be put to better use in other markets where margins are more substantial such as the US, Latin America, and Oceania.

Investment at First Milk

Fri, 08 Mar 2013 00:00:00 +0100

The UK dairy co-operative First Milk is set to undertake further investment in its business in order to develop new income streams.

The co-op has already invested £20 million over the past 18 months, but is now in talks with potential partners to develop its value added production systems rather than a commodity focus.

The amount of capital its members are required to invest has been raised as result from 0.2 ppl to 0.5 ppl from April this year. April will also see First milk paying a 3% return on members’ capital account balances while increasing its standard milk price by 0.5 ppl and by an additional 0.4 ppl for its cheese and balancing pool payments.

US corn to treble by 2014

Wed, 06 Mar 2013 00:00:00 +0100

By 2014 the US corn inventory is set to triple to a record 55 million tonnes following the forecasted low this year of 16 million tonnes.

After yields fell to 3 tonnes per acre in 2012 these are set to increase to 4 tonnes per acre, with corn production to rise 35% to 369 million tonnes with a 16% increase in consumption levels.

An increase in US corn exports and use in domestic grain based ethanol will be countered by falling oil consumption and increasing output in Brazil, Argentina, Ukraine and India.

Dean Foods sees profit

Mon, 04 Mar 2013 00:00:00 +0100

Q4 showed Dean Foods in the US to bring in a profit as a result of increased commodity costs from its Fresh Dairy Direct business which saw its net sales grow 2% to the equivalent of £1.6 billion.

Net profit for the period reached £24 million compared with a loss of £6.5 million in the same period in 2011.

The main focus for 2013 will be a reduction of the company’s costs which will result in a closure of 10-15% of its plants.

Steady rise in future milk production

Fri, 01 Mar 2013 00:00:00 +0100

The USDA forecast a steady rise in milk production over the next decade with levels reaching 104 million tonnes in 2022 compared to the estimated 91 million tonnes in 2013.

Cow numbers are however set to follow a long term decline over the period. Counteracting this, milk yield per cow is set to increase due to greater technological and genetic developments. Yield per cow is set to reach c. 11.7 litres in 2022 compared with 9.9 litres currently.

The report showed that commercial use of dairy products is set to increase at a faster rate than the growing world population with cheese demand set to rise due to an increase in prepared food and away from home consumption.

Slowdown in growth for Nestl�

Wed, 27 Feb 2013 00:00:00 +0100

Nestlé saw its total revenues in 2012 increase at a slower rate than usual of 2% following weak demand in Europe. Emerging markets in Asia, Oceania, and Africa also witnessed a slowdown with an 8% growth rate compared to 12% in 2011.

Total sales at the company reached the equivalent of £65 billion with dairy sales seeing a 6% growth in sales to £13 billion and a net profit of £7.5 billion.

The company believed 2012 was good for the company in terms of infant nutrition in emerging markets such as the BRICs and Africa with a double digit growth in formula sales.

Russia impose temporary ban on US meat

Mon, 25 Feb 2013 00:00:00 +0100

Russian authorities have imposed a temporary ban on frozen pork and beef imports from the US after a failure to guarantee that products do not contain ractopamine.

The substance is added to cattle and pig feed in the country to increase muscle mass and reduce fat. However the additive is banned in a number of countries including Russia.

US meat exporters believe the ban will create huge financial losses. In the first 11 months of 2012 the US exported c. £185 million worth of pork and £201 million worth of beef to Russia.

Arla sees rise in 2012 turnover

Fri, 22 Feb 2013 00:00:00 +0100

Despite the first half of 2012 being dominated by severe price pressures across the industry, Arla has seen growth in its annual turnover.

Turnover increased 16% to the equivalent of £7.4 billion in 2012, compared with £6.4 billion in 2011. Consolidated net profit reached £220 million, an increase from £160 million the year before. Mergers, acquisitions and growth in strong Arla brands are behind the positive results.

Arla delivered growth in turnover and earnings in almost all markets outside of the EU in 2012, with Russian turnover seeing a 28% increase, and in the Middle East and Africa an increase of 22%. This development has reignited the fact that growth opportunities for the cooperative lie in international growth markets. Arla have never experienced such a positive development in their profits outside the EU before.

In 2013 Arla forecast they will achieve a turnover of £8.4 billion and a 3% profit of £260 million.

Dairy Crest Announce Strong Q3

Wed, 20 Feb 2013 00:00:00 +0100

Dairy Crest released their Q3 statement which shows they are continuing to cope well in the current challenging environment.

The company's four key brands (Cathedral City, Country Life, Clover and Frijj) continue to grow with increased sales volumes of 4% and value of 5% over the last nine months.

Their annual cost saving target is on track with £23 million of savings during 2012. The sale of St Hubert also significantly strengthened their financial position, with the cash from the sale being used to make new acquisitions in the future.

Cranswick to open new pork facility

Fri, 15 Feb 2013 00:00:00 +0100

Cranswick are set to open a new facility following a £30 million pork deal with Asda.

Cranswick had been supplying the BIG 4 retailer with pork, but with the closure of Asda's other supplier Vion, the company has been contracted to supply additional volumes to fill the gap.

On average each week the company will now be supplying around 300 - 350 tonnes of pork to Asda.

Miratorg See Increased Pork Production

Wed, 13 Feb 2013 00:00:00 +0100

The Russian pork and animal feed producer Miratorg announced that in 2012 the company achieved pork production volumes of 280,200 tonnes (liveweight). This is a 65% increase from the total in 2011 of just 170,200 tonnes.

Growth has been achieved through greater efficiency on its pig farms; access to new pig production facilities; and the launch of new industrial sites in Russia.

At the end of 2012 the company’s sow herds were 34% higher than in 2011 at 121,000 head. 2013 is set to see the company aim to reach production volumes of 363,200 tonnes, a 30% increase from 2012’s level.

EU Meat Production to Fall

Mon, 11 Feb 2013 00:00:00 +0100

An EU Commission report states that total meat production in the EU is set to fall by 2% over the next two years. It will then take a further 10 years for the EU meat sector to reach production levels seen in 2011 of 45 million tonnes.

Beef production is set to reduce by 4% with pork production set to recover from the sow stall ban and remain around its current level of 23 million tonnes.

Meat production in the EU over the next 10 years will be driven by increasing poultry and pork meat consumption as well as strong external demand and higher prices.

The EU is set to see meat consumption in 2022 fall 1% lower than the 2011 level to 82.6 kg per capita.

Emerging Markets Drive EU Dairy

Fri, 08 Feb 2013 00:00:00 +0100

An EU Commission report believes that EU dairy product demand will continue to be driven by emerging markets over the next ten years.

Over that period cheese and SMP exports are set to be the best performer, while exports of butter and WMP are set to fall over the decade.

The EC report also believes that a year before milk quotas are abolished EU milk deliveries will only have reached 8.3 million tonnes, 6% lower than the quota level.

First Milk Announce Price Increase

Fri, 08 Feb 2013 00:00:00 +0100

The standard litre milk price paid to farmers in First Milk's liquid pool is set to increase by 0.5 ppl from the 1st April 2013. Producers in the cheese and balancing pools are also set to see their standard litre price increase by 0.4 ppl at the same time.

First Milk are set to pay out a 3% return on members' capital account balances in April as part of its ongoing programme to regularly reward investment in the business.

In the future, the company is looking to raise capital for the business from non-members in a way that does not compromise the ownership of the co-operative. This follows interest from some employees and farmers who do not yet supply First Milk.

Arla's 2013 Investment

Wed, 06 Feb 2013 00:00:00 +0100

The Arla board are providing £232 million of investment in order to:

expand capacity
make environmental improvements
continue to develop quality
improve innovation during 2013

Almost 40% of the money will be specifically for expanding export production.

The largest single investment from the money will be put towards a construction of the brand new £103 million whey-based lactose production facility in Denmark. Arla also plan to reduce production costs by £288 million by 2015.

A2 Milk doing well for Muller - Wiseman

Mon, 04 Feb 2013 00:00:00 +0100

Muller-Wiseman revealed that they are currently supplying just over 50,000 litres a day of A2 milk.

Milk comes from 16 farms in the Shropshire/Staffordshire/Cheshire area, with another four farms set to join during the middle of 2013 which will bring total supply to 60,000 litres a day.

A2 milk was originally launched in 750 stores in the UK in October 2012 and is set to be introduced at a further 100 this month.

Emerging Markets Future for Arla

Fri, 01 Feb 2013 00:00:00 +0100

Arla Foods are set to focus their future plans on growing markets such as Russia, China, the Middle East and Africa in the Strategy 2017. The company plan to co-operate with local industry, develop distribution networks, and invest in marketing to take opportunity of the large export potential these countries offer.

Arla believe overall revenue in these markets could increase from £394 million to £1.1 billion by 2017. Focus closer to home will continue in Denmark, Sweden, the UK, Germany, Finland, and the Netherlands through profitability and innovation focus rather than expansions and mergers / acquisitions.

The main reason behind the drive to focus on these growth markets is the upcoming EU milk quota abolition. The dairy company believes it will receive 1 million tonnes of milk per year once the quotas are lifted and this cannot be sold as profitable products in the EU.

Arla's new Danish Lactose Facility

Mon, 28 Jan 2013 00:00:00 +0100

Arla Foods is set to invest €20 million on a new lactose plant in Denmark. It is part of the company's €268 million strategy to boost its most profitable export products.

The new facility will have a capacity of 85,000 tonnes of lactose per annum and is scheduled to be completed in October 2014, with full operations complete in 2016.

There has been a growing demand for infant milk formula which this facility is keen to optimise on, together with Arla's existing plant in Germany.

Amul to open new plant in India

Wed, 23 Jan 2013 00:00:00 +0100

The Indian milk brand Amul are set to open a new processing plant in Mumbai at a cost of £18.8 million.

The factory will have the capacity to process 50,000 litres per day making it the largest in the country. The packing line will be fully automated and controlled through centralised computer monitoring systems.

All milk required for the factory will be sourced from local co-operative societies. As well as producing milk, the factory will contain the country's largest ice cream line as well as facilities to manufacture buttermilk and curd.

Pork Processor Focuses on Branding Packaged Foods

Fri, 18 Jan 2013 00:00:00 +0100

Smithfield Foods, the largest pork and hog processor is set to refocus upon branding its packaged foods division in order to become less dependent on its hog farm operations which have been volatile in previous years.

Packaged meats currently account for 46% of the company's sales. New brands and products will be added with a focus on convenience and health.

Muller to invest �17 million in new butter plant

Mon, 14 Jan 2013 00:00:00 +0100

Muller announced plans to move into butter production in the UK.

The company is set to build the largest butter plant in the country at their current facility in Market Drayton at a cost of £17 million. Once completed, the plant will have the capacity to handle all of the 90,000 tonnes of cream produced by the Muller Wiseman group which will result in 45,000 tonnes of butter.

Branching out into butter brings Muller's UK operation more in line with its German model where the factory there produces a wide range of dairy products.

Smithfield's Pork Success

Mon, 14 Jan 2013 00:00:00 +0100

The US meat processor Smithfield Foods reported a 3% fall in its overall Q2 sales to the equivalent of £1.9 billion. Pork was the largest contributor to this revenue despite sales falling 2% in the period (compared to Q2 2011) to £1.7 billion.

Within the pork division, packaged products saw a 33% increase in operating profit driven by brand activation, new product launches, market share improvements, and distribution gains. Fresh pork sales fell 4% to £0.8 billion, yet strong profit margins of 8% meant total operating profits for the segment increased 11% to £25 million.

However, gains in pork were offset by a poor performance in the company’s hog production division where production fell by 7% to £452 million due to higher production costs and lower live hog prices.

At the end of 2012 Smithfield Foods also announced that it had transitioned 38% of its pregnant sows on its company-owned farms in the US from individual gestation stalls to group housing systems.

The company is now on track to finish conversions on all its company owned farms in the country by 2017, international compliance will be completed slightly later in 2022.

India's Milk Sector Continues to Grow

Fri, 11 Jan 2013 00:00:00 +0100

Milk production in India is set to reach 135.5 million tonnes in 2013, a 5% increase from 2012’s level due to firming domestic demand and better prices according to a USDA study.

Fluid milk production is set to continue to grow this year, however production of non-fat dry milk is set to only face marginal increases due to a large number of stocks being carried over from 2012.

Demand growth for dairy products in India is estimated at c. 7% annually, which is twice the growth rate of current domestic supply.

FrieslandCampina Strengthening its Dairy Brand

Wed, 09 Jan 2013 00:00:00 +0100

FrieslandCampina in Germany is intending to invest ‘tens of millions’ to update plant technology, improve infrastructure, and strengthen the market position of its core dairy brand. It is also set to reduce its domestic workforce by 15% to improve efficiencies which will have no negative impacts on current production levels.

These measures have been announced as local competition, declining consumption, and supermarket dominance has put the German dairy market under greater pressure.

FrieslandCampina has also entered into a joint venture with Bongrain which came into existence at the beginning of the month. The business venture will involve FrieslandCampina’s branded cheese products being sold in the French market as they have expertise in cheese production while Bongrain offer knowledge of the branded cheese retail market in the country.

European Commission - on track for milk quota phasing out

Mon, 07 Jan 2013 00:00:00 +0100

A European Commission report on the phasing out of milk quotas in 2015 shows that the dairy sector is on track for its introduction. Production quotas are no longer necessary in a number of member states and the quota price (paid by farmers seeking additional quota) is already zero or close to zero.

The role of producers in the dairy supply chain was strengthened further with the introduction of the ‘milk package’ at the end of 2012. This package allows dairy farmers to negotiate prices with processors with the aim of boosting their position in the supply chain and preparing for 2015.

The report indicates that medium and long term prospects for the dairy sector are positive with higher forecasted demand as a result of an increasing desire for Western diets in emerging markets set to maintain price levels.

Counterfeit meat seized in international operation

Fri, 21 Dec 2012 00:00:00 +0100

Counterfeit, mislabelled and sub standard meat products were seized in an operation coordinated by Interpol and European police agency Europol.

The international operation spanned 29 countries and a number of sausages, ham, lamb, chicken, and beef were affected. More than 135 tonnes of potentially harmful food of all kinds and a further 100 tonnes of misdeclared and potentially hazardous foodstuffs were seized.

The main infringements were the misuse of geographical indications, especially for sausages, and the breach of sanitary rules, particularly in regards to the slaughtering condition of animals.

Management buyout for Vion UK

Wed, 19 Dec 2012 00:00:00 +0100

The Netherland processing company Vion NV has agreed a management buyout of its UK pork business following an announcement last month that it was to be sold.

The deal is backed by UK private equity firm, Endless. The priority now for the UK business is to ensure that excellent levels of service and product quality continue under the new deal.

Vion are now focussing their attentions on securing the sale of their remaining poultry and red meat operations in the UK.

Promar Standard amended contact details

Wed, 19 Dec 2012 00:00:00 +0100

Please note an incorrect telephone number appears in British Dairying, the correct number to call for a free silage sample and forage review is 01270 616800.

Russia Lifts Ban on British Beef

Mon, 17 Dec 2012 00:00:00 +0100

The ban on British beef being exported to Russia has been lifted. The ban, which has been in place since 1996 was a result of a BSE outbreak in the UK.

The worldwide veto on British beef exports was lifted in 2006, however Russia refused to remove the restrictions. Russia are also close to lifting a ban on its meat imports from the Brazilian states of Mato Grosso, Parana and Rio Grande do Sul.

The embargo was placed after Russian inspectors identified violations of veterinary and sanitary rules in plants in June 2011.

UK Pig Census 2012

Fri, 14 Dec 2012 00:00:00 +0100

The latest 2012 census of UK pigs recorded a population of 4.5 million head.

The breeding herd was reported to be 523,000 head, a <1% decline on the same figures in 2011. The number of breeding females declined by 1.5% from June 2011, though sows-in-pig increased by nearly 5%. The number of market pigs was 3.9 million head, up 1% from last year. Recent feed price rises stimulated a hike in sows being culled from the herd.

Dairy Herd Growth in Russia

Wed, 12 Dec 2012 00:00:00 +0100

Russia’s dairy herd is expected to increase next year due to a livestock development programme from the government and favourable loans for farmers.

The draft State Agricultural Program for 2013 - 2020 sets a target of an annual milk production of 38 million tonnes by 2020. Whilst cow inventories are down in 2012 by 1%, milk output has risen, due to higher yields from improving genetics and better farm management practices.

Prospects for 2013 are still somewhat mixed, with cheese production up by 6% and expected to continue despite increased competition from imports, due to their competitive price

Free Trade Agreement between US and EU

Mon, 10 Dec 2012 00:00:00 +0100

A coalition of the US food and agricultural organisations, led by the National Pork Producers Council (NPPC) is continuing its support for a Free Trade Agreement (FTA) between the US and the EU.

However, the NPPC have made it clear that any deal must include agriculture and that the EU must address non-tariff trade barriers. As part of the talks, the EU has stated the FTA must include geographical indications granting exclusive rights to specific product names for the EU.

This could cause problems for the US, as many of these product names have been used outside the Europe for many years – e.g. the US would not be allowed to export Parmesan (style) cheese to the EU.

Denmark Increase Pig Production

Fri, 07 Dec 2012 00:00:00 +0100

Danish Crown is set to help pig producers in Denmark increase the production of pigs, by providing grants for the construction of slaughter houses and the renovation of old sow stalls to help secure the company’s future supply of pigs.

The production of finishers in the country has been falling over recent years due to a lack of interest in investment opportunities. The company have set a target to increase total production by 10,000 pigs a week to 520,000 more a year.

Danish pig producers have been praised for the work they have been doing to improve the optimisation of feed conversion ratios in order to improve the cost of pig production in the country.

Growth Forecast Slashed by OECD

Wed, 05 Dec 2012 00:00:00 +0100

The OECD slashed forecasts for growth in 2013, with warnings that the risk of a serious global recession cannot be ruled out.

OECD expects global growth of 1.4% in 2013, this is a 0.8% fall from its May forecast of 2.2%. Greece is set to be the worst performer with its economy predicted to shrink by 4.5% next year. The Spanish, Italian, Slovenian and Portuguese economies are also predicted to contract during 2013.

The most positive performance is expected to be seen by Chile with an economic growth of 4.5%.

The UK economy is expected to see an expansion of 0.9% next year and 1.6% in 2014.

New Dairy Trade Opportunities for the US

Mon, 03 Dec 2012 00:00:00 +0100

A new bill has been passed in the US which could lead to the establishment of a ‘permanent normal trade relation’ (PNTR) with Russia and Moldova.

Current legislation prevents the US from taking full advantage of Russia’s recent ascension to the World Trade Organisation (WTO).

For the past two years the Russian market has been closed to the US as the country insisted upon certain dairy certificate statements and inspection requirements which the US had been unwilling to accept. However, if the new bill is signed into law then it will create stronger opportunities for US dairy exports to enter these markets.

The National Milk Producers Federation (NMPF) and the US Dairy Export Council (USDEC) have welcomed the passing of the bill.

Dairy Crest sees fall in profits

Fri, 30 Nov 2012 00:00:00 +0100

Dairy Crest has seen its half year profits in 2012 fall 16% from the same period in 2011 due to problems in its liquid milk business.

Pre-tax profits were £19.1 million, compared to the £22.7 million for the first six months of 2011. In the same period the liquid division saw its profits fall by 64% to just £2.1 million.

Standardising EU Food Labelling

Wed, 28 Nov 2012 00:00:00 +0100

A group of 12 major food manufacturers have backed a new plan to standardise food labelling in the European Union. Together these companies have pleded to harmonise their labels in the EU in a move supported by industry trade bodies FoodDrinkEurope and EuroCommerce.

The companies involved are:

Coca-Cola
Danone
Ferrero
General Mills
Kellogg’s
Mondelez
Mars
Metro
Nestlé
Orangina-Schweppes
Pepsico
Unilever

The new labels, which are due to be implemented by the end of 2014 will contain front of pack calorie information per 100 grams/ml as well as additional information per portion size.

In Europe, nearly half of all packaged food products have nutritional information on the front of a pack.

US Pork Sector to Receive Funding Boost

Mon, 26 Nov 2012 00:00:00 +0100

Additional funding has been approved by the US's National Pork Board to help promote the struggling sector.

Domestic and international marketing budgets have been increased to help boost US pork demand following the disruption caused by this summer's drought.

In 2013, nearly US $30 million will be provided to help boost domestic marketing, with a further US $7 million for international marketing projects. An additional US $2 million will be used to help marketing for the remainder of 2012.

Promar's James Webster - 3rd in BIAC Young Consultant of the Year Awards

Sat, 24 Nov 2012 00:00:00 +0100

Senior Promar consultant James Webster came 3rd in BIAC's 2012 Young Consultant of the Year Awards this week.

Here he is, being presented his award from former DEFRA minister Jim Paice.

Welsh Red Meat in China

Fri, 23 Nov 2012 00:00:00 +0100

Meat Promotion Wales (HCC) representatives and three Welsh red meat exporters, are set to travel to the Far East in order to try and gain access to the Chinese red meat market for Welsh lamb and beef.

Accessing the Chinese market could create a huge boost for the Welsh sector - currently only three countries can send their lamb exports to China and these all demand a high price.

The Welsh exporters travelling on the mission will have opportunities to meet potential business partners as well as attending the Food and Hotel China exhibition.

Data from HCC shows that in 2011, Hong Kong increased their imports of Welsh lamb by 300% with a total worth of more than £2 million to the Welsh economy.

Potential Budget Cuts for EU Meat Production Support

Wed, 21 Nov 2012 00:00:00 +0100

The EU's annual €140 million meat and livestock market intervention budget could face deep cuts following a heads of government meeting later this month.

The meeting is set to agree the overall 2014-2020 EU spending deal as well as consider proposals which will demand an additional 10.8% cut in the Common Agricultural Policy (CAP) spending on top of the planned 12% reduction.

Cuts have been opposed by the European Parliament and the European Commission.

Meat and livestock programmes at risk include:

this year's annual €36 million beef and veal market refunds for producers
€9 million refunds for live beef and veal cattle
€10 million refunds for pigmeat producers facing low prices
€12 million for storage of unsold pigmeat
€65 million for poultry producer refunds.

Vion UK to sell off UK Operations

Tue, 20 Nov 2012 00:00:00 +0100

Vion UK, the country's largest meat producer is to sell of its UK operations in order to focus on its core markets in the Netherlands and Germany.

The news comes after the recent announcement to close its production site in Scotland.

UK pork, red meat and poultry operations currently owned by the company will be sold as ongoing viable businesses.

Vion's UK Chairman Peter Barr said: "The level of interest in the businesses has been strong...we have already started detailed discussions with a number of interested parties."

Milk Price Increase for M�ller / Wiseman Farmers

Mon, 19 Nov 2012 00:00:00 +0100

Müller Dairy and its Müller owned Robert Wiseman Dairies will increase their farm gate milk price by 1.5 ppl to 30.5 ppl by February 2013.

Supplying farmers (with the exception of those in the Tesco and Sainsbury's supply groups) will receive a 0.5 ppl price increase on 1st December 2012 and an additional 1 ppl from 1st February 2013.

Müller Dairy UK's CEO, Ronald Kers states, "We want to return a higher milk price to farmers so that we can ensure security of supply for our customers in an environment where off farm milk production is dropping".

Proposed Restrictions on Use of Antibiotics in the Livestock Sector

Mon, 19 Nov 2012 00:00:00 +0100

European Parliament's health committee is encouraging the European Commission to introduce tougher controls restricting the availability of new third and fourth generation antibiotics in the livestock sector.

Antibiotic use in the meat industry is believed to be too widespread and can promote immunity to drug use which can cause serious health problems.

In order to reduce demand for these drugs it has been suggested the Commission should:

Review EU animal welfare laws - to boost animal health without the use of drugs
Limit the right to prescribe antimicrobials to professionally qualified vets
Allocate the rights to prescribe and sell antimicrobials to different people to remove economic incentives to prescribe

The motion will now be discussed by the European Parliament's plenary session.

Pig Sow Stall Ban Compliance in Denmark

Fri, 16 Nov 2012 00:00:00 +0100

Pig producers in Denmark are confident they will be ready for the introduction of the EU’s sow stall ban in January. 85% of farmers are already operating to the new legislation requirements, and have received support over the 10 year transition period from the Danish Pig Research Centre.

Any farmers found not to be abiding by the legislation after its introduction will forfeit their entitlement to support under the EU Single Farm Payment, according to the Danish authorities.

FMD Vaccination Delay in Brazil

Wed, 14 Nov 2012 00:00:00 +0100

In response to the current drought in the Brazil, the Ministry of Agriculture relaxed timings of foot-and-mouth disease (FMD) vaccinations for cattle and buffaloes by up to 30 days.

The decision was made to protect the country’s cattle herd, which is not in top condition following the drought.

Brazil has been working towards becoming recognised as FMD free by 2013 for several years, and the delay in vaccinations is not set to impact upon this objective

E Coli Breakout Confirmed in Canada

Mon, 12 Nov 2012 00:00:00 +0100

16 cases of human E.coli have been confirmed in beef produced in Canada. The breakout has been traced back to XL Foods and over 2,000 beef products from its production facility have been recalled.

The government are now working with the Food Inspection Agency to ensure other meat processors are updated on food safety control measures.

Production resumed at the operation at the start of November, but will remain under enhanced surveillance by authorities

Fonterra Investment in China

Fri, 09 Nov 2012 00:00:00 +0100

New Zealand’s Fonterra signed an agreement in China to develop two additional farms which would each house c. 3,350 cows and together produce 65 million litres of milk a year.

The two investments would complete the co-operative’s ‘hub’ of five farms in the Hebi province of China.

The plants are expected to be fully operational by October 2013 and together the five farms would be producing 150 million litres of milk a year.

Fonterra believe demand for dairy is set to double by 2020 and as a result much of this growth will be met from local production.

Global Pork Production to Grow in 2013

Tue, 06 Nov 2012 00:00:00 +0100

The latest Livestock and Poultry: World Markets and Trade report from the USDA indicates that global pork production is set to reach 104.7 million tonnes in 2013.

This is a <1% increase from 2012’s production levels of 104,363 tonnes.

China accounts for nearly half of total world production and is set to see a 1% increase in production to 52 million tonnes. The slowdown in production growth for the country is due in part to a weaker consumer demand from slowing economic growth, rising feed costs, and small scale producers exiting the industry and creating a nominally lower breeding stock for 2013. However the Chinese government still continue to support the pork industry through subsidies, boosting breeding stock imports, and occasional pork purchases to support prices.

Pork production in Brazil is set to grow 2% over the next year to reach 3.3. million tonnes in 2013 due to strong international demand for the meat, and government interventions to protect the market.

Palm Oil Sustainability by 2015 in the UK

Fri, 02 Nov 2012 00:00:00 +0100

A number of UK supermarkets, manufacturers, charities, the government and WWF have joined forces to ensure palm oil used in everyday food and products will be 100% responsibly sourced by 2015.

The government will set up an advice and information service system to help UK businesses work towards the target which will include a helpline, website, newsletter and seminars.

Palm oil and palm kernel oil are used in the food industry as frying fats and as ingredients in a number of food products such as biscuits, margarine, snacks and bakery products. They are also used in the production of biodiesel, animal feed, soaps and other cleaning products and cosmetics.

The UK’s Environment Minister Richard Benyon said, “The Government is leading the way by ensuring that only environmentally friendly sourced palm oil is used in its central food and catering services. This is great news for wildlife and forests around the world”.

New 'standard' UK Food Labelling System

Tue, 30 Oct 2012 00:00:00 +0100

2013 will see the introduction of a new food labelling system in the UK designed to provide nutritional information encouraging shoppers to make healthier choices.

The label, which will feature on the front of food packaging will display:

guideline daily amounts
traffic-light colour coding
high/medium/low descriptions for fat, saturated fat, salt, sugar, and calorie content.

The system will be voluntary but Tesco and Sainsbury's have already announced they will be taking part.

In Europe the UK has the largest number of food products with front of pack nutritional labels on, however shoppers often get confused between the number of different labels and logos. As a result a standard system would help eliminate any potential confusion.

Sainsbury's to Lose Red Tractor Logo

Mon, 29 Oct 2012 00:00:00 +0100

Logo confusion has caused Sainsbury's to drop the Red Tractor logo from their food packaging.

The decision came after research showed customers were confused by too many logos on food packaging. Despite dropping the image, Sainsbury's will continue to adhere and exceed the Red Tractor standard.

The NFU, who are keen to promote the standard as widely as possible described the decision as, "Extremely disappointing news to farmers who take pride in the Red Tractor logo as a mark of the good standards of animal welfare, environmental protection and traceability to which they produce."

EU Countries Face Superlevy Quota Fines

Fri, 26 Oct 2012 00:00:00 +0100

Superlevy penalties totalling €78 million were given to six EU countries as a result of exceeding 2011/2012 milk quotas.

Collectively Austria, Ireland, the Netherlands, Germany, Cyprus, and Luxembourg exceeded their national quotas by 283,000 tonnes.

The superlevy is applied once national quotas are exceeded at a rate of €27.83 per 100 kg.

Austria faced the worst fines at €33.6 million after exceeding their quota by 4% (120,650 tonnes).

Despite the oversupply from these countries, total EU deliveries remained well below quota volume.

Morrisons increase retail milk price

Wed, 24 Oct 2012 00:00:00 +0100

Retail milk prices in Morrisons increased 25% this month. A four pint bottle of milk from the retailer now costs £1.49, from its previous selling price of £1.18 and takes the price to the highest it has been for over a year.

Morrisons are attributing the price rise to soaring commodity costs.

However, despite the rise (which applies to Morrisons standard branded milk), the retailer will continue to offer four pint poly-bottles for £1 under their Meadow Park brand, and are currently promoting a three for £3 offer on four pint bottles.

The price rise was introduced at the start of October, but currently no other retailers have followed and increased their own retail milk prices.

China's Economy Suffers Slowdown

Mon, 22 Oct 2012 00:00:00 +0100

China's economy grew 7.4% in Q3 resulting in the seventh consecutive quarter of annual growth slowdown.

The World Bank cut its full year GDP growth forecast for China to 7.7% in 2012 from May's forecast of 8.2%. China is set to record their weakest annual growth since 1999 due to:

a slowdown in domestic investment
a fall in demand from major export markets.

Despite the slowdown, growth rates still remain the envy of the developed world. Latest data shows China is close to the end of its downturn with investment, retail sales and industrial production sectors all starting to grow at the end of Q3.

The slowdown has negatively affected infrastructure and investment sectors in the country which will have a knock on effect for other global markets that rely upon China as a key export market.

Vion's Scottish Pork Plant to Close

Fri, 19 Oct 2012 00:00:00 +0100

Financial problems have caused Vion to close its primary pork processing plant in Scotland.

The West Lothian based site was losing £79,000 a day and no new buyers were able to come forward with viable business plans to save the site.

The site used to process 8,000 pigs on a weekly basis, half of which were reared in Scotland. Producers will now have to consider the additional costs of transporting their livestock to England for processing.

The government is working alongside Quality Meat Scotland, the Scottish Pig Producers organisation, and the National Farmers' Union of Scotland to look at future options for the sector.

Part of the operation will close this month, with the remainder in February 2013.

Fall in Global Government Support for Agriculture

Wed, 17 Oct 2012 00:00:00 +0100

The Organisation of Economic Co-operation and Development's (OECD) latest Agricultural Policy: Monitoring and Evaluation 2012 has shown a fall in global government support to the agricultural sector.

Government support fell to 19% of total farm receipts in 2011, with support to producers at the equivalent of £147 billion. These prices reflect a long term global trend of falling levels of government support for agriculture driven by recent developments in international commodity markets.

New Zealand, Australia, Chile, the US, Mexico, Israel, and Canada were found to have levels of support below the OECD average of 20%. The EU had exactly 20% support, while Iceland, South Korea, Japan, Switzerland, and Norway all had high levels of support.

EU Pork Prices to remain high into 2014

Mon, 15 Oct 2012 00:00:00 +0100

Low production levels of pork in the EU and globally will help to maintain current high prices according to a Rabobank report.

EU pork prices will remain high into 2014 due to:

the shrinking of the EU sow herd
high piglet prices
the EU sow stall ban
strong export demand

Low profitability in recent years for small scale piglet producers is causing many to cease production - this trend will continue further with the additional investment required to adhere to the EU sow stall ban.

Fonterra Reports Net Profit Loss

Fri, 12 Oct 2012 00:00:00 +0100

New Zealand's Fonterra has reported a drop in their net profit for the 2012 season compared with the previous year and a cut in its final payout to its farmers.

The co-operative’s revenue fell marginally by <1% to the equivalent of £10.1 billion, while net profit fell 19% to £318 million. The fall in profits has been a result of increased milk production causing the price of dairy products to fall according to Fonterra.

Final payouts to Fonterra farmers were also reduced by c. 15% to the equivalent of £3.30 per kilogram of milk solids compared to last year’s payouts. The co-operatives milk product sector had a strong year with a 23% increase in earnings to £262 million

New Organic Price structure from FrieslandCampina

Wed, 10 Oct 2012 00:00:00 +0100

The Dutch co-operative FrieslandCampina are to launch a new pricing system for organic milk which will come into force in 2013.

The organic price will no longer be pegged to the conventional price, instead the guaranteed price will consist of a weighted average of the price of organic farm milk from the Netherlands (9%), Germany (35%), Denmark (28%) and the UK (28%).

Restrained Dairy Production in 2013

Mon, 08 Oct 2012 00:00:00 +0100

Poor weather conditions and rising feed prices are set to create a period (to last into Q2 2013) of restrained dairy production according to the latest Rabobank Dairy Quarterly.

Average global dairy growth was <1% in July compared to the same period in 2011, with both Europe and the US seeing a contraction of 0.7% and 0.3% respectively.

Despite the gloomy outlook there are signs that the market trend could be improved through a weak Euro which has caused EU cheese and SMP exports to rise nearly 30% year on year in July.

Rabobank believe the global dairy market will not level out until the second half of 2013.

Voluntary Dairy Code Granted Approval

Thu, 04 Oct 2012 00:00:00 +0100

Approval has been granted to the UK Dairy Industry’s voluntary code of best practice for milk supply contracts.

The code was agreed upon earlier in the year by UK processors and farmer representatives in order to provide farmers with fairer and more transparent milk contracts.

The main points from the code are detailed below:

Base Milk Price

Milk base prices or pricing mechanisms must be clearly set out in contracts

Prices can be agreed, negotiated or set at the purchasers’ discretion

Purchasers’ have the right to set their milk prices - however farmers must be given a minimum 30 day notice of any price drops and a three month ‘early exit’ clause following any price changes. Co-ops are exempt from the ‘early exit’ clause.

The minimum early termination period can be extended if agreed upon by producer groups.

Pricing Adjustments

Changes cannot be made to adjustments underlying the base price paid for milk without at least 30 days written notice and a three month ‘early exit clause’. Adjustments include: Milk quality bonuses/penalties, seasonality incentives/penalties, imposed production/management standards, and bonuses for continuity of supply. Co-ops are exempt from the ‘early exit’ clause.

Variation of Contract Terms

Any contract term changes not specifically agreed with the producer requires a minimum 30 day notice period, and a three month ‘early exit’ clause following any contract alterations. Co-ops are exempt from the ‘early exit’ clause.

Non Exclusivity

Contracts must allow producers who expand their production levels to supply milk to other purchasers if the first purchaser does not want to receive the additional milk under the same terms and conditions.

Standard Notice to Terminate Contracts

Notice period required to resign a contract should not exceed 15 months and should not (normally) be less than three months. This notice period should not be confused with the right to resign contracts at three months notice in the event of a price change.

Farm Bill Rejection by the US

Wed, 03 Oct 2012 00:00:00 +0100

The US House of Representatives failed to pass a new farm bill before the existing legislation expired.

This will result in many agricultural programs in the country reverting back to a previous 'permanent' legislation, while others may disappear.

This will put a number of farming families in the US at risk during a period when they are already struggling with the effects of drought.

Russia not set to be a meat exporter until after 2017

Mon, 01 Oct 2012 00:00:00 +0100

The Russian Grain Union (RGU) believe the country is soon set to become self sufficient in pork and poultry products.

However, Russia is not forecast to become an active meat exporter until after 2017 according to the RGU. This is due to the high prices being paid for meat currently in the domestic market. High prices have resulted in foreign countries looking to sell meat into Russia rather than purchase it from the country.

Prices are set to fall after 2017 as many government subsidised projects in the industry would have completed paying off loans.

Dairy Crest's Six Month Trading Results

Fri, 28 Sep 2012 00:00:00 +0100

Dairy Crest's six month results to September 2012 show that trading in the first half of the year remained challenging with lower profits than those seen in 2011. Despite this, profit expectations for the full year (ending March 2013) remain unchanged.

Brand investment has been a key part of Dairy Crest's investment structure over the past six months and has included:

Increased expenditure on their four main UK brands (Cathedral City, Country Life, Clover, and Frijj) which has driven growth
Brand innovations (Chedds, and Cathedral City Selections) are showing strong sales growth, with more innovations for the convenience market planned for the next six months

In the medium term Dairy Crest continue to aim for a 3% return on sales through:

Consolidating the spreads division for improved efficiency
Implementing milk selling price increases
Consolidating milk rounds

Milk Price Rise from Dairy Crest

Wed, 26 Sep 2012 00:00:00 +0100

Dairy Crest is to increase the price paid for its non-aligned liquid milk and Davidstow cheese contracts from 1st November 2012.

Farmer's on the two contracts will now be paid 29 ppl. Non-aligned liquid farmers will also benefit from an earlier increase to 28.25 ppl from 1st October. When the rise is implemented prices will be higher than they were before the May price falls.

The announcement comes after those from First Milk, Arla, and Robert Wiseman Dairies.

The price rise is hoped to build confidence again in the sector after a difficult summer for UK farmers, and reflects the expectations of improved returns from commodity markets.

Infant Formula Partnership for China and France

Mon, 24 Sep 2012 00:00:00 +0100

The Chinese infant formula manufacturer, Synutra, has signed a €100 million partnership deal with French dairy co-operative Sodiall and its subsidiary Euroserum. This is Synutra's first investment outside of China.

The deal allows Synutra to build two milk drying units in France which will produce powdered milk and fat-enriched demineralised whey in order to meet the growing Chinese demand.

Construction of the plants is due to start in 2015, and when complete will have a processing capacity of 280 million litres of milk and 30,000 tonnes of whey a year.

Rabobank Forecast Global Agricultural Agflation

Fri, 21 Sep 2012 00:00:00 +0100

Agricultural commodity prices are driving the world into a period of 'agflation' according to details from a recent Rabobank report.

Food prices are set to reach record highs in 2013 and continue to rise throughout the year. Rabobank forecast that the United Nations' Food and Agricultural Organisation's Food Price Index will increase 15% by the end of June 2013.

Price rises are due to squeeze profit margins in the dairy sector hard as a result of increased grain and oilseed prices (on top of the grain price rises caused by the recent drought in the US, Russia, and South America) resulting in a rise in the cost of dairy ingredients.

Irish Food Board Introduce a Sustainability Programme

Tue, 18 Sep 2012 00:00:00 +0100

The Irish Food Board, Board Bia, have introduced a new programme intended to show the Irish food industry as a world leader in sustainability.

The programme is based around a sustainability charter with suppliers pledging to reach a set of independently verified benchmarks for their supply chain such as:

carbon emissions
water use
biodiversity
waste management.

Bord Bia have set a target that by 2014 75% of Ireland's food exporters will participate in the scheme - currently around half are preparing sustainability plans.

Russia Introduce Temporary Ban on Cattle Imports

Mon, 17 Sep 2012 00:00:00 +0100

The Federal Service for Veterinary Phyytosanitary Surveillance (Rosselkhoznadzor) in Russia has imposed a temporary ban on imports of cattle and ruminants from Switzerland, as well as any genetic material derived from them.

The ban comes after Switzerland saw outbreaks of the Schmallenberg virus. Additionally, a temporary ban has been imposed on three companies in Australia (JBS Australia), Spain (Frecarn), and China (Longxing), after traces of zoonotic diseases were found in their meat imports to Russia for the second time.

A number of other companies across the globe (India, Uruguay, France, Moldova, Spain, Argentina, and the Ukraine) also received warnings.

Watch the video of Promar's David Cooke at Livestock 2012

Thu, 13 Sep 2012 00:00:00 +0100

Watch the video of Promar's David Cooke speaking at this year's Livestock 2012 event.

David talks about the recent research conducted by Promar which illustrates why some farmers are more successful than others.

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A UK Dairy Code of Best Practice Agreed

Wed, 12 Sep 2012 00:00:00 +0100

A dairy code of best practice, relating to milk supply contracts, has been agreed between UK processors and farmer representatives.

The code is designed to provide a greater transparency, and assure farmers that their contracts are not putting them at a disadvantage in the marketplace.

A number of minimum requirements have been outlined including: Farmers must receive at least 30 days' notice prior to any price change, with retrospective price changes no longer acceptable. If a milk supplier is unhappy with a price change then they should have the right to exit the contract with three months' notice.

Arla Foods UK and Robert Wiseman Dairies have announced similar plans recently in order to regain the confidence of their milk suppliers. Wiseman announced the launch of their MilkWise initiative earlier this month (a plan whereby they will collaborate with farmers on how raw milk should be valued by the company in the future), with Arla Foods also adopting a new milk sourcing and pricing model to help boost confidence in the sector.

Rabobank report slowdown in New Zealand dairy growth

Mon, 10 Sep 2012 00:00:00 +0100

New Zealand dairy production is set to grow c. 5% in the 2012/2013 season – a lower growth rate than the 10% seen in 2011/2012.

A report by Rabobank forecasts that growth in the New Zealand dairy industry is set to slow down over the next ten years, with growth opportunities coming from productivity improvements rather than increasing herd numbers. Over the last ten years milk production in the country has increased by nearly 50%, and the growth outlook for the next decade will be lower at 30% (although still high on a global scale).

The fall back in growth is linked to the European milk quota abolition in 2015 when it is forecast that production in the EU will increase by 60% in the five years following the abolishment.

Global Food Security Index 2012

Fri, 07 Sep 2012 00:00:00 +0100

The Global Food Security Index 2012 produced by the Economist Intelligence Unit details that US, Denmark, and Norway are the most food secure countries in the world due to a combination of:

Good food supplies
High incomes
Low spending on food compared to other outlay
Having a significant investment in agricultural research and development

At the other end of the list several sub-Saharan African countries such as Mozambique, Ethiopia, Rwanda, and Niger, which were positioned in the bottom third of the index are set to become the world’s fastest growing economies during the next two years. This growth indicates that in the future these economies may be in a position where they can address their own food security issues.

Arla to Increase Milk Price in October

Wed, 05 Sep 2012 00:00:00 +0100

In the UK Arla Foods have joined forces with their Arla Foods Milk Partnership (AFMP) to launch a milk sourcing model which will offer transparency to its milk pricing. The key elements of the model include:

An increase in Arla’s standard litre milk price to 29.5 ppl from the 1st October for producers in the non-aligned Asda and Tesco seasonal milk pools. The Tesco Sustainable Dairy Group (TSDG) and Sainsbury’s Dairy Development Group (SDDG) will continue to have their milk prices formulated in accordance with existing price models.
Full support of the Voluntary Code of Practice and a commitment to engage with the coalition government on the 10-point plan.
A transparent and sustainable pricing model to be delivered in 2013. This will involve: a range of contracts to suit different farmer’s needs; monthly milk price announcements to smooth milk price transitions; support to retailer aligned pools; and launching a study into the cost of production drivers in order to improve Arla’s farmers profitability.

Stricter Import Controls for US Meat Firms Supplying Russia

Mon, 03 Sep 2012 00:00:00 +0100

Russia is tightening their controls on meat supplied from a number of US companies after banned substances were found in shipments.

A recent shipment from the US was found to contain listeria in pork produced by Tyson Fresh Meat, and the banned tetracycline and chlorteracycline in pork produced by Triumph Foods.

The Russian Federal service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor) stated that as it is was the company's first violation then a stricter regime of intensive laboratory testing will be introduced for imports of US meat from:

Tyson Fresh Meats
John Morrell
Triumph Foods
Farmland Foods.

If further violations are found Rosselkhoznadzor will be forced to introduce a temporary restriction on imports.

Cargill's fall in Profits Driven by its Meat Businesses

Fri, 31 Aug 2012 00:00:00 +0100

The US meat processor Cargill reported fallings in their Q4 and fiscal year 2012 profits.

Q4 profit fell 82% to £46 million from the same period a year ago, while 2012 earnings were down over 50% from last year's record of £1.7 billion.

The loss in earnings was driven by losses in the company's meat business as well as external cyclical problems in the US soybean and beef sectors.

Despite the loss, Cargill has invested more than £2.5 billion in the past year in joint ventures, and new and expanded facilities. This includes the purchase of the American poultry and meat processor Corporación Pipasa, the formation of a joint beef venture in Australia, and the development of an integrated poultry business in China.

Fonterra sees Record Exports

Wed, 29 Aug 2012 00:00:00 +0100

The final three months of the 2011/2012 season (May-July 2012) saw Fonterra achieve record exports.

During the final three months Fonterra exported 620,000 tonnes of dairy products to more than 100 countries - a 36% increase from the same period in 2011.

The 2011/2012 season also saw record milk production from its dairy farmers with a 10% increase due to favourable weather conditions throughout the season.

Milk Price Recovery - the worst is behind us

Mon, 27 Aug 2012 00:00:00 +0100

The European Dairy Association (EDA) believe the "worst is behind us" in terms of milk price recovery.

The EDA state that raw milk prices are beginning to show some signs of recovery. However, price recovery is ultimately dependent upon the type of products being produced from the milk - powdered milk prices are still low, while cheese is seeing a better price

Milk price protests have been witnessed in a number of EU countries, although not on the same scale as those in the UK. Despite improvements and delayed price reductions Farmers For Action (FFA) continue to protest in the UK.

Meat Consumption to increase in Developing Countries, but fall in Developed Areas

Fri, 24 Aug 2012 00:00:00 +0100

The FAO-OECD Agricultural Outlook 2012-2021 shows per capita meat consumption in developing countries such as Asia and Latin America are set to increase by c. 3.2 kg per year.

The increase is due in part to growing incomes and the Westernisation of diets. Developing countries are also set to dominate meat production in 2021 producing around 58% of the world’s bovine meat.

In contrast to developing countries increasing their meat consumption,the Short Term Outlook Report from the European Commission shows that EU meat consumption is down 0.8% in 2012 with an expectation it will fall lower to 0.4% in 2013 due to higher prices, continual economic pressures, and a tightening of supplies.

Beef and veal production is forecast to fall 3.5% this year, before rising slightly by <1% in 2013. This fall in production is set to maintain high beef prices and keep exports strong, however the shortage of domestic supply may result in the EU becoming a net beef importer rather than exporter during the end of 2012 and into 2013.

Australian Dairy Co-operative to Invest

Wed, 22 Aug 2012 00:00:00 +0100

The Australian dairy co-operative Murray Goulburn is set to invest €172 million over the next three years to expand and update their manufacturing capabilities.

Money will be spent on improving the co-op's facilities for manufacturing UHT milk, butter, spreads and cheese - doubling their UHT milk capacity, and increasing butter capacity to 20,000 tonnes per year to meet Australian and overseas demand.

The investment is part of the organisation's plan to compete in Australia and at an international level in Asia and the Middle East.

Germany sees fall in pig slaughterings

Mon, 20 Aug 2012 00:00:00 +0100

Germany, the EU's largest pork consumer reported a fall in pig slaughterings of 0.8% for the first half of 2012.

The decline is the first in seven years in the country, causing the number of slaughtered pigs to fall by 237,000 head to 28.8 million. Pork production in the country also fell 1.1% to 2.7 million tonnes.

During the same period poultry meat production increased 1.8% by 12,700 tonnes to 713,000 tonnes.

Drought Assistance for US livestock producers

Fri, 17 Aug 2012 00:00:00 +0100

The USDA is set to use nearly US $16 million to help support crop and livestock producers in the US who have been negatively affected by the recent drought in the country.

In addition the USDA will provide a further US $14 million for the 'Emergency Conservation Programme', which is used to help fund the moving of water to those livestock in need, providing emergency forage for livestock, and rehabilitating land that has been severely affected by the drought.

The US states with the most severe drought conditions are: Arkansas, Colorado, Georgia, Kansas, Kentucky, and Nebraska.

The US Drought Monitor indicates that currently around 66% of the nation’s hay acreage is in a drought area, while 73% of the country's cattle acreage is experiencing drought conditions.

US drought causes increase in cow slaughterings

Wed, 15 Aug 2012 00:00:00 +0100

The continuing drought conditions in the US is causing more cows to be sent to slaughter, reducing the potential for short term US prime beef production. The USDA expects US beef production to be down 4% in 2012, and decline a further 2% in 2013.

Currently it is estimated that combined cow and bull slaughtering are c. 148,000 head per week. This total is close to the 2012 highs and 12% higher than the drought impacted numbers seen in the country a year ago.

It is estimated by CME that just under 60% of all US beef cows are located in US states where over half of the pastures are in a poor or very poor condition – last year this figure was c. 30%.

National Pig Association encourage support for British farmers

Mon, 13 Aug 2012 00:00:00 +0100

The National Pig Association fear that the increase in the costs of pig feed ingredients could cause c. 10% of the current UK pig producers to leave the sector by the end of 2012.

This would equate to c. 1.5 million rashers of bacon and 2.3 million sausages a week. As a result the Association is encouraging UK shoppers to support British farmers over the coming months.

US based joint venture for PepsiCo and Muller

Fri, 10 Aug 2012 00:00:00 +0100

PepsiCo formed a joint venture with Müller to start selling yoghurt in the US.

The joint venture involves building a new yoghurt manufacturing facility in New York and is the first time either PepsiCo or Müller have entered the US market.

The new facility is due to be completed in 2013 and will become one of the largest in the US and firms PepsiCo’s entry to the world dairy market following their acquisition of Russian leading player Wimm-Bill-Dan in 2011.

Stable European Food Price Inflation

Wed, 08 Aug 2012 00:00:00 +0100

The European Central Bank released their June figures showing that European food inflation remained stable at 2.8%.

The inflation level was up only slightly from May's figure of 2.3%.

Although a steady inflation level is positive for customers there is still a threat of continual future price increases. As a result the Bank believe manufacturers still need to innovate and create differentiation in order to survive future pressures.

US sees Increase in Dairy Exports

Mon, 06 Aug 2012 00:00:00 +0100

Strong sales of cheese, milk powder and whey in the US have helped push the country's dairy exports to record levels in May.

Total export value increased 26% in May compared with the same month in 2011 to US $500 million. This pushed total dairy shipments for the first five months of the year to US $2.3 billion - a 22% increase from 2011.

The main markets for these products were: Mexico, Southeast Asia, Canada, the Middle East/North Africa, and China.

Milk Price Cuts Cancelled

Fri, 03 Aug 2012 00:00:00 +0100

All four milk processors who had previously announced milk price cuts from 1st August have cancelled them.

Arla's 2 ppl planned price cut has been cancelled
Both Robert Wiseman Dairies and First Milk's 1.7 ppl August planned price cuts have been cancelled
Dairy Crest's 1.65 ppl planned price cut for August has been set aside for two months while discussions are held with its farmers

British Farming's Place in the Olympics

Wed, 01 Aug 2012 00:00:00 +0100

With Olympic fever sweeping the nation it is important to remember the part British farming will be playing in the games.

Throughout the Olympic Games 14 million meals are set to be served.

In line with London 2012's sustainability commitments all fruit, vegetables and cereals are British and seasonal - where available.

The UK farming industry is set to supply to the Olympic village alone with:

232 tonnes of potatoes
31 tonnes of poultry
19 tonnes of eggs
75,000 litres of milk

The NFU head of food chain Lee Woodger said: "Serving 14 million meals over a three week period is a huge challenge, but providing healthy, tasty nutritious food for the country is what the British farming industry does best and delivers economic benefits to communities up and down the country."

Romanian Investment for Smithfield

Mon, 30 Jul 2012 00:00:00 +0100

The US pork company Smithfield has to date made a US $600 million investment in Romania. Of this total 83% (US $500 million), has been utilised for the farms division while the remaining US $100 million went into processing units in the country.

The company's decision to invest in the sector was based upon the established tradition of raising pigs in the west of the country, and the potential to supply cereal products locally which are needed for animal feed.

Smithfield already has operations in Romania - managing several pig farms, two compound feed factories, a meat processing factory, a factory processing animal by-products, a slaughterhouse and a network of warehouse and logistical services.

Arla and Dairy Crest Abandon their Milk Price Reductions

Fri, 27 Jul 2012 00:00:00 +0100

Following a week of protests from dairy farmers two UK milk processors, Arla and Dairy Crest have called off their planned milk price reductions.

Arla will no longer implement its planned August price reduction, while Dairy Crest have pushed back their planned August price cut for two months while negotiations continue with their farmers.

The last week has seen a number of demonstrations organised by Farmers For Action (FFA), targeting Arla, Robert Wiseman and Dairy Crest processing plants. FFA have announced their demonstrations will continue but planned protests against Arla and Dairy Crest will now be called off.

The decision from the two dairy processors puts pressure on Robert Wiseman Dairies to also consider abandoning their price cut.

US corn production estimates fall

Wed, 25 Jul 2012 00:00:00 +0100

The USDA has dropped its US corn production estimates down by a further 7% due to the continual drought in the country.

The forecast has now been reduced to 12 billion bushels, the smallest forecast in five years, with yield falling from 146, to 137 bushels per acre.

Experts believe the dry weather conditions will continue throughout August, adding more problems to the present situation. Currently 55% of the US is in drought.

Rabobank's Dairy Company Ranking 2012

Mon, 23 Jul 2012 00:00:00 +0100

Rabobank's latest ranking of the world's most successful dairy companies has shown how consolidation in the sector has changed the list this year.

Nestle and Danone remain as the two largest dairy companies based on turnover of €18.6 billion and €14 billion respectively in 2011.

Lactalis has moved up a position to become the world's third largest dairy company helped by its acquisition of Parmalat.

Muller entered the list at number 18 after their recent UK acquisition of Robert Wiseman Dairies.

Agricultural Outlook 2012-2021

Wed, 18 Jul 2012 00:00:00 +0100

The latest Agricultural Outlook 2012-2021 from the OECD-FAO revealed the sector is in need of change.

The report details that agricultural production needs to increase by 60% over the next 40 years to meet rising food demands and help constrain food prices. Over the past 10 years global agricultural output increased by 3% per annum led by growth in the BRIC countries (Brazil, Russia, India, and China).

Sustainability will also play a key part in the future with a growing need to improve the sustainable use of available land, water, marine ecosystems, fish stocks, forests and biodiversity.

Investment in the Indian dairy sector

Mon, 16 Jul 2012 00:00:00 +0100

The Indian dairy sector is set to see new investments from both new and established companies.

The Sahara India Pariwar company has an ambitious plan to build the world’s biggest dairy with a capacity of five million tonnes, which would start selling milk and milk products from 2013.

The Gujarat Cooperative Milk Marketing Federation already have 40 plants, but want to invest £345 million in setting up nine new processing units over the next four years. After the expansion, the company’s milk capacity will reach 18 million litres a day with a targeted turnover of £3.4 million by 2018.

Mother Dairy the wholly owned subsidiary of the National Dairy Development Board is set to double its dairy product turnover by the end of the 2013/2014 financial year. They are keen to do this through adding capacities and expanding their current Indian distribution and marketing. By 2013/2014 they forecast the company’s dairy products business will have doubled to £126 billion.

Concerns over ASF in Russia

Fri, 13 Jul 2012 00:00:00 +0100

Recent outbreaks of African Swine Fever (ASF) in Russia are causing concerns for the Russian Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor).

Rosselkhoznadzor is worried about the outbreaks proximity to the Black Earth region where c. 40% of the total pig stock is concentrated. Strict quarantine systems are in place but the migration of wild boars has already led to the spread of ASF into neighbouring regions. The outbreak in the South of Russia caused losses of £294 million in 2011/2012 with official estimates stating 250,000 pigs were culled as a result – although unofficial estimates take this figure to as high as 400,000 pigs.

Slowdown in South Korea pork imports

Wed, 11 Jul 2012 00:00:00 +0100

In recent months South Korea has had a growing demand for pork with a 70% growth in total pork imports in 2011. However in the first four months of 2012, signs indicate that this double digit growth will not able to continue.

This is shown further by the IMF who forecast slower growth for the country in 2012 as a result of a slowing global economy. Year to date sales of pork to South Korea have fallen by 16% from Canada, and 9% from the US from 55,000 tonnes to 50,000 tonnes respectively.

There is still growth in the market, but at a lower rate of <1%. Following the US decline in imports, South Korea and the USDA have started a promotional campaign to encourage the consumption of US frozen pork (which is considered lower quality in Korea).

EU support for meat promotion

Mon, 09 Jul 2012 00:00:00 +0100

The European Union is set to offer financial support to key EU markets in order to help promote meat through a three year scheme to support the promotion of EU agricultural products within and outside the EU.

The scheme covers fresh and processed fruit and vegetables, dairy products, oil, seeds, wine, PGIs, and PDOs. Currently 20 projects have been awarded funding – the three year scheme will cost £57 million with 50% of each project being funded by the EU, with the remainder met by individual organisations and member states. This includes the following:

The Danish Agriculture & Food Council will receive £2.7 million to promote beef, veal and pig meat to China
The Polish Beef Cattle Breeders Association will promote beef within Poland through funding of £663,000 for its Quality Meat Programme
Qualty Meat Scotland will receive £2 million to promote PGI of its red meat labels to eight European countries including: Belgium, Denmark, France, Germany, Italy, Sweden, the Netherlands and the UK

UK faces Milk Price Cuts

Thu, 05 Jul 2012 00:00:00 +0100

Robert Wiseman Dairies is to reduce its milk price by 1.7 ppl from the 1st August following a 2 ppl price cut in June 2012. The reduction has been attributed to a fall in the value of cream over the last year.

Following this announcement Dairy Crest announced a 1.7 ppl price cut and Arla a 2 ppl milk price cut from August.

The White Paper 2012 released by Dairy UK

Wed, 04 Jul 2012 00:00:00 +0100

The White Paper 2012 has been published by Dairy UK.

The report reveals that:

99% of people regularly consume milk and dairy products - up 3% from 2010
96% regularly drink fresh milk - up 2% from 2010
95% regularly eat cheese - up 5% from 2010

The UK dairy market is now estimated to be worth £10.2 billion annually - accounting for 12% of food and drink sales.

Annual capital expenditure by the UK's major dairy companies has increased to £210 million according to the report.

EU Ready for Sow Stall Ban

Mon, 02 Jul 2012 00:00:00 +0100

Eighteen EU member states announced they will be fully compliant with the partial ban on sow stalls by 1st January 2013.

Of the eighteen, Denmark, Germany, the Netherlands, and Belgium have stated they will be compliant with the ban by the end of this year.

When the partial ban is introduced in 2013, Poland expects only 94% of its industry to be free of sow stalls; while 95% of holdings in Austria are expected be compliant, 93% of Finnish and Greek holdings, and 95% of Slovenian holdings.

State of the art meat processing unit to be constructed in Russia

Fri, 29 Jun 2012 00:00:00 +0100

The Russian agricultural company Ariant is constructing a new meat processing facility with the aim for it to be the largest in Europe.

The facility will be located in Southern Russia with a production capacity of 140 tonnes of meat per day in the 15,000 sq metre facility. The unit is expected to cost the company £116 million.

The unit will be built using the most modern and scientific technology, such as implementing a system of processing that excludes any possibility of meat contamination from any source. This is done by fully isolating work areas from outside, with all employees and vehicles entering the complex required to go through a strict disinfection process.

Construction on the plant will start at the start of 2013.

Russian Meat Processing Company invests �86.5 million

Wed, 27 Jun 2012 00:00:00 +0100

The Russian meat processing company Cherkizovo have acquired a number of new agricultural facilities in Central Russia.

The facilities together have a value of £86.5 million and include: a swine nucleus unit; grain storage facilities; and an active land bank.

The swine nucleus unit has capacity for 400 sows, 1,000 nursery pigs and 6,700 finishers. The grain storage facility has a capacity of 150,000 tonnes with an additional grain elevator also acquired with the potential for capacity of 90,000 tonnes, while the land bank is around 30,000 hectares.

The new investments are set to improve the vertical integration of the supply chain according to the company's CEO.

Danone downgrade their 2012 profit forecasts

Mon, 25 Jun 2012 00:00:00 +0100

Since March 2012, the consumption of Danone products in Southern Europe has been falling at a steeper rate than expected. As a result Danone have reduced their profit forecasts for 2012 - although their sales growth target of 5-7% remain in place due to robust sales in emerging markets such as Russia, the Americas, and Asia.

Danone believe the reason behind the fall in consumption is linked to the growing rate of unemployment in Southern Europe - in particular Spain whose unemployment rate is currently at around 24%.

First Milk announce profits

Fri, 22 Jun 2012 00:00:00 +0100

First Milk announced a robust performance in their results to March 2012.

Pre tax profits were up 85% to £13.3 million with £9.6 million of this relating to the profit made on the sale of their shareholding in Wiseman Dairies.

Group turnover saw an increase of 1% to £579 million.

First Milk invested £6.3 million in capital projects during the period and were able to recruit 195 million litres of new milk.

Arla signed agreement with China's Mengniu to boost exports

Wed, 20 Jun 2012 00:00:00 +0100

To strengthen Arla's exports in China the company has signed agreements with Mengniu and the country's leading dairy, food and beverage company COFCO Corporation.

The deal involves Arla investing £187 million and becoming an indirect shareholder of Mengnui Dairy Company with a 6% holding (COFCO is Mengniu's single largest shareholder).

Under the agreement the Arla brand will move into new product categories to attract more consumers in China with an aim to increase turnover five-fold by 2016 as a direct result of the agreement. Currently Arla and Mengniu have a joint venture to sell powdered milk products in China.

Through the agreement a China-Denmark Milk Technology and Corporation Centre will be established. The facility will provide expert knowledge on milk quality, traceability, and controlled milk production. The facility has been given the backing of the Chinese Ministry of Agriculture and Denmark's Ministry of Food, Agriculture and Fisheries.

Global Beef Production to Remain Stable

Mon, 18 Jun 2012 00:00:00 +0100

Global beef production is set to remain stable in 2012 at 67.5 million tonnes according to the USDA, with demand growth in developing countries (such as Asia, Latin America and the Caribbean) offset by production and consumption declines in developed countries (caused by recent high prices), particularly the US and EU.

In 2012, more than half of the global beef market is set to be supplied by production from developing countries – with an opportunity for Brazil to regain their position as the world’s largest beef exporter after the re-authorisation of plants to export to Russia.

Production in India is also set to grow due to an expanding dairy sector which will offer opportunities for increased beef exports, and three new recently constructed export orientated slaughter and processing facilities.

In 2013, global production is set to fall to 64.9 million tonnes.

Muller to purchase Greencore factory

Fri, 15 Jun 2012 00:00:00 +0100

Muller UK has reached an agreement to purchase Greencore's chilled desserts production facility in Shropshire. The deal is worth £4.3 million plus stock.

Ownership of the factory will transfer to Muller from the 1st January 2013, during this time Greencore must transfer production of its remaining desserts to its Evercreech facility - maintaining around £50 million of its dessert business.

The operation in Shropshire manufactures Cadbury chilled desserts which Muller sells under a license from Cadbury. An eight year co-packing agreement between Greencore and Muller for the Cadbury desserts is to be terminated under the new ownership.

Muller intends to further extend its range of Cadbury products at the new facility following its recent purchase of Robert Wiseman Dairies earlier this year.

Developing Markets Key to Dairy Growth

Fri, 15 Jun 2012 00:00:00 +0100

A report from Tetra Pak identified 2.7 billion consumers in developing markets living on £1 - £5 a day who represent 38% of developing markets total liquid dairy products (LPD) volume consumption.

This group (of consumers) are called ‘Deeper in the Pyramid (DIP) and their LDP consumption is set to grow by 11% from 72 billion litres in 2011 to 80 billion litres in 2014.

Demand for milk in developed markets is reaching a plateau, and as a result, DIPs’ in developing countries offer good growth opportunities for global dairy companies. To attract these consumers dairy operations must make LDPs more affordable, use different dairy ingredients to achieve the right price point and look to sell products through traditional retail formats.

Improving the Dairy Sector in Scotland

Wed, 13 Jun 2012 00:00:00 +0100

Five Scottish organisations (including representatives from the Scottish government, Scottish Development International (SDI), Scotland Food & Drink and Dairy UK) met to plot out a strategy to move the dairy sector forward.

The working group has set itself the following aims:

Establish new opportunities both domestically and internationally for Scottish milk and dairy products
Establish how we support these opportunities
To instil confidence and drive ambition throughout the whole Scottish dairy supply chain
Create a strong Scottish brand for milk and dairy products
Understanding where Scottish products can fit into the European and global dairy market

Hong Kong opens up market to UK bone-in-beef

Mon, 11 Jun 2012 00:00:00 +0100

Hong Kong has agreed to now accept UK bone-in-beef imports, 16 years after all British beef exports were banned due to the BSE crisis.

The deal was struck between Defra, the Hong Kong authorities and Eblex, and is part of a staged approach to open up the market.

The UK can now export beef rib cuts and other specified bone-in products, except vertebral column cuts.

Nestle to build dairy in China

Fri, 08 Jun 2012 00:00:00 +0100

Nestle has entered into an agreement to build a 2,000 cow dairy farm in the Inner Mongolia region of North China.

Nestle have signed a memorandum of understanding with Old Barag Banner county government to build the farm by the end of 2013. The agreement details that Nestle will not hold ownership of the farm, but instead will offer advice on its management.

Fonterra set to build Netherlands dairy ingredients plant

Wed, 06 Jun 2012 00:00:00 +0100

Fonterra and Dutch premium cheese producer A-ware Food Group have signed a memorandum of understanding for the construction of a new plant which would produce both cheese and nutritional ingredients.

The new facility is being described as 'two plants in one'. A-ware will produce cheese, while Fonterra will separately produce nutritional ingredients using whey and lactose by products from A-ware's cheese lines.

The proposal is now being reviewed by both companies, with a view for completion by the end of 2012.

DEFRA signed export deal with China

Fri, 01 Jun 2012 00:00:00 +0100

The UK's DEFRA has agreed a £50 million pork export deal with China.

Most of the products exported to China will be products that are unpopular with UK consumers, such as offal, trotters, and ears.

This is the first time a pork trade deal has been signed between the UK and China.

China's consumption of meat is increasing rapidly, with forecasts predicting British pork exports to China could soon be worth £50 million a year.

Rabobank forecast stable pork prices in 2012

Wed, 30 May 2012 00:00:00 +0100

Reduced Asian imports, and the 'grilling season' in the Northern hemisphere are set to bring pork prices back to a stable level in 2012.

Price levels in March were 4% lower than December 2011, and 14% lower than the latest peak in July 2011. The drop in prices has been attributed to the recovery of Chinese hog production, and a drop in Asian imports after the surge in domestic imports caused by diseased pork in the country.

Trade disruptions have also affected global prices in the industry - including the Russian ban on Brazilian pork.

Arla Foods and Milk Link to merge under new proposal

Tue, 22 May 2012 00:00:00 +0100

A proposed merger has been announced between the two dairy co-operatives of Arla Foods amba and Milk Link.

The merger is set to bring together these two key dairy processing businesses creating the largest player in the UK dairy market.

If the merger is approved then the combined business will have considerable strengths including:

Combined turnover of £2 billion
Milk processing capacity of 3.2 billion litres - around 24% of total UK production
15 cheese, fresh milk, long life milk and ingredients production and packing facilities
Established market positions in a range of product sectors
Some of the UK's leading butter, cheese, and milk brands

The merger would mean Milk Link members will become part of Europe's leading dairy co-operative. It is expected to provide a basis for improved returns for Milk Link members and allow them to achieve, in the future, the same level of return as enjoyed by existing Arla owners.

The proposal will be subject to approval by both Milk Link Members and Arla Foods amba Board of Representatives, and relevant regulatory authorities.

Understanding the Cost of Production Milk Pricing

Tue, 22 May 2012 00:00:00 +0100

Information from Promar's Derek Gardner on the principles underpinning the Promar Cost Tracker.

Promar Cost Tracker

FMD Threat in Russia and Surrounding Countries

Mon, 21 May 2012 00:00:00 +0100

Countries of the Commonwealth of Independent States (CIS) are witnessing a spread of foot-and-mouth disease (FMD), particularly in Russia, Kazakhstan and Kyrgyzstan.

There have been two outbreaks of FMD in Russia this year, with warnings that if neighbouring states do not correct the situation epidemics could become overwhelming in the country and spread to the rest of Europe. Russia's main threat is importing the virus from Kazakhstan, as such a 'buffer zone' has been created on the border of the two countries.

In Kazakhstan, nine cases of FMD have already been registered in 2012 (more than all recorded cases in 2011), around 8,000 head of cattle have been culled as a result. In Kyrgyzstan the situation is worse in the Issyk-Kul region where the FMD outbreak is being seen as an epidemic with no vaccines available in the country. Around 30-40% of cattle in some regions of Kyrgyzstan are suffering from FMD.

The Russian Ministry of Agriculture is set to allocate £535 million for the purchase of vaccines against FMD and disinfectants against African swine fever in 2012.

Herd Managers of the future

Fri, 18 May 2012 00:00:00 +0100

Promar In The News 18 May.pdf

Global meat production set to increase 2% in 2012

Wed, 16 May 2012 00:00:00 +0100

The FAO expect global meat production in 2012 to reach 302 million tonnes, a 2% increase from 2011's production output.

Production is set to be helped by increased output in poultry and pigmeat in developing countries such as Brazil and India.

FAO believe though that countries will struggle to find markets for their increased outputs however, as increased production in developing countries will slow down trade expansion.

Development of a Code of Practice in the Dairy Industry

Mon, 14 May 2012 00:00:00 +0100

As a result of the recent decisions by four major UK milk processors to cut their milk price, UK and Scottish governments have agreed to work together with the dairy industry to develop a code of practice aimed to protect the dairy sector.

Farm Minister Jim Paice said the processors' decision, ‘underlined the need for the industry to agree on a robust voluntary code of practice which would improve contractual conditions and therefore the balance of power.'

Grocery Adjudicator Established

Fri, 11 May 2012 00:00:00 +0100

It was confirmed in the Queen's Speech that a Groceries Code Adjudicator (GCA) will be established to ensure the fair treatment of supermarket suppliers.

The GCA is set to, "...address the market dominance of the large retailers and ensure suppliers are treated fairly and lawfully. The GCA would address these competition issues by arbitrating disputes between retailers and suppliers, investigating anonymous complaints, and taking sanctions against retailers who break the rules."

The Bill establishing the GCA will oversee the Groceries Supply Chain Code of Practice (GSCOP) which came into force in the UK in 2010.

Weetabix bought by China's Bright Food

Thu, 10 May 2012 00:00:00 +0100

The Chinese company Bright Group has purchased a 60% stake in Weetabix with a deal that values the company at £1.2 billion.

The UK based company was family owned until 2004 when it was purchased by Lion Capital. Weetabix accounts for 7% of UK cereal sales with annual sales of £101 million.

This deal is the largest done by a Chinese company in the food and drink sector.

US containing BSE discovery

Tue, 08 May 2012 00:00:00 +0100

The US government believes there is no reason why countries should ban its beef imports following the discovery of its first BSE case in six years.

The US has in place a system that the World Organisation for Animal Health (OIE) has determined ensures that beef and beef products are safe for human consumption and as a result this detection of BSE should not affect US trade. Officials from OIE note than precautions taken by the US are consistent with OIE standards. The detection demonstrates that the national surveillance system in the country is efficient.

Of all countries which the US exports beef to only two have suspended US beef imports following the announcement - South Korea and Indonesia.

China has the largest food and grocery retail market

Thu, 03 May 2012 00:00:00 +0100

The latest data from IGD shows that China has overtaken the US as the world's largest grocery retail market. In 2011 the market was worth £607 billion in China, over £30 billion more than the US whose market was worth £572 billion.

It is forecasted that by 2015 the Chinese grocery market is set to reach a value of £918 billion, with the US behind at £675 billion.

All BRIC Nations (Brazil, Russia, India and China) will also rank in the top 5 grocery markets by 2015.

China's poultry sector suffers from a H5N1 bird flu virus outbreak

Tue, 01 May 2012 00:00:00 +0100

The Northwestern Ningxia Hui region of China has announced an outbreak of the H5N1 bird flu virus in poultry.

The outbreak was discovered after c. 23,000 chickens at several farms in the region showed signs of the avian influenza. Since the virus has been confirmed, 95,000 chickens have been culled.

China is particularly vulnerable to bird flu outbreaks as it has the largest poultry population in the world. A quarantine team has now been set up to advise poultry farmers on how to prevent another epidemic.

Fonterra to increase Asian investments

Fri, 27 Apr 2012 00:00:00 +0100

Fonterra is set to invest £51 million to expand its dairy operations in China by building two new large scale dairy farms in the Hebei province of China - taking the total to five. The five farms in the province will have a combined dairy herd of 15,000 milking cows producing c. 150 million litres of milk a year.

Fonterra's ultimate goal is to develop farming hubs across the country with an aim to produce 1 billion litres of milk every year by 2020. Consumption of milk in China is forecast to double in the same period with the country consuming 70 billion litres of milk every year.

Investment is also set to occur in Indonesia through spend in a blending and packing plant in the country due to its increased demand for nutritional products. Currently Fonterra packs and blends its consumer brands for the Indonesian market in New Zealand or in co-packers in Asia. Over the next eight years demand for dairy in Indonesia is forecast to grow by around 50%.

Fonterra forecast that dairy demand is set to increase by 100 billion litres over the next eight years with 60% of this growth coming from Asian markets such as China, India and Indonesia.

Danone gain market share in Brazil

Wed, 25 Apr 2012 00:00:00 +0100

Danone has overtaken Nestlé to become the regional leader of yoghurt sales in the Northeast region of Brazil with a market share of 32%.

Daone’s strategy was focused upon diversifying their current product offerings and targeting lower income groups. Over the last three years Danone has launched seven new yoghurts in the region with a price of less than 34 pence per unit.

Previously Danone had transported its products from another part of Brazil causing an increase in prices of 10% and a reduced shelf life on products of up to one week. As a result to save on logistic costs Danone opened a production plant in the region.

The company also hired more than 250 sales people to sell to the smaller neighbourhood shops which account for c. 60% of sales in the region.

US farmers receive their first MILC payments

Mon, 23 Apr 2012 00:00:00 +0100

For the first time since April 2010 US dairy farmers will receive 0.56 pence per litre of processed milk produced in February under the Milk Income Loss Contract programme (MILC).

MILC payments are triggered when the liquid milk price in New England falls below a certain level (c. 23.1 ppl). Although milk prices have remained around this level, the increase in feed prices has caused the payments to start due to the feed ration component.

The MILC estimate payments for the next few months will be: 0.45 ppl for March production, 0.58 ppl for April production and 0.63 ppl for May production.

Dairy prices have fallen 3-8% since 2012 according to Rabobank

Thu, 19 Apr 2012 00:00:00 +0100

A recent report by Rabobank suggests, stronger than expected global dairy supply and patchy demand is causing international dairy prices to fall.

Since the start of 2012, Rabobank believes international dairy prices have fallen between 3 - 8% across all categories, and they forecast there may be further pressure on prices during the second half of 2012.

The negative price forecast though could be overturned if widespread drought conditions become severe enough to disrupt supply, or if macroeconomic conditions exceed current expectations.

Growth at Arla is driven by emerging markets

Wed, 18 Apr 2012 00:00:00 +0100

Arla expect their global dairy product demand to increase by 2.4% each year over the next five years driven by growth from China, Russia, and the Middle East and North Africa.

It is felt that discount dairy retailers were their key competition with both European and US consumers becoming more price sensitive in 2011. As such, it is key for the company to start reducing their production costs to compete with these retailers.

Glanbia increase turnover by 26%

Mon, 16 Apr 2012 00:00:00 +0100

The Irish dairy company Glanbia reached a turnover of £2.25 billion in 2011, an increase of 26% from the previous year.

The company's success has been linked to a boom in their US cheddar export sales, and growing demand from markets such as: China, Russia, and Southeast Asia.

Glanbia believe dairy prices will fall within the first half of 2012, compared to 2011 due to increased global milk and dairy product availability.

China's 2012 Growth Target Downgraded

Thu, 12 Apr 2012 00:00:00 +0100

The Chinese government have downgraded the country's growth target for 2012 from 8% to 7.5%.

The lower target is due to the expectation that exports will reduce due in part to the European debt crisis and a continuing fragile US recovery.

China is one of the largest purchasers of dairy products in the world. As a result a downturn in China's economy is set to have an impact on import demand creating further pressures on global markets.

A �67.4 million investment in the Kazakhstan poultry sector

Tue, 10 Apr 2012 00:00:00 +0100

The Israeli company MAD is set to spend £67.4 million building five large poultry farms in Northern Kazakhstan.

The project will focus upon the construction of broiler breeders' lines for the production of premixes which in turn will allow the country to significantly reduce their volume of poultry imports.

The project is set to be implemented in three stages over four years. The total amount of poultry meat produced by these facilities has yet to be confirmed but experts estimate it could range from anywhere between 50,000 to 70,000 tonnes per annum.

BOCM Pauls taken over by ForFarmers

Wed, 04 Apr 2012 00:00:00 +0100

The UK Based food group BOCM Pauls has been taken over by ForFarmers for £70.5 million making it Europe's largest feed producer.

The transaction has been signed by both parties but still must be approved by the general meeting of shareholders of ForFarmers.

BOCM Pauls operates 11 compound feed mills and has a 20% market share leader position in the production and sale of compound feed in the UK, producing over 1.9 million tonnes of feed each year.

Morrisons drops GM-free poultry policy

Mon, 02 Apr 2012 00:00:00 +0100

Morrisons have decided to strengthen their focus on sustainability by dropping their GM-free feed requirement for poultry meat and eggs. The move comes after supermarkets banned all GM in poultry feed in 2001, even though it was allowed in feed for other livestock species.

The main reason behind this decision is that feed is becoming a large expenditure fixture for livestock producers. The previous ban has been costly and difficult for farmers to adhere to.

The NFU chief poultry adviser has welcomed the decision as it will help to make feed more affordable while at the same time making poultry production more sustainable.

Russia plans a 20% dairy growth by 2020

Thu, 29 Mar 2012 00:00:00 +0100

The Russian Agriculture Minister has set a target for Russian domestic dairy production to increase by 20% by 2020.

On milk output alone the minister, Yelena Skrynnik, expects Russian farms to produce 38 million tonnes of milk in 2012 - a 20% increase from the 32 million produced last year.

In 2012 the Russian government is set to spend £107 million to help support the dairy farmers in the country.

Fonterra Auction Prices Fall in March

Mon, 26 Mar 2012 00:00:00 +0100

Both WMP and SMP prices dropped again in the latest Fonterra globalDairyTrade online trading event - with Chinese demand for WMP falling.

A large amount of milk in key producing regions is continuing to exert a downward pressure on global prices.

The Future of New Zealand Lamb Exports

Thu, 22 Mar 2012 00:00:00 +0100

New Zealand exports and supplies meat products globally to around 90 countries. With the country being the world's second largest producer of sheep, exports of lamb are the most important meat export.

The majority of lamb exports from New Zealand are exported to the EU - 49% in volume and 58% in value. Within the EU, the UK is the largest single market for lamb exports accounting for 21% of shipments.

Despite Europe being the most significant region for lamb exports, over the past 10 years the percentage has been decreasing. Emerging markets such as Asia have increased their share of New Zealand lamb exports over the same period. In 2001/02 12% of total New Zealand lamb exports went to North Asia, whereas in 2010/11 this figure had increased to 20% of total exports. Within Asia, China is the most important market accounting for 70% of lamb shipments.

The Middle East is also an important emerging market for New Zealand lamb with a high consumption rate of lamb in the country. However the Middle East is a price sensitive market with high global prices meaning shipments to the region decreased by 29% over the last year.

Fonterra makes new dairy investment and reveal their 'key mega trends'

Mon, 19 Mar 2012 00:00:00 +0100

A combination of higher milk production and increased demand from the Middle East, Southeast Asia and China has resulted in Fonterra investing in a second £155 million milk drier.

Building work of their first milk drier at the plant in Darfield, Canterbury began in 2010, with milk processing set to take place in August this year. Construction of the second drier is due to take place within the next few months with completion by 2013. The second drier will increase production capacity at the site by an additional 4.4 million litres a day - on top of the 2.2 million for the first drier.

The milk powder produced at the plant is set to be exported to the Middle East, South East Asia and China.

At a recent conference in New Zealand, Fonterra CEO Theo Spierings illustrated 6 'key mega trends' that will affect its future strategy:

1. The rise of Emerging Markets (BRIC)
2. Changing demographics - a new middle class, urbanisation, ageing populations
3. Focus on nutrition and safety
4. Volatile commodity price rises
5. Sustainability and responsibility
6. New technology and innovation

Promar to sponsor the National Herdsmans Conference

Fri, 16 Mar 2012 00:00:00 +0100

After the success of last year, we are again sponsoring the National Herdsmans Conference.

It is a great mix of speakers and a good chance to meet a lot of people in a similar situation as a herdsperson or farm worker. If you are currently a herdsperson or interested in the career opportunities it is a must to attend.

For further details see: www.nationalherdsmansconference.com

Increase in world wheat prices despite record 2012 crop

Wed, 14 Mar 2012 00:00:00 +0100

FAO's Cereal Price Index increased 2% to 227 points in February with international wheat prices increasing more than other cereal crops.

However FAO have forecast their second highest recorded, world wheat crop forecast for 2012 in their Crop Prospects and Food Situation Report this month. The production forecast of 690 million tonnes could help to bring down the current high wheat prices.

Major investments in US beef processor's facilities

Mon, 12 Mar 2012 00:00:00 +0100

Two major US processors, Tyson and Cargill have invested in multi-million dollar projects to upgrade their existing beef facilities.

Tyson Fresh Meats is updating its largest beef plant in Dakota with a state of the art slaughter and process technology due to be completed by 2013.

Cargill invested US $6.1 million (£3.8 million) for a new boiler system at their processing unit in Texas which will improve energy efficiency and competitiveness at the plant.

EU Milk Deliveries Up

Thu, 08 Mar 2012 00:00:00 +0100

Cow milk deliveries in the EU increased by 2% in 2011 due to strong production in France, Germany, Ireland, Poland, the UK, and Austria.

In 2012, milk deliveries are forecast to increase further by 1% and in 2013 by 0.6% according to the European Commission in their Short Term Outlook Report.

9 billion litres of extra milk to enter the market after quotas lifted

Mon, 05 Mar 2012 00:00:00 +0100

A report from Rabobank forecasts that when dairy quotas in Europe are fully lifted in 2015 an additional nine billion litres of milk will be produced each year in Europe.

It is estimated that 3.6 billion litres of the additional milk will be absorbed by greater demand from the EU. The remainder of the extra production is set to reach export destinations such as the Middle East and Russia.

Rabobank forecast that global milk demand will increase by a compound annual growth rate of 2.4% over the next five years.

Cutting the red tape for farmers

Wed, 29 Feb 2012 00:00:00 +0100

New measures aiming to reduce unnecessary burdens on farmers to improve business competitiveness have been published. The government’s full response to Farming Regulation Task Force aims to take action against 86% of original recommendations made in May 2011.

The key commitments include:

• A pilot to increase data sharing between government agencies - producing less wasted time on 'form filling'
• Closer industry involvement in looking for non-regulatory approaches wherever possible
• Simplifying messages to farmers in relation to environmental protection
• Offering a potential way forward for the removal of the six day livestock standing rule in a way which still maintains protection against animal disease in an affordable and enforceable way
• Fewer inspections for those farmers already meeting high environmental and animal welfare standards
• More effective UK lobbying on key EU farming laws
• Scheduling meetings between the Department of Transport and the NFU on changing the rules on restricting tractor and trailer weights
• Making it easier for farmers to access Government services online
• DEFRA workshops looking at how farm paperwork can be reduced

Launching the government’s response Farming Minister Jim Paice said, "This government wants to help create the right conditions for businesses to thrive and remove unnecessary burdens which hold back UK economic growth. This is a new approach to working with the farming industry, and shows Defra is committed to freeing up businesses to help drive economic recovery."

Double digit growth at Arla

Mon, 27 Feb 2012 00:00:00 +0100

2011 saw revenue and earnings at Arla Foods produce double digit growth, despite 80% of the company's business being based in Europe where the recent debt crisis has created cautious customers. Revenue increased by 12% in 2011 to reach £6.2 billion, with profit of £149.7 million. Half of Arla's revenue growth was through organic growth driven by their three global brands: Arla, Lurpak, and Castello.

Arla's UK market situation was affected by an increasing customer focus on value for money creating greater price competition on staple products such as fresh milk. Despite this Arla increased its net revenue in the UK by 5% to £1.4 billion predominantly due to higher sales volumes.

Outside of Europe Arla have been successful in MENA (Middle East and North Africa) and Russia where their market position increased by 27% and 33% respectively.

In the future part of Arla's Group strategy focuses on reaching an annual revenue of £8.5 billion by 2015.

Fonterra sees strong demand from Asian markets

Thu, 23 Feb 2012 00:00:00 +0100

Fonterra's organic ingredient business has been driven by strong demand from Asian markets - although no sale statistics have yet been released.

Fonterra does well in these markets due to the market's concern over food safety. There is an increasing demand for clean, natural products and as a result organic foods are seeing a boom in Asian markets, particularly China.

Other Asian countries to see huge demand for Fonterra’s organic dairy products are: China, Southeast Asia, Korea, Malaysia, Hong Kong, Taiwan, and Singapore.

Kraft generate �257 million sales

Wed, 22 Feb 2012 00:00:00 +0100

Latest financial results from the US firm Kraft shows the company generated sales of £275 million after acquiring the UK chocolate company Cadbury last year.

Globally, net revenues at the company increased by 10.5% to £35 billion with a strong growth in emerging markets where revenue increased 16%.

Dairy Investment continues at Milk Link

Tue, 21 Feb 2012 00:00:00 +0100

Two lots of investment have been undertaken at Milk Link.

The company's four year programme, 'Project Vision' has entered into its final stage at their Oswestry production facility.

The last stage of the project, a £2 million investment has seen the installation of an additional advanced high speed, fully automated, cutting and flow wrapping line. The compact unit has been developed to maximise the performance of smaller run lengths.

Project Vision has been designed to transform the facility into one of the UK's foremost cheese cutting and packing plants.

The second lot of investment from Milk Link comes as a £400,000 continuing investment at their Llandyrnog Creamery.

The money will pay for a whey de-salination plant to be installed, making the creamery the first Milk Link site to use this new technology to filter salted whey, improving profitability at the site.

Administrators called into DairyStix maker

Wed, 15 Feb 2012 00:00:00 +0100

Administrators have been called in to Quadra Foods, the UK manufacturers of DairyStix milk pouches. The company supplies 121 million single serve milk pouches to airlines each year.

Quadra is the processing arm of the Farmright Group which manages and supplies 200 million litres of milk to a range of dairy companies in the UK including Dairy Crest. In a statement earlier this week Dairy Crest anticipated that the collapse of the company would increase their bad debt provision by up to £4 million.

No official statement has yet been issued, and talks are still ongoing as to whether trading at Quadra can be salvaged.

Competition for milk supply increases

Mon, 13 Feb 2012 00:00:00 +0100

Arla are searching for another 500 producers to join their existing 1,400 strong Arla Foods Partnership following the development of their new £150 million fresh milk dairy in Aylesbury

The general consensus from other major processors is that they want more milk. Over the last few weeks Medina Dairy and Meadow Foods have even been using paid for advertisements. Medina is looking to add to its existing 184 producers, while Meadow Foods is looking to increase volume by another 150 million litres from their existing 450 million litres.

Many UK producers are expanding and increasing their individual production levels, however it is clear processors are not relying on this as their sole source of extra volume.

Margins increase in the dairy sector

Thu, 09 Feb 2012 00:00:00 +0100

Despite rising commodity costs and a difficult economic environment, a recent report from Rabobank shows leading FMCG companies, active in the dairy sector have been successful in increasing their margins over the past 5 years.

FMCGs have, (according to the report), boosted their return on capital employed, by 200% since 2006. Dairy giants such as Nestle, Danone and Emmi have managed to increase their margins significantly. Their success was partly due to creating a high market share for themselves in the sector, successful roll outs of lower cost product lines, and occasionally trading up to specific higher margin products.

In regards to the future of the dairy industry, Rabobank forecast it will be characterised by solid market growth from developing markets such as China, India, and Southeast Asia. Together these areas are set to account for 80% of total volume growth in the dairy sector, with a high level of dependence upon outside sources of supply.

BASF to pull out of GM in Europe

Tue, 07 Feb 2012 00:00:00 +0100

BASF are to pull out of GM in Europe and concentrate activities in their main markets of North and South America. Development of all products solely targeted at the European market have been stopped.

Reasons behind the move are due to Europe having a worsening acceptance of GM.

UK must adapt to Climate Change

Mon, 30 Jan 2012 00:00:00 +0100

A new report from Defra 'The Climate Change Risk Assessment' has been published.

The report details the main climate change challenges the UK is facing. The key risks mentioned in the report include: hotter summers;increased pressure on the country's water resources; increased flooding risks; and increased risk of droughts.

The report also details some opportunities climate change may bring for the UK such as: opportunities to improve sustainable food production.

The evidence from the report will be used to develop a National Adaptation Programme setting out timescales for Government to take actions against climate change.

German Yoghurt Maker M�ller to Acquire Robert Wiseman Dairies

Mon, 16 Jan 2012 00:00:00 +0100

A cash offer of £279.5 million from Müller was accepted by Wiseman Dairies on Monday 16th January 2012. Müller will pay 390p per share. The change in ownership will not affect current farmer's milk prices and Wiseman will continue to offer a competitive milk price in the future.

Speaking on behalf of the company Robert Wiseman, stated: "The combination of Müller and Wiseman makes strong commercial and and strategic sense, creating a leading integrated dairy business in the UK with complementary positions in the yoghurt and potted desserts market and the fresh milk market."

Mr Wiseman will continue to serve on the new board, under Müller's Heiner Kamps, Müller's chief executive.

If Promar farmers have concerns about this development then please contact us so we can discuss the issue and impacts further.

Milk Link Raise Member Prices

Tue, 01 Nov 2011 00:00:00 +0100

The UK co-op Milk Link are raising their member's milk price by 0.5 pence from today (1st November). Increasing the liquid milk price to 28.5 ppl for both manufacturing and liquid schedules.

The increase applies to non-member 'direct' dairy farmer suppliers, with the exception of those who are linked to a basket of prices schedule.

The increase does not however apply to organic producers.

Promar International look for staff and associates to help support future growth

Fri, 28 Oct 2011 00:00:00 +0100

Promar International is pleased to announce the business's recent accreditation of Investors In People. Over the last two years the management team have worked hard to improve communication within the business and help continue to recruit, train and develop some of the best staff in U.K. and global agriculture.

The business is pleased to announce that to help with the future double digit growth of the business that more staff are required. In addition to two new farm consultants needed in the Cumbria and Gloucsetershire areas, a new Farm Business Secretary is needed in the Staffordshire/Cheshire region.

The business has alo recognised the importance that the environment is having on farming and food chain businesses and is wishing to expand its specialist environmental team. In addition to needing an employed senior consultant , with specialist knowledge of nutrient planning, the business is also keen to recruit associate staff who can help fulfil existing and new environmental work.

For further details please go to the job section of this website

October price increase for Arla

Mon, 03 Oct 2011 00:00:00 +0100

As from the 1st October Arla increased their producer milk price by 1.85ppl. This increase is achieved through an increase of 0.85ppl to the existing base price, with 0.5ppl added to the existing 1.3ppl bonus for top band cell counts of below 250,000, and a further 0.5ppl for those who achieve bactoscan readings of less than 30,000. Those supplying ASDA however will see their DairyLink premium cut by 0.25ppl to 1ppl, taking their net price increase down to 1.6ppl.

These increases will result in:

flagship standard litre price of 30.33ppl for SDDG suppliers
ASDA supplier price of 29.23ppl
non aligned producer prices of 28.73ppl
Arla standard price of 28.48ppl

A further 0.15ppl will be added to those achieving the 4% butterfat standard base in December 2011.

Milk Link announce �20 million investment

Fri, 30 Sep 2011 00:00:00 +0100

Milk Link announced they are investing £20 million to transform their Lockerbie Creamery - making the dairy processing site the largest in Scotland and one of the most advanced in the UK. The major redevelopment is due to start later this year and will be completed by autumn 2012. The latest processing technology will be utilised to increase annual production by 12,000 tonnes (the equivalent of 120 million litres of milk), to over 37,000 tonnes of cheese per annum. As a result of the capacity increase Milk Link are seeking additional Scottish and North England dairy farmers to add to the existing 50 Milk Link members in Scotland who already supply Lockrebie.

The investment is one of the largest seen in the UK dairy sector over the last 20 years. It follows on from Milk Link's major investments at Taw Valley where a new whey processing plant and a sodt cheese creamery were built at their Cornish Country Larder's Trevarrian site, both of which will be fully operational this autumn.

Arla given the go ahead for the worlds largest zero carbon dairy

Fri, 30 Sep 2011 00:00:00 +0100

The Aylesbury Vale District Council's planning authority has approved plans by Arla to build the worlds largest zero carbon dairy. The dairy, when complete, will be able to process and package up to 1.3 billion litres of milk per annum. It is costing £150 million to build, with Arla committingto 100% privately fund the project. The aim is to have the dairy fully functional towards the end of 2012. The final decision now rests with the Secretary of State.

Milk price to be increased at First Milk

Wed, 21 Sep 2011 00:00:00 +0100

First Milk will be increasing the price paid to their liquid pool by 1.5ppl. A 1ppl increase will be received by producers in the cheese and balancing pools. Both price increases will be introduced from the 1^st October 2011. The price increases reflect First Milk’s improved market returns.

Dairy Crest increase milk price

Tue, 06 Sep 2011 00:00:00 +0100

Following the announcement by Wiseman’s last month to increase their milk prices, Dairy Crest have quickly followed suit.From 1st October producers on their liquid contracts can receive a price increase of 1.85ppl bringing the price of a standard litre to 28.6 ppl.

The increase involves a 1.25ppl rise on the standard milk price.Extra price increases are achieved via producers achieving new quality standards.Those within a bactoscan range of 30 or less will gain an extra 0.3ppl, and those with a somatic cell count of 200 or less can gain a further 0.3ppl producing a total of 1.85ppl.

First Milk and New Zealand Fonterra�s strategic joint venture

Tue, 06 Sep 2011 00:00:00 +0100

Fonterra are sourcing ingredients from Europe for the first time through a strategic joint venture with the UK’s First Milk. The venture will involve the UK co-op supplying the New Zealand co-op with food grade quality whey.

There is a growing demand for nutrition ingredient products from consumers in Europe. Fonterra established the joint venture in order to increase local sourcing for these new customers. First Milk’s whey will be used in nutrition ingredients such as: PowerProtein and ElevateProtein.

Arla brings a taste of India to the UK

Tue, 06 Sep 2011 00:00:00 +0100

Following 3 years of research and development Arla have created the Savera Indian dairy product range for the UK market. The range compromises of five products: paneer, a soft cheese; dahi, a yoghurt used in curries; lassi, a sweet yoghurt drink; and raita, a dairy sauce traditionally used as a dip.

The range was deigned to fill a gap in the UK market for authentic Indian dairy products. It allows Indian families to pick up traditional ingredients during their regular shopping trips to the major retailers rather than having to visit specialist Indian food shops. Some of the product range has already secured listings in both Tesco and Asda, and will be on sale in October.

Autumn Grass Decisions

Mon, 05 Sep 2011 00:00:00 +0100

Ensuring good quality grass is one of the best ways to reduce reliance on purchased feeds and now is the time to make some important decisions.

Reseeding costs are on the increase with diesel, seed and fertiliser prices all rising. Although many dairy farmers may be considering delaying reseeds, Promar Regional Consultant Danni Cooke still believes there is a strong economic case for a structured reseeding programme.

“While reseeding costs around £500/ha the benefits in increased productivity will far outweigh this,” Danni explains. “As swards age and the proportion of less productive species increases, so productivity declines. This does two things. It reduces the yield achievable and also increases the cost of each kilo of dry matter grown.”

The table looks at the output and the cost of dry matter production for a medium term cutting ley over a seven year period. The cost of production includes annual growing costs and the write off of initial reseeding costs.

“In the first year there is plenty of high ME grass, but as the sward ages, the output in terms of dry matter production, and the quality as measured as average ME of the grass both drop off, leading to an increase in the cost per kgDM grown.

“To this cost must be added the cost of additional feed required to make up the energy shortfall and allow a similar milk output per hectare. By year six the cost per kgDM has increased by 50% and an additional £1000 of concentrate per hectare is required to replace the reduced energy available from the grass. The breakeven point is around four years.

“The decline in output isn’t something that is usually measured but it is something that happens naturally in all swards. Reseeding is one way to make sure that sward productivity is maintained, and purchased feed costs controlled, so I would advise against putting off the reseeding of swards that are showing their age,” Danni concludes.

Once the decision to reseed has been taken it is vital to do everything to make sure the new ley is well established. Ensuring good plant establishment is crucial if reseeding is going to be cost effective, observes NWF Agriculture’s Leigh Berrisford. “It is important to ensure the seed goes into a well-prepared seed bed containing the correct nutrients for root development,” Mr Berrisford points out.

Phosphate and potash are particularly important for establishment of both grasses and clovers and are affected by previous crop management. Unless routine fertiliser practices have maintained soil levels, the status of both P and K will have been depleted, potentially reducing the success of the reseed.

“Fields used primarily for silage often have low P and K status. New leys ideally require a soil index of 2 for both phosphate and potash. A soil analysis can help prevent problems with nutrient shortages and also save money on unnecessary applications.

“For example, if a field is at soil index 2 it will require 50kg/ha of both phosphate and potash in the seedbed. A field at soil index 1, however, requires 80kg of each nutrient. Without an updated analysis, how do you know what to apply?

“If the field is at index 1 and you only apply 50kg then initial germination will be reduced and plants will grow less vigorously, being more prone to moisture shortages due to inadequate root development. Conversely if the field was at index 2 and 60kg per nutrient were applied, this would equate to 10kg/ha of excess P and K which is a cost that could be avoided.”

Mr Berrisford also recommends soil analysis as the best way to check on the pH status of the soil. Reseeds are particularly susceptible to pH and lime should be applied if the soil pH is less than 6.4. A failure to correct pH will result in poor nutrient uptake by the plant and reduced bacterial and earthworm activity in the soil.

As well as ensuring the correct nutrient status, Mr Berrisford stresses the importance of seed bed preparation. “Start by looking at soil structure as poor structure will lead to waterlogging and reduced growth. Compaction, or soil pans, will reduce root penetration. Pans from machinery damage can be as far as 275mm below the surface. If pans are found then sub-soil to 50mm below the pan.

“The key to optimum germination is ensuring good soil to seed contact so prepare a fine tilth 5-8cm deep and then roll before seeding to ensure the surface is firm. Get the seed into the seedbed before too much moisture is lost but avoid sowing when too wet. After sowing use flat or Cambridge rollers to consolidate rather than compacting the seedbed to help preserve moisture,” he recommends.

If fields are not being reseeded it is important to manage them well this autumn to ensure good early season growth.

“If you want to maximise the availability of early season grass you need to leave fields in the right condition this autumn,” explains Promar Regional Consultant Paul Henderson. “Ideally fields need 3-4” of vegetative growth with the minimum of stems and seed heads. Leafy growth is not affected by winter kill but stems will be killed off, becoming unpalatable dead material in the spring sward.”

He advises grazing fields hard or topping them to remove all seed heads before they are shut up with a cover of leafy growth of 1750-1850kg/ha (3-4”). Fields should be closed up in the order they will be opened up again in the spring so that the early grazed fields have the most grass on them.

He also advises caution when considering tack sheep. “Grass will start growing above 5°C and it is important that this early growth is there for the cows, and this means be prepared to move tack sheep off early. If sheep are grazing cow fields then they should be gone by no later than 1st February, sooner on farms where turn out may be early.”

While sheep may tidy up old stemmy swards, he stresses that they much prefer eating new season growth, and the cost of this will far outweigh the income received.

“Most farmers will receive around 50p per sheep per week and graze them at around five ewes per hectare giving a monthly income of just over £10 per hectare. Early season grass will grow at around 45kgDM per hectare per day, equivalent to 1.4 tonnes per month. With grass worth £50/t DM, this monthly growth is valued at £70/ha, considerably in excess of the income from sheep grazing. Keeping sheep too long costs you money and will restrict early season grazing for cows, Mr Henderson concludes.

Year	Yield (t DM/Year)	ME (MJ/kg)	Cost of Production p/kg DM	Lost MJ ('1000/ha)	Concentrates to replace at £220/t
1	13.0	12.0	10.0
2	12.5	11.8	10.4	6	£110
3	11.5	11.6	11.3	18	£330
4	10.5	11.4	12.4	30	£550
5	9.5	11.2	13.7	42	£770
6	8.5	11.0	15.3	54	£1,000
7	7.0	10.8	18.0	72	£1,325

Training The Dairy Managers Of The Future

Mon, 05 Sep 2011 00:00:00 +0100

A new industry initiative is committed to increasing the supply of the high calibre dairy managers required to run tomorrow’s increasingly complex dairy farm businesses.

Dairy herds are getting larger, farming systems are getting more complex, market pressures are increasing, the demands of assurance and welfare schemes more rigorous and the size of farm workforces is on the up. Each of these changes on its own would represent a challenge for the people running UK dairy herds. Together they represent a quantum change in the skill set required to deliver high performance levels.

The Dairy Management Academy is a joint initiative between Promar International, Genus Breeding and LKL Services which has been established to develop a constant stream of high calibre managers for the UKs dairy farms.

“The requirements of dairy managers is changing and for the first time there is a defined structure to allow them to develop the skill set required,” explains Promar Regional Consultant Danni Cooke who is one of the drivers of the initiative.

“The dairy manager of the future must possess a much broader spectrum of management skills. They must know how to manage a business and large teams of staff as well as managing cows.

“They must be in tune with the needs of their customer, the processors, and ensure the business is geared to producing what the customer wants. They must also understand the concerns and influence of the public and be able to interact with consumers to improve the perception of British dairying.”

The Dairy Management Academy works with dairy farmers to recruit, motivate and train managers. The recruitment process is rigorous and is focussed on matching the right candidate with the appropriate long term position. Currently there are 14 participants managing a total of 5,000 cows from Scotland to Cornwall, working on a range of farms from large intensive herds to New Zealand based grazing systems.

The major part of the Academy is a major programme of training which comprises eight two-day courses scheduled over two years. The training is split roughly 50:50 between on-farm and classroom sessions and each delegate will also spend a week on an overseas study tour.

“The courses are pretty intensive and are not designed to allow delegates to just turn up and tick the box. We expect them to work,” Danni continues. “The emphasis is on the higher level skills required to manage modern, progressive units rather than basic stockmanship. Our ideal candidate will have several years of on farm experience backed by some form of formal qualification.

The courses cover a broad range of subjects including technical areas such as nutrition, herd health, forage production and youngstock rearing. Where necessary, delegates also attend courses on foot trimming and artificial insemination.

“The technical skills are important but a great deal of the work of the Academy, and the area where delegates are seeing most benefit is in the wider management skills. For example a module looks at financial management, benchmarking and record keeping. We also cover statutory records and regulatory schemes as managers will need to understand the broad environment they work within. Plans are in place to add carbon footprint assessments into the course.

“Staff management is another huge area. Teams are becoming larger and more specialised and so managers need the skills to optimise team performance. So we cover communication and professional relationships, time management motivation and areas such as appraisals. This area is probably the biggest eye opener for those currently involved.”

“The courses also explain the benefits of Standard Operating Procedures and how to implement them on farm.”

By increasing the broad skill base of herd managers, Danni believes the Dairy Management Academy tackles one of the major issues facing the dairy industry in the UK. She believes that upskilling dairy farm managers will help increase the professionalism across the supply chain and open up opportunities for closer co-operation between, for example, milk producers and processors.

“If the people responsible for achieving profitable and sustainable milk production are more competent in working with their supply chain partners there could be considerable synergies and benefits.

“And the industry is certainly buying into the principles. The next intake into the Academy is not until December but we already have a waiting list,” she concludes.

For more information on the Dairy Management Academy, contact Danni Cooke on 07976-334764 or email Danni.cooke@genusplc.com

Plan To Minimise Exposure To Volatility

Mon, 05 Sep 2011 00:00:00 +0100

Promar Regional Consultant Danni Cooke considers some solutions for dairy farmers in the light of volatile global markets.

Market volatility is a fact of life and global forces are having an increasing effect on prices in the UK. Supply and demand is behind the increases we are all familiar with – 20% increases in fertiliser, 34% increase in red diesel prices and higher, more volatile feed prices. We are also at the mercy of fluctuating exchange rates.

The one thing which is certainly true is that there is a limit to what individual dairy farmers can do to influence this picture, so now more than ever before, the key to business sustainability is to concentrate on the things that you can control and influence and to drive the best return from them.

How can you limit your exposure to market volatility and reduce the risk in your system? Answering these questions can help to develop a more sustainable business, and there are many successful dairy farm businesses which have adopted this approach. Individual farm prospects will largely depend on how well you can manage your exposure to outside forces.

The key is to look at maximising the efficiency of all operations. How can you do things better? Where can you take cost out of the system without losing output?

It is essential to focus on profit. Many farms are having to make some big decisions about investment, expansion, changes to the system and so on. Any business decision needs to be taken with an end result and a profit increase in mind. Everything you do should be geared to increasing business profit.

Recently we have seen success by challenging farmers to calculate the total profit they require and then to work backwards from there to determine the turnover and technical performance required to deliver it. Within this process it is also important to assess the risk to the plan of price changes to core inputs.

For many farms the starting point must be to look at forage use. We have seen a period of milk yield increases largely as a result of increased purchased feed use. Yield from forage has declined, yet it is strongly and positively correlated to profit. Farms that produce more from forage are more profitable. Furthermore, producing more from forage reduces purchased feed requirements, so helping protect the business from price volatility.

We recently analysed the data for a group of over 240 dairy farmers costed using Promar Farm Business Accounts which gives an in-depth breakdown of farm finances and technical performance. Farms were ranked based on the yield from forage per cow and the results for the average and top 25% of the sample are shown in table 1.

The farms producing more from forage produced very similar yields per cow compared to the average but at a far lower feed rate per litre, so resulting in 1700 litres more milk from forage per cow. Feed cost per litre was 2ppl less.

By the time the gross margin is calculated the benefit was an extra 2.5ppl, due to other costs being lower, suggesting farmers looking to maximise forage use also control other costs carefully. This is confirmed by the higher operating profit.

The high yield from forage farms produced an operating profit per litre 43% higher than average which clearly demonstrates the link between yield from forage and profit.

It is also interesting to compare the high yield from forage herds with the highest yielding herds. When we analysed the data comparing the top 25% ranked on yield with the top 25% ranked on yield from forage, the results confirmed the benefit of making full use of your own resources. The high yield farms produced 1563 more litres per cow but operating profit per litre was 3.8ppl less than the top 25% of farms selected on yield from forage (table 2).

This suggests that a strategy of chasing marginal litres while increasing output did not necessarily increase profits as much as a strategy of focussing on how the milk is produced.

When converted to profit per cow, the farmers who focussed on yield from forage rather than driving milk yield generated an additional £190 profit per cow despite a lower milk yield and turnover.

By focussing on the areas within their control, successful businesses will be able to offset some of the impact of rising input prices. This might include making better use of slurry to drive down fertiliser use, spending more time shopping around for inputs or taking steps to improve grassland output and utilisation. Whatever approach is chosen there should be scope within most businesses to develop plans to minimise the exposure to volatility and improve profit levels.

Table 1: Comparison of average and top 25% of FBA herds ranked on yield from forage per cow

	Average	Top 25%
Milk yield per cow (L)	7714	7601
Concentrate use (kg/l)	0.38	0.29
Milk from forage/cow (L)	1094	2783
Feed cost (ppl)	7.9	5.9
Gross margin (ppl)	15.6	18.1
Operating profit (ppl)	7.1	10.2

Table 2: Comparison of top 25% of farms ranked on milk yield and top 25% ranked on yield from forage

	Top 25% by milk from forage per cow	Top 25% by milk yield per cow
Milk yield per cow (L)	7601	9164
Yield from forage per cow (L)	2783	870
Concentrate use (kg/l)	0.29	0.39
Feed cost (ppl)	5.9	8.6
Gross margin (ppl)	18.1	14.6
Operating profit (ppl)	10.2	6.4
Operating profit/cow (£)	775	586