The NFU is having urgent talks with First Milk after the co-operative announced that it was delaying the next milk payment by two weeks.
First Milk’s chairman, Sir Jim Paice MP, said: “With the added uncertainty of the imminent EU quota removal, the Board has taken the decision to re-build the fundamentals of the business ahead of the spring flush.
“As such, the Board has therefore decided that the milk payment planned for 12th January will now be deferred until 26th January, with all future payments also being deferred by 2 weeks.”
The union also said First Milk was increasing capital levy contributions and recouping extra capital from farmers at a time when they are already under huge financial pressure.
At member meetings in November, the First Milk Board was open about the losses that were accrued in the early months of this financial year as the company dealt with rapidly falling markets. Despite aligning milk prices with market returns to balance the books since October 2014, there remains a gap of 1 pence per litre on an annualised basis due to these earlier accrued losses, which has restricted the cash available to the business.
NFU President Meurig Raymond said: “This is a wholly unacceptable announcement from First Milk coming after last week’s announcement of a milk price cut, which I understand is partly to be reversed, with members now being asked to fork out an extra 1.5ppl in capital investment as well as receiving a delayed payment for milk already supplied.
“The NFU’s first priority has been to get a meeting with First Milk to seek answers to very specific questions about how this will impact on our members.
“It is quite clear that this announcement will be a serious burden for farmers and will be damaging to cash flow at an expensive and demanding time of year for costs. It is essential at this time that banks understand and are supportive of our farmer members so they can continue to finance their businesses. I will be personally contacting all the main agricultural banks to ask them to do so. It is so important at this difficult time for the dairy industry that the financial health of First Milk is secured.”
NFU dairy board chairman Rob Harrison said: “We are urgently seeking answers from First Milk. With the unprecedented volatility that the industry has seen over the last 12 months, the NFU has been, and will continue to, help our members as best we can when deeply distressing announcements are made in the industry.
“We will aim to provide answers to members through our regional services and through NFU CallFirst. I would also ask those in the allied industries to be sensitive of the impact this announcement will have on the cash flow of many dairy farmers across the UK.”
Paice said: “We are a business owned by dairy farmers. The Board are acutely aware of the difficulties this current extreme volatility is causing First Milk members and the UK dairy industry. We don’t know how long this current market downturn will last, and we are aware that hundreds of UK dairy farmers are unlikely to find a home for their milk this spring. Our priority is to make the business and our processing assets as secure as possible in order that we can continue to process and market every litre of our members’ milk.
“In addition to this move, we are working across a number of areas to deliver a stronger business platform for 2015. Some of these are around better aligning our collective milk supply with market demand, and some are strategic moves. All are aimed at delivering stronger business fundamentals for First Milk heading into the 2015 spring flush.
“Finally, we have reminded members that our AGM is being held on 30 January at The Holiday Inn Hotel, Haydock and if they are not able to attend, we will also be holding a series of member meetings around the country in February.”
