Our Council has received a categorical assurance from the Executive at this month’s Membership Development Group (MDG) meeting that milk cheques will be paid into members’ bank accounts as normal at the start of next week. The MDG, which meets every month to consider all aspects of membership interest, felt it vital to reassure everyone of this fact in the face of the scurrilous rumours circulating in the industry. “Regardless of what others may speculate, the simple fact is that our business will continue to pay members in full for all their milk just as it has always done,” farmer director, Michael Oakes said. “It is simply not an issue, as everyone will see for themselves by Monday.”

Non-executive chairman, Rob Knight, has resigned from our Board with immediate effect. Announcing his decision at this week’s Board of Directors meeting, Rob who has chaired our business since 2003 said: “I’m proud to have played a part in the huge progress we have made in the past five years, transforming ourselves from a small milk broker into a major dairy processor. As our business moves into a new phase in its development it is an appropriate time for me to hand over the reins.”

Farmer director, Lord Grantchester, who will act as interim chairman, thanked Rob for his valuable contribution and wished him well for the future, identifying clear challenges for every dairy business in the current trading environment. “Our team is working hard to ensure we adapt to the changing industry in a way that will deliver the greatest long-term benefits and security for our members.
I share the determination of our Board, Executive and Member Council to work closely together to make this happen.”

Commercial director, David Potts is leaving our business this week to take up the role of managing director of NOM Dairy (UK), the Austrian-based dairy leader currently mounting a major offensive on the UK yoghurt and yoghurt drinks market from a brand new £40 million dairy and headquarters in Telford. Thanking David for his contribution and commitment to our business, we wish him every success in his move and look forward to a continuing relationship as NOM becomes a customer of DFB’s milk supply business later in the year.

Philip Moody has stepped-down from our Board of Directors with immediate effect to allow him to focus on the role of strategic adviser to the business in his capacity as managing director of Smith & Williamson Corporate Finance Ltd.

Long-standing Shropshire member and experienced FTSE 100 board director, Roger Taylor has been elected to serve on our Board of Directors under the normal Council process following the end of current vice-chairman, David Wilkinson’s three-year farmer director term. With existing business commitments making it impossible for Roger to fully take up his position immediately, David has generously agreed to remain on the Board until next February for the greatest possible continuity.

Thanking David for his valuable input to our development over the years and continued commitment, Council chairman Stephen Yates welcomed Roger Taylor’s extensive, high level business experience and proven leadership talent. “As chief executive then chairman of Sun Alliance, Roger was responsible for developing its business widely as well as overseeing its merger to create insurance giant, Royal Sun Alliance,” he explained. “Closely involved with running his herd of 450 pedigree Jerseys at Blodwell Hall near Oswestry, he has the further advantage of a thorough understanding of both modern dairying and our business”.

“A loyal member with a substantial stake in our success who currently chairs our Channel Island Committee, Roger has a clear appreciation of the issues we face, well-developed views on how to address them, and a determination to deliver for the membership,” he stressed. “He will begin working with the Board straight away, although it is likely to be the New Year before our business can profit from his full attention.”

Our Member Business Centre has established a register of members with dairy cattle to sell – either in the normal course of their business or through dispersals – to put them in contact with members seeking replacements or wishing to expand. All anyone who has cattle for sale or with dispersal sales planned needs to do is provide us with their details by phoning 08700 108181 or e-mailing memberbusinesscentre@dfob.co.uk and we will enter them on the register.

Details:

Barlow Bros of Croston, Preston, have one Limousin Bull for sale, 16 months old, available immediately. Contact: Michael Barlow 07921 674041

H W Oultram & Co Newbridge Farm, Deeside, Clwyd:  4 recently calved hifers and 4 in-calf Ayshire heifers . Contact Mr Oultram 01244 532108.

B L Langford, Welshpool, Powys.  Pedigree Holstein Friesians for sale, 50 cows, 8 in-calf heifers and 20 maiden heifers. Calving all year round and available for sale from now. Contact Philip Langford 01938 810483.

The events of the wider world and domestic economy are genuinely unprecedented and it is simply not possible to know what effect they may have on any or all businesses in the dairy or any other sector. We are working in unpredictable circumstances. In running a business without carrying general reserves, (as we have always paid back to members all that we receive from customers), the increased risks have to be recognised and DFB must do what is judged necessary to protect members’ best interests. This may mean, as on this occasion, taking difficult and tough decisions.

With regard to the financing of the business, the position remains unchanged. The banks remain fully supportive and continue to work closely with us, as is to be expected in the current climate.

Whilst taking a prudent approach with cash, it is also important to recognise that both milk price and interest payments come from the same pot – the Profit and Loss account – and not paying this half years’ interest gives us the best potential to optimise milk price to members. This was a fundamentally important consideration in the Board’s decision.

Milk demand is currently being influenced by an increasingly volatile and rapidly moving market. The liquid market appears at last to be reasserting itself, but with increasing domestic production short-term and, for the first time, significant liquid milk imports, this market has not hardened as would be expected at this time of year. Spot market prices are well down on expectations and commodity markets globally are some 20-30% below the levels of this time last year. Taking these factors together with the wider economic pressures, it re-emphasises the need to take a very cautious approach and build in a protective buffer within the business.

It was against this background that the Board of Dairy Farmers of Britain announced to its members its decision not to pay interest on MIAs and MCAs for the first half of this year. As the statement indicated, this robust decision was a cautious response, taken against the background of extraordinary economic circumstances.

The Board would like to reassure our members that it will keep this developing situation under review and will continue to prioritise the needs of the members now and in the long term by ensuring that the business is guided prudently through this challenging period.

If the opportunity to redress this position occurs, whether through interest payments or milk price, your Board will of course consider it.

Following a distribution agreement with the Snowdonia Cheese Company, we shall be extending the marketing of the premium, award-winning Welsh wax truckles developed and produced on its behalf at Llandyrnog to major multiple retailers and convenience stores across the country. Working closely with Snowdonia, we are confident our strong national retailer relationships and distribution facilities will substantially boost the reach and uptake of the range of attractive 200g truckles like Black Bomber, Green Thunder and Pickle Power which have established such a reputation for quality and Welsh provenance through the company’s highly successful marketing efforts in the delicatessen, farm shop, on-line and independent retail sectors, explains cheese marketing manager, Mike Whetter.

The UK dairy industry must be prepared to cope with more rapid change and greater volatility than ever if it is to prosper in the decidedly bumpy ride ahead for the national economy. This was the clear message our strong contingent of delegates received loud and clear from the impressive platform of speakers at this year’s Dairy UK Conference.

Setting the economic scene, authoritative HSBC senior economist, Mark Berrisford-Smith left no-one in any doubt that our national economic woes are set to get worse before they get better, with recovery most unlikely before 2010 at the earliest. At the same time, however, he stressed that the legacy of 16 years of sustained national economic growth and stability means we are entering this recession in a much better position than we did the last three downturns. Which means we are better placed to emerge from our current difficulties when the logjam in the wholesale money markets eventually clears. “We’ve sustained our economy the easy way to date,” Mark Berrisford-Smith argued. “But the country is going to have to rely on more than just shopping in the future. It’s quite simple really. If we can’t steal it or borrow it we’re simply going to have to earn it. Which means old-fashioned hard work, focusing on the things we’re good at and doing them really well.”

In this context, the Conference made it plain that the market approach dairy businesses follow is likely to matter less than the effectiveness with which they pursue it. In particular, Fonterra general manager of strategy, Paul Campbell and Arla Foods UK deputy chief executive, Hanne Sondegaard demonstrated that concentrating almost exclusively on either the commodity market at the one extreme or added value fresh products at the other are equally valid approaches providing they are done well. Regardless of their focus or scale, managing change and both price and cost volatility were clearly identified as the key challenges facing both milk producers and processors in the immediate future. Uncomfortable though it may be in the short term, the experts agreed, but those who best survive some of the most uncertain economic prospects in recent memory will be those who are fast enough on their feet to counter any business threats and take advantage of any market opportunities rapidly and effectively as they arise.

Many thanks to all those who helped make this year’s Dairy Event and Livestock Show one of our most successful yet in bringing members together. Our lunchtime hog roast provided timely sustenance for no less than 400 members and guests, with many more dropping in throughout the two days as they took advantage of the expanded event with its record of more than 460 trade exhibitors and impressive schedule of practical displays and demonstrations. The opportunity involvement in events like this provides for so many of us to share mutual interests and experiences as well as discussing topical milk management and marketing ideas and issues is a major (and often unrecognised) benefit of modern co-operation in action.