First Milk have been urged to meet with their milk suppliers as a matter of priority by the National Farmers' Union.
After face-to-face talks with the dairy co-operative today, NFU President Meurig Raymond said information from First Milk to its milk suppliers was absolutely essential given the current situation.
First Milk announced on Thursday that it is delaying its next milk payment by two weeks, increasing capital levy contributions and recouping extra capital from farmers at a time when they are already under huge financial pressure. Mr Raymond said the timing of the announcement meant a serious burden for farmers and damage to cash flow at an expensive and demanding time of year for costs.
“It is paramount that the financial stability of First Milk is secured,” said Mr Raymond. “And as a farmer-owned co-operative, I expect First Milk to arrange early meetings with their farmer suppliers, before their AGM at the end of January, to answer their urgent questions. Farmers need to have a better understanding of their options in order to develop a sustainable business plan.
“Make no mistake, I have heard from NFU members, some who are extremely anxious after yesterday’s news, and I have taken those views to the chairman of First Milk during discussions today.
“My priority is the impact of First Milk’s announcement on our members and I am working to ensure we are doing all we can across the NFU to support our members at this crucial time.
“Our county advisers and group secretary network is working to support our members affected and we are taking lots of calls from worried members at CallFirst. To help with information to our members we have compiled a Q&A which is available on NFU Online.
“In the meantime we are holding ongoing talks with banks to ensure they remain supportive to dairy farmers at this crucial time”, he said.
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.
“The announcement from First Milk that regular payments to their farmer members will be deferred by two weeks is likely to cause cash flow difficulties for affected milk producers," said Jonathan Allright, head of AMC.
“The Agricultural Mortgage Corporation (AMC) has been a specialist lender to farming businesses for over 86 years and understands the challenging nature of the sector. Our teams are used to helping our customers through difficult trading conditions and we pride ourselves on our long term support for UK Agriculture.
The Royal Association of British Dairy Farmers has called for honesty among First Milk officials following its announcement to defer this week’s fortnightly payment to members and to make changes to their capital contributions.
“We urge First Milk board to be honest and up front with its communications with members, many of whom have been left uncertain of the future of their dairy farming businesses," says RABDF chairman, Ian Macalpine. “They need to be informed of the absolute truth in particular about the use of their increased capital contributions from the current 0.5ppl to 2ppl.
“First Milk’s member businesses are being put under enormous stress with crucial decision making with banks and suppliers, both for the short and long term. Consequently, they need accurate information in order to make these decisions; they also need to be reassured that they will continue to have a milk buyer,” he says adding: “We urge all First Milk members to attend their delayed agm on 30 January.”
