Following cuts announced by other major processors last week, First Milk announced fresh price cuts for its suppliers on Friday.

The cuts come after First Milk announced that the cooperative made a profit last year (before restructuring costs). The Company said in a statement, “At the same time as we have taken steps to improve First Milk, the market has continued to worsen. As a result of falls in the market mechanism that governs our returns… price changes need to be implemented.”

Farmers in First Milk’s various pools will suffer the following price cuts:

-0.66ppl for the four creamery milk pools and the Northern England pool
-0.61ppl for the Scottish Mainland & Bute pools
-0.72ppl for Midlands & East Wales pool

On Thursday, First milk announced that it now expects to deliver an operating profit (before restructuring costs) of £4m for the year to 31 March 2016 (compared to a loss of £20M for the prior year). The business’ debt has reduced to £33M from a peak of £84M in 2014/15.

On Thursday, First Milk CEO Mike Gallacher said, “As we move into the second year of our turnaround, the focus will be on continuing to drive a wide range of operational improvements aimed at improving our efficiency and delivering a better service to our customers. Progress will allow us to start to improve our relative performance on milk prices as we implement a new operating system based on a stable P&L and transparent Milk Price Index. Our aim is to repay the loyalty of our members who have supported their business so strongly."

On Wednesday, NFU dairy board chairman Michael Oakes said even the most efficient dairy farmers cannot survive with prices at their current low levels.
 
Mr Oakes said, “There’s no question that this is the most difficult time many dairy farmers have ever faced with milk prices far below breakeven levels,. In the Copa milk meeting this week we saw the same sentiment shared across Europe. What we have seen is that UK dairy farmers are reacting to the market reality – with daily milk volumes now falling below production this time last year. This unfortunately is not the case elsewhere in Europe. Processors must clearly explain to farmers what they are doing to try to add value at this difficult time and farmers need to be honest with supplier on their production plans for the months ahead.
 
“We thank those retailer businesses that have stuck by their initiatives on liquid milk and cheese throughout this market downturn. Retailer initiatives can bring sustainability for dairy farmers. We would like to see all stakeholders within the supply chain take steps towards introducing sustainable principles into their own supply chains. This would give greater collaboration allowing for supply chain efficiencies and ensuring the UK dairy sector remains competitive on a global market.”