First Milk Announces 'Stronger Platform' to Address Cash Restrictions

UK – A UK dairy processor is reviewing the fundamentals of its business due to concerns over cash availability after what it dubbed a "year of volatility" never seen before.
calendar icon 8 January 2015
clock icon 2 minute read

Dairy cooperative First Milk will be deferring milk payments planned for January 12 until January 26, with all future payments being deferred two weeks.

This is part of a raft of measures to provide a “stronger platform” and rebuild its business fundamentals for 2015 to address losses accrued early last year when world dairy prices fell by over 50 per cent.

A one pence per litre shortfall still remains on an annualised basis, despite the books being balanced in October.

First Milk chairman, Sir Jim Paice MP said: “While our lenders have been supportive as we’ve dealt with this volatility, 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.”

He added that the board would:

  • Reverse 1.1 pence per litre of the February milk price reductions for the manufacturing and liquid pools;
  • Increase members’ capital investment from 0.5 to 2 pence per litre for milk supplied from December 2014 up to August 2015;
  • Increased members capital investment target from 5 to 7 pence per litre

The actions will deliver cash to the business and: "Play an integral role in putting our finances and our business on a stronger platform,” he added.

“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.”

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