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Thread: first milk 73 million debt

  1. #1
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    first milk 73 million debt

    With a 7.8 million loss as well and debt up from 47 million to 73 million in one year , where is this company going in future ?

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    Senior Member wellington53's Avatar
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    Re: first milk 73 million debt

    Quote Originally Posted by big philip View Post
    With a 7.8 million loss as well and debt up from 47 million to 73 million in one year , where is this company going in future ?
    What you on about Philip?

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    Re: first milk 73 million debt

    Quote Originally Posted by wellington53 View Post
    What you on about Philip?
    Its the uk s biggest milk co-op

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    Re: first milk 73 million debt

    Quote Originally Posted by big philip View Post
    With a 7.8 million loss as well and debt up from 47 million to 73 million in one year , where is this company going in future ?
    Taken over.

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    Re: first milk 73 million debt

    What have they done to increase debt by 26million? Aloss is one thing , have they bought something?

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    Senior Member matthew's Avatar
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    Re: first milk 73 million debt

    Quote Originally Posted by wastedyears View Post
    What have they done to increase debt by 26million? Aloss is one thing , have they bought something?
    A share of DFoB's pension fund, a legacy of the MMB?? (See post on NMR)

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    Re: first milk 73 million debt

    Big Philip
    Let me refresh your memory then put you straight. Its just over a week since your masters Muller posted similar losses and I don't recall you shouting about that !!!
    Most of our debt is in cheese stocks and the increase in debt has been after the purchase of CNP the sports nutrition company for 8.4 million and we have also invested a further 9 million in our creameries and the rest is increased cheese stocks which is normal at this time of year. Last year was very difficult for everyone and FM took the descision to support our producers rather than cut prices. We are in good shape and in the first half of this year turnover is up 40million and a pre tax profit generated of 1.1 million.
    We are on the up Philip so get used to it.

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    Re: first milk 73 million debt

    The cheese market is pretty dire at the moment, how are sales of mull of kintyre doing at the moment Argyll? I said in a previous thread that i had heard that FM was on the radar of an Irish coop, dont know if there is any truth in it though.

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    Re: first milk 73 million debt

    I think the difference is that wisemans were making rather a lot of money in the years leading up to this one, and made a comparatively small loss this time around.

    Without wishing to upset anyone it is obvious the milk market will become one of two very large national players who can process for very low overall costs per litres and a handful of smaller regional ones who are good at selling value added stuff.

    Whether this is a good or bad thing remains to be seen.

    I am unconvinced that a business can be operated in a way that both benefits shareholders whilst simultaneously keeping people at the farm gate happy. Those two objectives seem 180 degrees away from each other?

  10. #10

    Re: first milk 73 million debt

    Not sure how you can reach any conclusions with the info you have given to us but from my calculations with educated asumtions on some facts the debt level looks less than some other peoples per litre of milk ,as to the loss how much would that be on a pence per litre basis?
    As said earlier is it connected to the fall out in the pennsion fund from recent activites in there ,its not all connected to dfob more recent events have happened

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    Re: first milk 73 million debt

    Yes, of course I think that would be true. I don't know the precise structure of FM, but I would assume that all shareholders also operate behind the farmgate too? If so, then there is no conflict.

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    Re: first milk 73 million debt

    Quote Originally Posted by Uwork4menow View Post
    I think the difference is that wisemans were making rather a lot of money in the years leading up to this one, and made a comparatively small loss this time around.

    Without wishing to upset anyone it is obvious the milk market will become one of two very large national players who can process for very low overall costs per litres and a handful of smaller regional ones who are good at selling value added stuff.

    Whether this is a good or bad thing remains to be seen.

    I am unconvinced that a business can be operated in a way that both benefits shareholders whilst simultaneously keeping people at the farm gate happy. Those two objectives seem 180 degrees away from each other?
    The point you are missing is that the shareholders are also the people at the farm gate, in FM anyway.

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    Re: first milk 73 million debt

    Quote Originally Posted by Argyll View Post
    The point you are missing is that the shareholders are also the people at the farm gate, in FM anyway.
    We have been here before.
    I remember the DFOB members on here blindly defending them. Fact is FM are a disaster not waiting to happen but actualy happening. Any one with any sense will get out asap.

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    Re: first milk 73 million debt

    Quote Originally Posted by AntiNFU View Post
    We have been here before.
    I remember the DFOB members on here blindly defending them. Fact is FM are a disaster not waiting to happen but actualy happening. Any one with any sense will get out asap.
    pension liaibilities up 26 percent from 9 million to 11 million

  15. #15

    Re: first milk 73 million debt

    Quote Originally Posted by big philip View Post
    pension liaibilities up 26 percent from 9 million to 11 million
    well i dont think that was first milks doing, part of the master plan of another.I said when i heard of it, that i was suprised that it was allowed to happen i cant beleive that first milk knew about it before hand as i think we would have heard about it from them at the time unless they were threatened like you BP


    Have you got a link to the results BP so we can look at them rather than wait for you to post

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    Re: first milk 73 million debt

    Quote Originally Posted by fir tree View Post
    well i dont think that was first milks doing, part of the master plan of another.I said when i heard of it, that i was suprised that it was allowed to happen i cant beleive that first milk knew about it before hand as i think we would have heard about it from them at the time unless they were threatened like you BP


    Have you got a link to the results BP so we can look at them rather than wait for you to post
    There are none so blind as those who will not see !!
    I hope you can stand the loss sadly many DFOB suppliers could not.

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    Re: first milk 73 million debt

    I think alot will depend on a rise in cheese price, if it doesn't come then FM will have to write down stock values as the price they are currently paying for milk will not be recovered from the market.

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    Re: first milk 73 million debt

    HOW MANY FARMERS supply fm ? I DONT POST ON FARMERS GUARDIAN and if I did it woulnt be as anonomous

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    Re: first milk 73 million debt

    Quote Originally Posted by Argyll View Post
    The point you are missing is that the shareholders are also the people at the farm gate, in FM anyway.
    No, I know that already.

    My point is, as a shareholder, it is in my interests for the company I partly own, to buy raw material (milk in this case), for the lowest possible cost process it and flog it for as much margin as possible.

    As a farmer, I am looking for as much money for my milk as possible.


    These two points are mutually exclusive, surely.

  20. #20

    Re: first milk 73 million debt

    Quote Originally Posted by AntiNFU View Post
    There are none so blind as those who will not see !!
    I hope you can stand the loss sadly many DFOB suppliers could not.
    I stood my dfob loss and still have the files 18 inches deep on the corner of my desk to remind me ,as you think that i am blind i look forward to you enlightening all of us to what has happened to the milk pension fund,i do not claim to now it all and are certain that i do notknow it all ,but i do know that events have happened orchestrated by others which first milk had no control over and will have left them worse off i think .looking forward to your explanations of what has happened

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    Re: first milk 73 million debt

    Quote Originally Posted by Uwork4menow View Post
    No, I know that already.

    My point is, as a shareholder, it is in my interests for the company I partly own, to buy raw material (milk in this case), for the lowest possible cost process it and flog it for as much margin as possible.

    As a farmer, I am looking for as much money for my milk as possible.


    These two points are mutually exclusive, surely.
    Then what you are really saying is that you don't think it is appropriate for a farmer to own shares in a dairy farm AND the company to which it supplies raw milk. Fair enough.

    But perhaps it should be viewed another way. The dairy farm and the co-op processor can be seen as two arms of the same business. When a farm undersells milk, it loses profit at the expense of the processing arm. When the processor pays too much, it loses profit at the expense of the farm. But, in theory (and for goodness sake don't ask for figures to back this up), it shouldn't matter a great deal which arm makes the most profit as it should be distributed back to the farmer anyway via farm profit or share dividend. Think of a small on farm processing unit for ice cream or cheese. Do you see any conflict here? Does it really matter where the profit is made, as long as the milk is made and processed cheaply, and sold for a high value.

    From a practical point of view, however, we prefer as farmers to have a profit-making farm (our raison d'etre) and our co-op processing arm run on slim margins (lest they get too comfortable). Perhaps the most important price to consider is the selling price of the finished product. A co-op processor should be trying hardest to stretch this value upwards while reducing operational costs. This is what it needs to do in order to return value to the farmer owner. Rather than seeing the process beginningng with feeding silage and grain, and ending as the tanker leaves the yard, we see it as ending when the product leaves the cold store.

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    Re: first milk 73 million debt

    No no, I think I have made my point poorly, it is fine by me for a farmer to own shares in any business, regardless of what it does who it supplies or buys from. Lets be honest also, a Co-op is a business, not a charity, and businesses live to make profits and make money to return to its shareholders. It must do this using whatever means available to it.

    My concern is that if I was the boss of Arla, then surely it is in my own interests and that of the company itself, to buy milk as cheaply as possible, from whatever source.

    As a farmer, you guys are all looking for the highest possible milk price which is understandable.

    How then does the business model operate to achieve these two aims? Is Arla going to solely be a solid/high value player in future and abandon the low(er) margin liquid side?

    I am a total outsider to this and have no clue how it all works, what I do know though, is that ultimately the market will be better off when the lame ducks are gone, bought out or crushed. We saw this with earlier times, where a company was struggling for cash flow, had too much invested or borrowed, and was selling off cheese stocks early and for a song to try to keep the wolf from the door. Actions like this kick the arse out of the bottom of the market and ultimately spread pain across all connected players and farmers.

    Hopefully going forward we will have two big players who are more able to poke the supermarkets and look outside the UK, whilst being secure enough to avoid the need to sell themselves short.

    Ultimately the milk market is going to resemble that of the supermarkets- an oligopoly of very large businesses each with a big slice of the overall cake and no need to do anything too daft.

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    Re: first milk 73 million debt

    Quote Originally Posted by DairyFarmer111 View Post
    Then what you are really saying is that you don't think it is appropriate for a farmer to own shares in a dairy farm AND the company to which it supplies raw milk. Fair enough.

    But perhaps it should be viewed another way. The dairy farm and the co-op processor can be seen as two arms of the same business. When a farm undersells milk, it loses profit at the expense of the processing arm. When the processor pays too much, it loses profit at the expense of the farm. But, in theory (and for goodness sake don't ask for figures to back this up), it shouldn't matter a great deal which arm makes the most profit as it should be distributed back to the farmer anyway via farm profit or share dividend. Think of a small on farm processing unit for ice cream or cheese. Do you see any conflict here? Does it really matter where the profit is made, as long as the milk is made and processed cheaply, and sold for a high value.

    From a practical point of view, however, we prefer as farmers to have a profit-making farm (our raison d'etre) and our co-op processing arm run on slim margins (lest they get too comfortable). Perhaps the most important price to consider is the selling price of the finished product. A co-op processor should be trying hardest to stretch this value upwards while reducing operational costs. This is what it needs to do in order to return value to the farmer owner. Rather than seeing the process beginningng with feeding silage and grain, and ending as the tanker leaves the yard, we see it as ending when the product leaves the cold store.
    Very good post, i personally think coops will be the future but farmers have to believe in them, and the coops have to deliver for the farmers as essentially they are they're boss.

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    Re: first milk 73 million debt

    Quote Originally Posted by Uwork4menow View Post
    No no, I think I have made my point poorly, it is fine by me for a farmer to own shares in any business, regardless of what it does who it supplies or buys from. Lets be honest also, a Co-op is a business, not a charity, and businesses live to make profits and make money to return to its shareholders. It must do this using whatever means available to it.

    My concern is that if I was the boss of Arla, then surely it is in my own interests and that of the company itself, to buy milk as cheaply as possible, from whatever source.

    As a farmer, you guys are all looking for the highest possible milk price which is understandable.

    How then does the business model operate to achieve these two aims? Is Arla going to solely be a solid/high value player in future and abandon the low(er) margin liquid side?

    I am a total outsider to this and have no clue how it all works, what I do know though, is that ultimately the market will be better off when the lame ducks are gone, bought out or crushed. We saw this with earlier times, where a company was struggling for cash flow, had too much invested or borrowed, and was selling off cheese stocks early and for a song to try to keep the wolf from the door. Actions like this kick the arse out of the bottom of the market and ultimately spread pain across all connected players and farmers.

    Hopefully going forward we will have two big players who are more able to poke the supermarkets and look outside the UK, whilst being secure enough to avoid the need to sell themselves short.

    Ultimately the milk market is going to resemble that of the supermarkets- an oligopoly of very large businesses each with a big slice of the overall cake and no need to do anything too daft.
    At least being part of a coop you can recover some of the profit in processing the milk and the profit doesn't end at the farm gate, supplying a PLC takes money out of the chain for the farmer. They're needs to be fewer larger coops and i personally think FM will merge with another one.

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    Re: first milk 73 million debt

    They don't necessarily need to abandon whatever is perceived to be the poorest payer (perhaps at this point and time liquid?) - they just need to be good at it. These companies, believe it or not, do know to a reasonably fine degree the costs of their competitors in various parts of the business (one of the tasks of the finance departments), and use these as a benchmark for their own costs. Therefore a co-op can satisfactorily make a low profit provided that it is getting the cost structure right and maximising revenue. The board and the management then agree how much can be paid out in milk price according to the revenue less operating costs. This is the difference. Co-op CEOs are not rewarded on company profit (unlike in the PLCs). They may actually be partly remunerated on the quality of the returns to the farmgate.

  26. #26

    Re: first milk 73 million debt

    At Milklink, Neil Kennedy had a lowish (given his role) base pay and a pretty large incentive sheme based around a combination of short and long term goals on maximising milk price. In Arla the company mission statement is about maximising the price paid for milk to the farmer owners (but certainly not to directs, who are paid enough to retain them and no more).

    Mayo, if you bothered to actually find out, before writing you would know that the target in Arla is not to maximise profit. The target is 3% profit on turnover and to maximise milk price. The 3% profit is then divided in a prescribed way to pay out as a thirteenth payment and for reinvestment. The capital for reinvestment is set at a figure equal to 4.5% of the paid out price. Mayo, now you are more informed perhaps you could remember that for future reference.

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    Re: first milk 73 million debt

    Quote Originally Posted by Farmer on a bike View Post
    At Milklink, Neil Kennedy had a lowish (given his role) base pay and a pretty large incentive sheme based around a combination of short and long term goals on maximising milk price. In Arla the company mission statement is about maximising the price paid for milk to the farmer owners (but certainly not to directs, who are paid enough to retain them and no more).

    Mayo, if you bothered to actually find out, before writing you would know that the target in Arla is not to maximise profit. The target is 3% profit on turnover and to maximise milk price. The 3% profit is then divided in a prescribed way to pay out as a thirteenth payment and for reinvestment. The capital for reinvestment is set at a figure equal to 4.5% of the paid out price. Mayo, now you are more informed perhaps you could remember that for future reference.
    What's got your knickers in a twist? Must be something in the water or the time of year perhaps.

    I have no intention of reading or remembering anything of the sort, I have quite enough information floating around my skull at the moment and much if it is quite important and will be useful in a more practical sense.

    Anyway thank you nonetheless for your insight, we shall observe the manner in which it was posted and draw our own conclusions. Maybe it's jet lag.

  28. #28

    Re: first milk 73 million debt

    Quote Originally Posted by Uwork4menow View Post
    I have no intention of reading or remembering anything.
    Never doubted it

  29. #29
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    Re: first milk 73 million debt

    http://ipaquotas.com/QUOTANEWS.htm Not good reading for FM, paying a high price for manufacturing milk may prove to be a bad move especially if alot of the cheese lands up being traded.

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    Re: first milk 73 million debt

    Quote Originally Posted by bigw View Post
    http://ipaquotas.com/QUOTANEWS.htm Not good reading for FM, paying a high price for manufacturing milk may prove to be a bad move especially if alot of the cheese lands up being traded.
    This does not make for good reading, so much for focussing on added value brands and million pound advertising campaigns, I recall DFoB being obsessed with brands which failed to hit the high notes. Still they'll soon have a politician as Chairman to spin the stories

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