MIKE Gallacher, the new chief executive at First Milk, has announced his turnaround plan for the beleaguered, co-operative.

A programme of significant cost reductions across the business includes proposals for up to 70 job losses and a new approach to milk pricing within its milk fields that links local milk prices to the value generated.

While a small number of roles at the co-op's manufacturing sites are affected, the proposed reduction in the workforce represents up to fifty per cent of the roles within some of the head office and support teams.

The collapse of dairy markets and the significant increase in milk volumes during 2014/15 exposed weaknesses in First Milk's existing milk pricing system. From 1st June 2015, pricing will be based on net commercial returns from First Milk's manufacturing sites and customers. As part of this, the tightest and closest milk fields have been identified which will be used to service these outlets most effectively.

The co-op will have four Manufacturing and three Balancing pools:

* Farms located around the Arran, Campbeltown, Lake District and Haverfordwest creameries will make up the manufacturing pools.

* Farms located on the Scottish mainland, within Northern England, and the Midlands of England/East Wales will make up the balancing pools.

The First Milk Board has agreed a £3.3m reduction in member payments, and this has been built into the milk prices, equating to an average price reduction of 0.33p per litre (ppl). Additionally, the First milk Board have confirmed the "B" price for April at 16.1ppl and also that based on the co-op's projections the "B" price range for June will be 14-17ppl.

In addition, Sir Jim Paice, chairman of First Milk, has announced that an independent review will be conducted of the governance and what has been learned from the business's recent disappointing performance. Modelled on the recent Myners review of the Coop, this review will seek to identify clear recommendations which will be shared with members by summer 2015.

Market round-up

The Cumberland and Dumfriesshire Farmers Mart sold 4668 prime hoggs in Longtown on Thursday to a top of £95.50 per head and 227p per kg to average 175.5p (-9p on the week), while 13 prime lambs peaked at £95 and 216p.

There were also 3010 cast sheep forward when heavy ewes sold to £150 for Texels and averaged £92.89 (-£1.70), while light ewes peaked at £86 for Blackfaces and levelled at £61.06 (+£3.31).