First Milk has announced that it is to introduce changes to its milk pricing mechanism from April 1st that include the introduction of A&B pricing and closer alignment of milk constituent payments with the core market for its milk.
Members supply milk to two main pools. The "manufacturing" pool is used predominantly to supply the co-op's four creameries, with a smaller volume of milk being processed at Westbury, especially during peak production months.
Milk from the "liquid" pool is sold into a range of markets which includes short and medium term liquid contracts, with significant volumes being processed at Westbury and supplies to the co-op's Glenfield Dairy. Considering the diverse range of markets and customers, the co-op believes it is more appropriate that this milk pool is now referred to as the "balancing" milk pool.
Each member will be allocated a varying monthly A volume (for the twelve months April to March) based on 80 per cent of the average of that same month's production during the previous two calendar years. So A volumes from April 1st will be based on 2013 and 2014. B volumes will include any milk which is produced in addition to the allocated A volume.
The price for A volumes will be based on market returns for that milk pool, as determined by the Board and announced 30 days in advance of the start of the relevant month. The price for B volumes will be the same for all milk pools and will reflect returns from short-term markets (for example, net returns from Westbury, curd and spot milk deals).
There will also be closer alignment of butterfat, protein and hygiene payments according to the end use of the milk.
From April 1st First Milk's manufacturing pricing schedules (both solids and volume based options) will contain a single payment rate for protein, a primary payment rate for the "cheese butterfat" (equivalent to up to 120 per cent of the protein content), and a secondary payment for "whey butterfat" (that which is in excess of 120 per cent of the protein content).
Bonuses for milk destined for the manufacturing pool that is below 50 bactoscan and below 200 cell count will be improved and aligned with those currently used within the balancing pool (1p per litre for each).
Market round-up
Lawrie & Symington Ltd sold 196 store heifers in Lanark on Tuesday to a top of £1350 per head and 283.5p per kg to average £982.89 and 220p, while 244 store, beef-bred bullocks peaked at £1490 and 289.9p to level at £1057.80 and 231p. Thirty-four store, B&W bullocks sold to £975 and 177.8p to average £769.04 and 165p.
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