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Ex 97 2E
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Arla Co-op Membership


"Butterfat reconciliation" as I understand it means that AFMP will in the future be paid for their milk by Arla Amba on Arla Amba's pricing schedule. As the UK's aggregate butterfat and protein percentages are much lower than the existing Arla Amba members it means that the AFMP milk will receive a much lower pence per litre after 1st January. As such the aggregate AFMP UK milk income will be lower thus there will be less money with which to pay the AFMP farmers with, hence the proposed [sign in to see URL] cut that was explained in the recent letter from AFMP.

Why have AFMP only raised the topic of butterfat reconciliation AFTER the roadshows?

Very disappointing communication from AFMP.

For a "white water" producer like myself this is a total game changer. I would be 3ppl worse off on the manufacturing pricing schedule, which presumably closely resembles Arla Amba's pricing schedule.

10/10/2013, 6:49 Link to this post PM via Email   PM via Forum
 
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GP80
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Re: Arla Co-op Membership


Yeah it is just typical afmp not mentioning the [sign in to see URL] reconciliation until now. Worrying for us as well- it appears the liquid contract may just really be a 'stop gap' contract and they will ultimately want us all on the manufacturing contract eventually.
10/10/2013, 20:46 Link to this post PM via Email   PM via Forum
 
errolston Profile
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Re: Arla Co-op Membership


That is what I am worried about.

I expect most AFMP members are white water producers because AFMP has historically been a liquid milk supplier and priced accordingly.
11/10/2013, 10:58 Link to this post PM via Email   PM via Forum
 
Big Bird Profile
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Re: Arla Co-op Membership


My understanding of the Arla Milklink situation is that once the merger is fully integrated the move will be towards a single contract rather than the current mixture.

We're on a liquid contract but it probably won't make a huge difference to us.
12/10/2013, 12:06 Link to this post PM via Email   PM via Forum
 
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Re: Arla Co-op Membership


And that contract wil contain bonuses/deductions for fat and protein?

There is more than a suggestion that some co-ops here will change from the current litre based bonus system to something more 'direct' like the A+B-C system perhaps post quotas.
12/10/2013, 19:27 Link to this post PM via Email   PM via Forum
 
errolston Profile
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Re: Arla Co-op Membership


I have been giving this issue a lot of thought.

Arla UK will still be receiving exactly the same income from it's customers as always. Yet, Arla AMBA by paying Arla UK based on the European pricing schedule create [sign in to see URL] deficit which didn't exist before.

Nice bit of business by Arla AMBA in creaming [sign in to see URL] profit straight off the UK farmers.
14/10/2013, 21:33 Link to this post PM via Email   PM via Forum
 
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Re: Arla Co-op Membership


Will UK farmers receive the same euro price for base as the Danes and swedes, or will the price be specific to the UK business and the local market?
14/10/2013, 23:19 Link to this post PM via Email   PM via Forum
 
errolston Profile
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Re: Arla Co-op Membership


My previous post was incorrect.

I have spoken to Jonathon Ovens about the Co-op Membership deal and the "Butterfat Reconciliation".

Basically Arla UK raised the price too far from 1st November. They were relying on using retailer premiums to make up the shortfall between the European income and the UK pricing schedule. The market price has overtaken the retailer price models and the [sign in to see URL] that Arla UK were going to use to make up the UK price has disappeared. Jonathon told me that they could just have cut the Arla UK price [sign in to see URL] and no one would have known the difference. But, because butterfat is worth so much at the moment they have raised the price paid for fat over 4% to try and stimulate fat production and over the longer term this should, they hope, see the income from Arla AMBA increase and the [sign in to see URL] shortfall should disappear.

FOAF, Arla UK will offer two contracts from 1st January to those who sign up to be Co-op members. A manufacturing price, based around constituents with higher thresholds for SCC and Bactoscan, which I think is basically the Denmark/Sweden price; and a liquid price which is basically the same contract we are all on at the moment, but with enhanced fat payments.

A the moment "corporate members" of Arla AMBA have discretion over their pricing schedule. Arla UK and the German Co-ops are "corporate members" not sure about MilkLink and others. Otherwise it is the same price as Denmark and Sweden.

Jonathon told me that the liquid contract would remain until at least 2018.
15/10/2013, 9:51 Link to this post PM via Email   PM via Forum
 
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EX91
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Re: Arla Co-op Membership


Sounds a little like simple simon says,only its Jonathon Ovens says now and they all follow!!!
Its a FAT TAX they know fine that there's no way as a group you will reach 4.2% fat, and they want the UK price down below the rest.
Why did they not just drop the price ? thats what they are effectively doing by giving Asda millions up front for a contract that is priced to pull the market down !!
Arla producers should be asking who is ultimately going to pay the millions they gave Asda, its there producers emoticonOH: emoticonOH:
2/11/2013, 15:27 Link to this post PM via Email   PM via Forum
 
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VG86
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Re: Arla Co-op Membership


quote:

FiringOnAllFour wrote:

Will UK farmers receive the same euro price for base as the Danes and swedes, or will the price be specific to the UK business and the local market?


I know this is pedantic but both the Danes and Swedes don't use the Euro.
As an Arla Milklink member my price is based in Danish Krona subject to the transistional arrangements (like no 13th payment till next year)
To be fair given the high milk prices across the board It is difficult to moan

11/11/2013, 22:45 Link to this post PM via Email   PM via Forum
 


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