First Milk introduces Business Performance Supplement

During recent member meetings across the UK, the First Milk Board covered progress made in reshaping the company through exit-ing poorly performing business units, cutting costs and operational improvements.

Now that the company is back trading profitably, First Milk is introducing a 2ppl Business Performance Supplement which will be awarded to members in stages to reflect these improvements.

Chief Executive Mike Gallacher commented:

“While the majority of our commercial returns are linked directly to market prices and therefore not within our control, our relative performance versus others in the UK market is within our control.

“We have therefore committed to members that we will deliver a 2ppl improvement in milk prices over and above any market-related movement in returns. We do not intend to save up money, but will instead pass cash through to members as soon as it becomes available.

“The first part of this money will come in June with a 0.25ppl Business Performance Supplement. This amount will build in the coming months as we improve our relative performance and will be measured by our Member Council using a new First Milk Price Index that will also be externally audited.

“Compared to a year ago, First Milk is a very different business. We have used the opportunity provided by members to develop a clear plan which we are delivering month by month, working with urgency to pass back improvements in the business directly to members.”

Over the last month, several dairy processors have announced price cuts which impact on First Milk’s basket/market mechanisms and reduce the commercial prices that are received by the business.

Based on these reduced market returns, First Milk’s A prices would have reduced from 1st June by 0.69ppl for its four creamery pools, by 0.59ppl for our Scottish mainland pool and by 0.57ppl in the Midlands pool.

However, taking both the reductions in the milk price mechanisms and the 0.25ppl Business Performance Supplement for June into account, First Milk’s net June price changes are as follows:

-0.44ppl for its four creamery (Haverfordwest, Lake District, Campbeltown & Arran) milk pools
-0.34ppl for the Scottish Mainland pool
-0.32ppl for the Midlands pool

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