First Milk Restructure

First Milk has announced a shake-up of its business to try and restore profitability.  Around 70staff will be made redundant – mainly at the co-op’s head office and in other support roles.  This is around half of the total.  In addition, prices paid to members will be cut once more.  This will see total farmer payments dropping by £3.3m – or 0.33ppl on average. 

The actual reduction will vary between farmers because First Milk is reorganising its supply into seven pools.  Farms around its Arran, Campeltown, Lake District and Haverfordwest creameries will make up its manufacturing pools.  There will be three further ‘balancing pools’ comprising farms in mainland Scotland, the Midlands of England and East Wales, and Northern England.  Farmers in the Midlands and East Wales are to be hit the hardest with a 1.2ppl price reduction in the ‘A’ price to 19.3ppl.  (There will also be a ‘sub-pool’ for farmers on the Isle of Bute in Scotland, paying a lower price to reflect higher transport costs to the mainland).

First Milk has announced that the ‘B’ price for April will be 16.1ppl.  The estimate for May is in the range 15-18ppl, and 14-17ppl for June.  Jim Paice, the Chariman of the co-op, has launched an independent review into the governance of First Milk and what lessons should be learned from the last few months.  This will be modelled on the recent report into the Co-op Group by Lord Paul Myners, and will report by the summer.