Archive: First Milk to introduce A&B milk pricing

Published 18 February 15

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First Milk has announced it will be implementing an A&B pricing for milk purchases from 1 April 2015. Farmers will be paid one price for a fixed proportion of their milk, with a separate price paid for additional volumes.The cooperative has said that the new pricing system will allow it to “better align market signals and milk production.”

First Milk has also announced it will only operate two milk pools which will be aligned to its core activities. The Manufacturing pool will be used predominately to supply its creameries while the Balancing pool will supply short and medium term liquid contracts, its Glenfield Dairy and processing at Westbury.

The price paid for milk will be split between ‘A’ volumes and ‘B’ volumes as follows:

  • ‘A’ volumes will be allocated to each farmer as 80% of average monthly deliveries from the past two production years and will vary monthly (i.e. April 2015 ‘A’ volumes will be 80% of the average of April deliveries in 2013 & 2014)
  • Pricing for ‘A’ volumes will differ between the two milk pools with payments linked to the end use of the milk
  • ‘B’ volumes in both pools will be paid the same price and will reflect returns from short term trading (for example, net returns from Westbury, curd and spot milk deals)

The cooperative will continue to give 30 days advance notice of price changes, although the ‘B ‘price will be provided as a forecasted range. They have also said that the Profile Adjustment Scheme (seasonality) will be retained.