Robert Craig – former NFU Cumbria County Chairman, Nuffield Scholar and First Milk director
I’m sure, given First Milk’s recent past, that some may think it is a strange decision for me to step up to become a director of First Milk, especially when, not so long ago, most of the dairy industry pundits had written us off.
The easy option will always be to sit back and accept the hand you’re given, expecting or assuming there’s someone else better equipped to represent your interests. Alternatively, I believe that when the opportunity presents itself, and you can put yourself in a position where you have influence, it is time to have a go and at least attempt to make a difference.
It’s certainly been a challenging couple of years for the business but the structural elements of the turnaround process that was undertaken have resulted in a business today that is focused and financially secure. Understanding where mistakes were made, re-shaping the governance structure of the co-op and divesting the loss-making subsidiaries leaves First Milk with a solid platform to build into the future.
Continuing to build and develop strength in our relationships with our key partners such as Tesco, Ornua and Nestle, alongside the relentless drive in operational efficiency, means we’re already seeing a narrowing of the milk price gap between ourselves and our competitors. But rest assured - we remain focused and committed to increasing our competitiveness and rebuilding the trust of our valued members – without whose loyalty we wouldn’t have a business today. In terms of the wider global dairy market, unfortunately, it looks as if the only certainty about the future of the dairy industry is more uncertainty. Whether it is Brexit, potential tariffs, exchange rates, or the ongoing volatility in the market, there are many reasons why producers need a secure business buying their milk.
First Milk certainly isn’t immune from market volatility and, of course, no business can buck the market long-term, but having a reasonable balance in terms of our milk supply and customer demand means we’re as well placed as any milk buyer to give our members some degree of protection from the huge market movements we’re seeing and will continue to see in to the future.
Looking towards the coming year, it’s now widely recognised that the current dairy commodity markets have peaked and looking at the milk futures (as posted on milkprices.com) the milk market is likely to move down in 2018. The extent of this market adjustment is difficult to predict and will be influenced by a combination of how productive the coming winter is across the rest of the EU, the domestic availability of forage and the relative cost of supplementary feed.
Longer term, prospects look better. There are fewer dairy replacements on farm across the UK, so we will undoubtedly see a tightening of milk supply possibly as early as 2019 - leading to a more bullish market. What’s more, there is anticipated to be a long-term increase in dairy demand as a result of global population growth.
Overall, I’m optimistic as I look forward to my new role as a director of First Milk and to the challenges and opportunities that lay ahead. Even given the many factors outside our control, the prospects for First Milk are more certain than we’ve seen for some time and I’m satisfied and confident we now have a committed and capable team leading the business, with a strong foundation for future growth.