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| Seasonality 2008 and 2009 | |
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The spring flush of milk production is a serious issue for the dairy industry, creating a major imbalance in the marketplace and leading to poor returns for dairy farmers. This supply instability has worsened in recent years and current predictions suggest that unless action is taken the trend towards spring production will continue. Dairy Farmers of Britain operates a graduated seasonality payment system for our supplying members to:
Review of scheme: DFB’s Executive and Council’s Member Payments Working Group, have agreed permanent changes to our seasonality scheme with effect from March 2009. The objective of these changes is to continue to encourage members, in aggregate, to provide DFB with level milk production. Although milk supply nationally remains tighter than in previous years, a spring flush could still result in short term oversupply and consequent reductions in market returns. In view of this, and the long term strategic need for level milk delivery to meet our market requirements and maximise the efficiency of our dairies, these changes simply fine tune the existing system and continue to reward summer and autumn milk and penalise spring milk which is produced over rolling average production (RAP) levels. The developments to our seasonality scheme therefore encourage members to shift the balance of their milk production more towards the summer and autumn to address the trough which is now extending into the earlier autumn months. August has become a bonus month whilst December becomes neutral. Another element of these changes is that the penalties applying in March (if the monthly production exceeds RAP) have been reduced. This will benefit those members whose autumn production continues through into late winter. Details of the scheme: The scheme involves adjustments to spring and autumn months only – other months in the year do not have additions or deductions. Spring adjustments:
NB: for March and April 2008 the adjustments will be based only on the percentage points over 105% of RAP rather than on all the points over 100%. The interactive calculator does NOT take this into account as it is intended to show the difference between the current and the revised scheme. Deductions apply on all litres consigned in the month only if the milk produced is more than the monthly RAP. If the litres produced in the month are less than the monthly RAP there will be no deductions. Example: If March production is 110 % of the monthly RAP the deduction will be 10 x -0.04ppl which is -0.4ppl deduction on all the litres for the month. Autumn adjustments:
Additions apply on all litres consigned in the month when the milk production is more than 90% of the monthly RAP. If production is less than 90% of the monthly RAP no additions apply. Example: If August production is 97% of the monthly RAP the bonus will be 7points x +0.04ppl which is + 0.28ppl addition on all the litres for the month. Notes: The RAP is calculated by taking the last twelve months total production (current month and previous 11 months), dividing it by 365 and then multiplying it by the number of days in the month. A RAP figure is calculated every month. A cap on deductions and additions applies at 160% of production in both the spring and the autumn. If you would like to see the way graduated seasonality will affect your business then please click here for our graduated seasonality calculator. Further reading: The August 2007 edition of Talking Points includes an exert of an article written by Chris Flint of Kite Consulting. To view the full article, please click on this link . |
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Tel: 08700 108191
Fax: 08700 108188
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