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First Milk cuts jobs and milk prices in revival plan

Charlie Taverner 01 May 2015
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First Milk has cut dozens of jobs and overhauled its milk payment system as the first part of a turnaround plan.

Up to 70 staff in head office and support roles will be dropped – about half of the total.

And the prices paid to members will be cut by £3.3m overall, an average of 0.33p/litre a farmer.

But the milk field will be sliced up into seven pools to reflect better that milk’s value.

See also: 5 issues raised by First Milk’s shock news

This means some producers will see payments rise, while others will face further cuts.

The announcement marks the first stage of new CEO Mike Gallacher’s plan to turn around the struggling co-op, which he will present to member meetings starting next week.

Mr Gallacher, who has been in the job for a month, said none of the decisions had been taken lightly.

But he said they were necessary to rebuild a “secure and stable” future for First Milk, its farmers and workers.

“As a team, our aim will be to provide every support for those impacted in the coming months,” Mr Gallacher said.

The biggest impact to farmers will be more milk price pain.

The seven milk pools are the payment changes for “A” milk from June are:

  • Arran (manufacturing pool) – 0.2p/litre cut to 20.67p/litre
  • Bute (manufacturing) – 1.2p/litre cut to 19.3p/litre
  • Campbeltown (manufacturing) – 0.2p/litre cut to 20.67p/litre
  • Haverfordwest (manufacturing) – 0.3p/litre rise to 21.17p/litre
  • Lake District Creamery (manufacturing) – 0.2p/litre cut to 21.17p/litre
  • Mainland Scotland (balancing pool) – 0.2p/litre cut to 20.3p/litre
  • Midlands of England and East Wales (balancing)– 1.2p/litre cut to 19.3p/litre
  • Northern England (balancing) – no change, 20.50p/litre

First Milk has projected a June “B” price, for any milk above 80% of last year’s production, at 14-17p/litre.

Also, First Milk chairman Jim Paice has announced an independent review into what the co-op can learn from the business’ recent poor performance.

This will be modelled on the Myners review of The Co-operative and will report recommendations by the summer.

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