Sir Jim Paice

Sir Jim Paice

First Milk has announced a further reduction to its farmgate milk price from next week, while Sir Jim Paice is to step down from his role as chairman.

The struggling dairy co-op, which confirmed last week it had accumulated losses of £22m during its past financial year, will reduce its standard litre price for ‘A’ payments (representing 80% of member milk volumes), by 1ppl across six out of its seven regional milk pools. The only exception is the midlands balancing pool which will see a 0.7ppl reduction.

This means that from 1 July, the processor will be paying ‘A’ prices at or below 20ppl. Farmers in the Midlands/East Wales, and Isle of Bute pools will be paid the least, at 18.60ppl and 19.05ppl respectively 

A spokesman for First Milk echoed CEO Mike Gallacher’s comments last week that the co-op would only pay prices it could afford to, with the July prices reflecting the ongoing global dairy commodities market.

Gallacher last month initiated a turnaround plan for the business – which will see it shed up to 70 jobs, cut costs, establish a new business unit structure and refocus on its core businesses – and the launch of a strategic internal review of the governance and commercial learnings from the business’s recent disappointing performance.

With that review now well underway, former Conservative MP Paice said today (24 June), that the time was right “to announce my intention to step down as chairman of First Milk”. He was appointed to the role in October 2013.

Citing the need for First Milk’s board to appoint “more people with real commercial and business skills”, he added that there had to be “significant change in the constitution of the board, and that includes the chairman role”.

Signalling his intention to stand down allowed to board “to immediately start work on scoping out the personal and professional qualities that they require in a new chairman, and initiating a recruitment process,” he claimed.

However, Paice will remain in his role “to ensure an appropriate transition”, and until “a smooth handover to a new chairman is achieved”.

The price cuts were met with dismay by the National Farmers Union’s dairy board chairman Rob Harrison.

“We are in a position now whereby the majority of dairy farmers in the UK will be receiving milk prices far below the cost of production, this is simply not sustainable,” he warned.

“What we need is a guarantee from our milk buyers that they are doing all they can to get the best possible price from the market,” Harrison added. “But above all, we need the industry to work with us to develop a rigid and practical set of risk management tools that can benefit our farmers and support them with fair prices during a period of market volatility.”