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I want to update you on two areas this month. First, let me cover milk prices, and then, secondly, I will update you on some organisational changes we plan to make within the business.

Despite the overwhelming statistics pointing to the need for milk prices to rise, the market has been slow to react so far.

Liquid prices will have to move first to re-establish their premium position in the dairy hierarchy; with milk for cheese prices coming under pressure to increase in the second half of financial year. Commentators are predicting that commodity prices will continue to firm, although it is very unlikely that they will hit the heights of 2007.

Please be assured that we are acutely aware of the pressures you are under, and we are forthright in our dealings with our customers to achieve price increases from them as quickly as possible.

Over the next few months we propose to reduce our number of office locations and streamline our organisation in order to improve performance and reduce the costs of the First Milk operation (elsewhere on this page are details of people changes to our Milk Operations division as a result of this restructure).

As part of this process, our Claygate office in Surrey (the head office for our cheese business) could potentially close. We are currently consulting with our people based there about their individual situations.

The aim of this proposed restructure is to help us become even more efficient, cost-effective, and fleet of foot in capitalising on opportunities.