First Milk is today (12 March 2013) announcing a double boost for its members in the form of a new preference share allocation plus a return on investment, worth a combined total of around £8900 to an average 1 million litre member.
Firstly, in April First Milk members will receive the allocation of the gain on the sale of First Milk's shareholding in Wiseman to Muller last year in the form of new preference shares. These shares have been allocated to each member based on the amount of capital already contributed to the business, with the allocation worth around £8000 to the average 1 million litre member. The First Milk Board intends to pay a 5% per annum return on these shares for at least five years.
Secondly, continuing on the theme of rewarding member investments, the company will pay out a 3% return on capital invested in First Milk or £900 to an average 1 million litre producer, also in April. Since 2010, First Milk has made two returns on investment to members each year, equating to an annual return of 6%.
First Milk vice chairman Tom Campbell commented:
"We have set out a clear direction to invest more heavily in added value as we look to transform the margins we receive. This will insulate us to some extent from the commodity product dogfight, particularly in the run-up to the removal of quotas in 2015.
"Along the way, we recognise that it's critically important for members to see regular returns on their investment coming through and their capital balances growing. This is a path that is already well-trodden by a number of successful farmer-owned businesses like FrieslandCampina and Fonterra.
"We've just finished 40 Farmer Forums around the country, talking face-to-face with nearly 800 members. The overwhelming majority of members in Scotland, England and Wales support the direction we're taking. We appreciate that there's no easy money right now, but at the Forums members supported the need to invest and follow a different path from the rest of the industry.
"At the Forums we also received the green light from members to investigate routes where non-members can invest in the business, as long as it doesn't impact on the ownership structure. A number of employees have already expressed a wish to do this, and we've had plenty of calls from producers over the last few weeks who are interested in routes for themselves and their family to invest too.
"Farmers will ultimately choose the future shape of the British dairy industry. The route we've set out at First Milk is for producers to seize the opportunities to collaborate and invest in their own added value processing, rather than lining someone else's pockets."
About First Milk
First Milk is the UK's only major dairy company owned by British dairy farmers.
As a business with a passion for innovation and sustainability, it is constantly seeking fresh ways of working with partners across the supply chain to drive pioneering solutions to industry challenges.
This has been supported through the recent acquisition of added value businesses, by rapid progress on launching new products and securing new customers in the UK and international markets.
A copy of First Milk's sustainability report is also available to download via its website - www.firstmilk.co.uk/sustainability/