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Marketing > Production And Milk Marketing > Flashcards

Production And Milk Marketing Flashcards

1
Q

Name 7 direct factors affecting the future dairy industry

A 
⭐️Milk prices
⭐️Government environmental strategy
⭐️Seasonality of supply/flat profiling
⭐️Processor and retailer margins
⭐️Input/production costs
⭐️Consumer demand
⭐️Perishable products requiring efficient systems
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2
Q

Trend in milk production

A

No. of producers are decreasing, but average herd sizes and milk yields are increasing

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3
Q

Factors affecting average price trends

A

⭐Prices volatile
⭐️Milk Marketing Board abolished 1994
⭐️Disease outbreaks (BSE and foot and mouth)
⭐️2012- collapse in price of cream, supermarket pressurise for cheaper prices

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4
Q

AMPE

A

Actual milk price equivalent

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5
Q

MCVE

A

Milk for cheese value equivalent

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6
Q

IMPE

A

Intervention milk price equivalent - the value of a litre of milk that has been manufactured into butter and SMP and sold in intervention. An assumed cost of manufacture is deducted to give equivalent raw milk price.

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7
Q

Factors affecting milk price received by farmers (5)

A 
⭐️Quality
⭐️Volume
⭐️Composition
⭐️Penalties
⭐️Collection charge
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8
Q

Market outlets (3)

A

⭐️DIRECT to milk processing company
⭐️Through a COOPERATIVE
⭐️Through a MARKETING GROUP to a dairy

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9
Q

Main aim of MMB

A

Sustain milk output and price stability

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10
Q

Key changes in milk procurement in recent years (3)

A

⭐️More being obtained through direct supply contract:
Downward trend in GB milk production to secure supplies
Reduced demand for milk the third parties

⭐️Larger proportion aligned to dedicated retailer contracts:
Secure supplies
Limited to three large liquid processors (Arla, Dairy Crest and RWD/Muller)

⭐️Larger average farm size

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11
Q

Benefits of an integrated supply chain (4)

A

⭐️Share performance data
⭐️Farmers receive higher prices
⭐️Deliver different welfare recommendations
⭐️Insulated from price trends

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12
Q

Typical feature contracts (3)

A

⭐️No reference to end use
⭐️Advantages: processors can move milk around easily; no unnecessary costs
⭐️Disadvantages: no guidance/leadership from supply chain; don’t deliver to best value

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13
Q

Non typical feature contracts (3)

A

⭐️Direct link to end use
⭐️Advantages: farmer had knowledge and can plan production; avoids unnecessary pursuits of low value constituents; cost benefit; supply to meet market, not quota
⭐️Disadvantages: less flexibility; long term planning required; potentially less efficient

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14
Q

Problems with contracts and selling 1⃣

A

REDUCE POOLING METHOD OF PRICING
⭐️Allow chain to meet market requirements more clearly
⭐️Harmonised price for all raw milk

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15
Q

Problems with contracts and selling 2⃣

A

BASE PRICES
⭐️Contracts based on liquid milk
⭐️Dairy Crest and Waitrose - focusing on assurance and traceability
⭐️Dairy Crest and M&S - unique formula with own set of market indicators
⭐️Differentiate: quality, service, assurance, cost etc

⭐️If only price competed on, all milk will be priced off at lowest common denominator

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16
Q

Problems with contracts and selling 3⃣

A

LEVEL SUPPLY
⭐️Show fixed monthly volume requirements
⭐️More dialog between producers and processors

17
Q

Problems with contracts and selling 4⃣

A

FARMERS NOT PAYING ATTENTION TO MARKETING MIX

⭐️Big difference in price paid to farmers on same contract than between farmers in different contracts

18
Q

Problems with contracts and selling 5⃣

A 
PROCESSOR/RETAILER POWER
⭐️Change prices at short notice
⭐️Some hard to quit
⭐️Farmers can't negotiate - lack of partnership, collaboration and trust
⭐️Pushed into other schemes
19
Q

Dairy voluntary agreements (6)

A

⭐️30 day notice of price changes
⭐️Retrospective price adjustments not acceptable
⭐️Can supply to more than one processor
⭐️Right to automatic contractural release
⭐️Must be a commitment to engage with farmers and to maintain prices within manually agreed parameters
⭐️Where farmer disagrees with prices, right for producer to exit contract with notice of three months

20
Q

Why is there a lack of confidence?

A

Continual low margins leads to reduced production, meaning investment decisions are likely to be abandoned and there will be a shortfall of milk to meet contract

21
Q

Farmer focus

A 
⭐️Get back to basics
⭐️Know contract details and deliver precisely
⭐️Think beyond farm gate
⭐️Develop dialogue with buyer
⭐️Look at production costs
⭐️Collaborate
⭐️improve efficiency
⭐️New product opportunities
22
Q

Name 6 indirect factors affecting the future dairy industry

A 
⭐️GLOBAL influences on UK market prices
⭐️Exchange rates
⭐️Skimmed milk powder trade
⭐️Feed prices
⭐️Impact of trade liberalisation/imports/exports
⭐️Weather

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