Less than three years ago farmers’ co-operative First Milk was on its knees and producer members had to pay the price with plummeting incomes and postponed milk cheques.
A transformed business has now posted financial results which show an £11 million turnaround in fortunes over the last 12 months.
From a £5.1 million net loss in 2016, the latest accounts show a net profit of £6 million for the year ending March 31.
However NFU Scotland (NFUS) was not slow to point out that dairy farmers had made “huge sacrifices” in order for the company to achieve that transformation.
In the last financial year First Milk group turnover was £206.5m (2016: £294.2m), net bank borrowings increased to £37.6m (2016: £32.1m) and total group capital and reserves increased to £22.0m (2016: £17.4m). There was capital investment of £3.8m across all sites compared to £4.8m in 2016.
The milk price paid to producer members rose by an average 9p per litre and included a business performance payment of 2ppl.
NFUS milk policy manager George Jamieson described the solid trading results as “very encouraging” and indicative of the hard work and sacrifice following the drastic steps which were taken.
“NFU Scotland would like to acknowledge the huge sacrifices made by First Milk members, without which the recovery could not have been delivered. The low prices First Milk members received over the recent difficult market conditions were amplified by the very poor financial position the co-op was in,” he said.
First Milk chairman Clive Sharpe said the business had been transformed over two years, with debt re-financing, a new long-term contract for fresh milk to Nestle UK and Ireland, a long-term cheese supply partnership with Tesco and Ornua Foods and the sale of the loss-making CNP sports nutrition business.
“The transformation of our business is complete and, as a result, First Milk today is now a more focused and financially secure business,” he said.
“This is demonstrated through these significantly improved financial results and, most importantly, through our ability to increase milk prices to our farmer members ahead of the market during the last financial year.”
The co-op’s new chief executive, Sheila Hancock said the team would continue to have a “relentless focus” on efficiency and quality.
She added: “We will put customers at the heart of our business, creating value through strong, long-term partnerships and exploit the advantages we have to grow the business. The combination of these efforts is to deliver competitive total returns to our members.”
However George Jamieson of NFUS made it clear that more could be done to build trust.
He said: “We believe there is a need, and a great deal of sense in increasing members understanding of governance and members responsibilities, measured not just by attendance and engagement with meetings and the AGM, but also building a culture of co-operation.”