First Milk has today announced a series of changes to its capital structure that will see the introduction of a ‘member premium’ in the form of a 13th payment to members from next year, as well as increased transparency in share trading and the freezing of capital contribution targets.
The extra payment – which will be introduced from April 2019 – will be 0.25p/L for someone who is fully invested in the business.
The amount will be adjusted pro-rata based on the achievement of the members’ capital target.
In addition, First Milk has confirmed that members’ capital targets will be fixed with immediate effect, based on current milk production levels as calculated in March 2018.
This will enable members to grow and expand their milk production without a requirement to contribute additional capital. Member capital contributions will continue for those that have not yet reached their capital target.
Introduction of independent share trading platform
Finally, to make share trading easier and the value of First Milk member shares more transparent, the co-operative has announced that it will work with Asset Match, an independent trading platform, to provide a free to use a trading system for members that will deliver market-derived trading prices.
Commenting on these announcements, chief executive, Shelagh Hancock, said: “I am delighted that First Milk now has the financial security to make these important changes to our capital structure.
“These developments have been agreed in direct response to member feedback and have the full support of the Board and Member Council.
In combination, these changes will recognise the loyalty of our long-standing members, remove some existing barriers to expansion on farms, and provide a simple and transparent way for members and retired members to trade shares.
“As we look to the future, these changes will help us deliver our growth strategy, which sees us investing significant capital into our sites to ensure we can meet the growing demand from our customers for our high-quality milk and cheese.
“By working together to deliver our growth plans I am confident that we will deliver prosperity for our members.”
A welcomed decision
John Smith, NFU Scotland Milk chairman, said the union had been lobbying for a members’ premium for several years.
“It is important that members are rewarded for their hard work and loyalty, which is exactly what this announcement will provide,” he said.
Despite the difficulties over the last few years, it is encouraging to see First Milk become more transparent and open with their members.
“It is positive to see First Milk seeking additional volumes of milk from their members and helping them facilitate expansion without the increase of capital targets which were seen as a barrier.”
