Robert Wiseman Dairies has announced pre-tax profits of £49.2million in the last financial year, almost 60% higher than the £30.8m profit in 2009. Sales volumes were also up by just over 9% to a record 1.77bn litres, with particular gains in sales to The Co-operative Group (an additional 116m litres).
Over 2009 the group benefited from volatile cream prices; prices increased in the second half of the year which drove cream revenues above the levels generated in the first half of the year. These increased cream revenues were, however, partially offset by rising plastic and fuel costs.
Chairman Alan Wiseman said the record results were "very satisfactory" and had exceeded previous profit estimates for the year. "It is very pleasing to have the facilities and capacity in place to continue growth towards our near-term target of selling over 2bn litres of milk a year.
"In relation to the improvement in our underlying operating margins, while the Group has recently benefited from higher cream revenues, there is no certainty that these will recur," he continued.
DairyCo Market Intelligence Manager David Swales commented.
"While Wiseman has consistently featured toward the top of the DairyCo league table of prices paid, many farmers will now be asking why the prices they have received have not increased since August 2009, despite the high cream revenues they are now reporting."
Looking wider than Wiseman's, at the industry as whole, there is dissatisfaction over the returns farmers are receiving in the current market. The average farmgate price in the UK has been static for six months, excluding seasonality payments, and stood at 24.08ppl in March 2010. However, data suggests that many processors are benefiting from improving returns in the market. In April AMPE, which measures the returns of processing milk into butter and skimmed milk powder, rose by 2.5ppl to 28.0ppl. Annual comparisons show AMPE is now 46.6% higher than in April 09, when it stood at 19.1ppl.
David Swales adds:"It is not unusual to see a time lag between increases in commodity prices and the farmgate price. Some commentators are starting to compare the current situation to that of the summer of 2007 when dairy commodity prices reached record levels. Then, the market boomed from June and July and farmgate prices only started to rise significantly in September and October, with the time lag allowing milk buyers to obtain better returns from their customers. If markets remain firm, as most people expect, we would expect prices paid to farmers to rise soon due to increased competition for milk."