Dairy Farmers of Britain Limited (Receivers and Managers Appointed) - Members Section

Tax guidance for farmers on monies lost as result of DFB's receivership.

We attached a link to the very recent guidance from HM Revenue and Customs for farmers in connection with the monies they have lost as a result of the receivership. A further comment on this guidance from the receivers will follow shortly on this website.

http://www.hmrc.gov.uk/briefs/cgt/brief0110.htm

"A final payment to members for milk supply was made on the 24th of August 2009 and should now be in their bank accounts. All members will be receiving a final statement in the post."

Final milk payment letter

Most recent communications

Further member correspondence

Members update

Base Price and Rolling Monthly Contract

Following the release of the new rolling monthly contract on Wednesday I am now in a position to outline the Base Prices which will be paid to farmers for milk supplied under the first monthly contract.

The Base Prices will be as follows;

  • Conventional Milk - 10ppl
  • Channel Islands Milk - 13ppl
  • Organic Milk - 16ppl

As explained in previous communications, the Base Price will be part of the total price paid to farmers each month.

The total price paid will be the trading margin for the month - in simple terms this is:

  • Sales price achieved for milk                                A
  • Less the costs of getting that milk to sale            (B)
  • Equals trading margin                                           C

The total price paid for milk will be calculated at the end of each payment period but will be a minimum of the Base Price and could be higher.  Please remember that this calculation excludes receivers and managers fees.

We understand that members may be unhappy with these Base Prices and it is important that we explain the reasons for the low pricing.

DFB has lost significant numbers of farmers and volumes of milk since the appointment of Receivers and Managers and has also lost a number of key customer contracts.  This means the Company is now faced with the following difficulties;

  • Reduced negotiating ability on Milk Sales Price
  • Diseconomies of scale in its haulage arrangements

As stated in previous releases, we recognise the hardship and uncertainty the appointment of Receivers and Managers places on Members and we have therefore included the following provisions in the contract;

  • Members can give DFB four weeks notice to terminate the contract, expiration of which allows them to move to another purchaser.
  • DFB will make payments to Members twice per month.

If you intend to stay with DFB please sign and return the acknowledgement slip.

The Base Price for the initial 2 week period will be reviewed next week after the end of that period.  This will take longer to calculate due to the increased volumes and added complexities of significant numbers of members leaving  DFB.

New Monthly Contract

The new contract is finalised and a copy has been attached and has also been sent to the remaining members in the post.

Key provisions:

  • Monthly contracts commencing at 12:00.01 am on the 17th of each month to midnight on the 16th of the following month.
  • Contracts renew automatically following the 16th of each month.
  • Members can give DFB at least four weeks notice to terminate the contract, expiration of which allows them to move to another purchaser.
  • DFB will make payments to Members twice per month.
  • DFB will pay the members based on a set pricing formulae. The price paid to you for the supply of milk will be the trading margin calculated after deducting DFB's trading costs from trading receipts in the ordinary course of business and apportioned between all the Members who have supplied milk based on the actual volumes supplied. (Please note that the fees of the Receivers and Managers will be excluded from these calculations.)
  • The New Agreement specifically provides for base prices for the purchase of conventional, organic and Channel Island milk.  These base prices are expected to be announced on Friday.

I thank you for your continued support during this difficult time.

Kind regards

Steve Oldfield
Joint receiver

Fourteen day Purchase Order

To be clear, the 14 day contract dated 3 June 2009 should preferably be signed now and returned to the member business centre via fax, 08700 108188 by the 12 June 2009.  This makes your position clear.  Please remember to sign on the last page (or front page) providing your name, address and farm number.  However, if you have found a safe home for your milk you must contact the member business centre on 08700 108181 as soon as possible and tell them who it is with and the effective date.

Members update

1. If you intend signing up to the New Agreement (by signing the Acknowledgement Slip) please do so by Monday 15th June 2009.  If you expect your volumes to reduce significantly, please will you indicate the volume reductions on your form and a member of the milk supply team will contact you.  We have not imposed a minimum volume for collection in the new agreement but in order to manage haulage and our selling volumes we need to assess in advance what volumes we expect. Further information is contained in the monthly contract and the covering letter.

2. A question was asked whether the members were liable for the historic debts of the Co-operative. They are not, with the exception that the Receivers and Managers are looking into the obligation of the members and ex-members under the Member Financial Agreement.  More will follow on this in the next week or so as we are calculating the numbers and ascertaining which farms are involved.

3. If you are a Channel Island producer the Member Council are seeking to organise that milk field, then please contact Richard Bruce on 01952 822 864 or 07802 264 221.

4. We understand that Anne Horton, via the members business centre, is co-ordinating the organic producers along with Huw Bowles of OMSCo.

5. Cash in the bank account. The Receivers and Managers are intending to make an on account payment to members for milk supplied since 3.00pm on Wednesday 3 June 2009 to midnight on 16 June 2009.  This should reach your bank account on or around the 19th June 2009.  For members who have signed up to the monthly contract they will also get a payment in early July to cover the period from 17 June 2009 to end June i.e. we will be moving to twice monthly payments.

6. We will provide in due course a full record of milk supplied but not paid for to all members for May. We will also add to this the amounts of members loanstock and Equity accounts so everyone knows the extent of their loss and it is in a form they can use for their accountant and Bank manager. Please note we are looking into whether or not the loan to equity swap in March can be unwound to assist some with their tax position. We will not know the answer to this for a week or so, therefore the statement assumes that swap is effective. If this changes we will let you know.

In summary, the vast majority of members have communicated well with the members helpline 08700 108181 and please continue to do so as we settle the DFB milk field and move to the new monthly arrangements.

My thanks to all for the practical way you are working with the milk supply team and my receivers team as this progresses.

Kind regards

Steve Oldfield
Joint receiver

Member Statements

As discussed at the regional member meetings, we are producing individual members' statements detailing the following:

  1. May balance outstanding (where applicable)
  2. June balance outstanding (where applicable)
  3. Members Capital Balance

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