Message from Bill MustoeCommunications UpdatePeople FocusFirst Milk Academy UpdateFirst Milk Direct Update

Features in this issue:

StraightTalk is Now Online

DECEMBER 2009

DECEMBER 2009

First Milk News

I have been your Chairman for seven weeks and without doubt the world

of dairy has been a steep learning curve for me. So far, I have presented to over 700 members as part of the meetings we did around the country, and probably talked one-on-one to over 100 members during that period.

Even with my limited understanding of the dairy industry, I know that we are off the pace right now on milk price. Let me talk about what we are doing to improve this situation.

The No.1 focus is our cheese business. At last count we have 16 projects at various stages of development that will improve our

profitability. However, we are not ignoring the rest of First Milk. We also have a number of project streams aimed at reducing costs or delivering new profit streams within our raw milk and ingredients operations.

While we have made a good start over the last few weeks, we can and must do more. I have got the Board and the Executive team together at the end of this week to come up with more ideas to substantially improve the quality of our earnings. We need to be imaginative and open up our minds to ideas for driving the business forward outside the constraints of our current business model.

In terms of managing costs, we've tightened up and stopped discretionary spend where we can by scrutinising all costs. I look at this very simply. Every pound the business spends is a pound that we can't pay out to you.

I said in the November newsletter that I wanted the Farmer Directors to get closer to the business and spend more time with the Executive team. I am happy to say that each of the farmer directors has stepped up to this challenge and I believe that we will get better debates at the Board and therefore better decision-making as a result of this linkage.

A significant number of members have told me that they are supportive of my plan to reduce the number of

elected farmer directors on the Board and co-opt farmer members with proven business acumen onto the Board. We are looking at ways to do this within the rules of First Milk, but rest assured that we will make these changes as quickly as possible.

What we are doing right now is not sexy. We are working hard across a host of areas to grind out better net margins. But I know from other businesses I have been involved with that if you have a clear direction and deliver against set objectives, the relative position of a business will definitely improve.

I wish you and your families well over the festive season.

Message from Bill Mustoe

" We need to be imaginative and open our minds up to ideas"

Welcome to the first online edition of StraightTalk.In the November newsletter, we outlined our proposal

to increase the speed and breadth of our communication with members, while minimising costs.

This means that instead of relying almost exclusively on printed materials like letters, newsletters and flyers, we will be using a range of communication channels to ensure that members hear news about the business first.

Our chairman Bill Mustoe recorded a voice message for members earlier this month. This proved popular with several hundred members calling to hear the message. From January, he will record a message each month.

Having listened to feedback from members and local representatives for a shorter, sharper newsletter, we have reduced this publication from eight pages to four.

This will be supplemented with a weekly news bulletin to keep you regularly updated on business information and UK/global dairy industry news. The first bulletin will be available on the ‘News’ section of the members' website on Friday 8 January.

In order to support these changes, we will be making greater use of text messaging, email and the ‘News’ section of the members' website, which we will develop over the next couple of months. We will keep you updated on progress.

Communications Update

To ensure that you are kept up to date, please inform membership services of any changes or updates to your contact details by emailing membershipservices@firstmilk.co.uk or calling 0141 847 6800.

First Milk Awarded Wiseman ‘Supplier of the Year’

We have been awarded Wiseman Dairies ‘Supplier of the Year’ in recognition of the professionalism,

responsiveness and capability of our sales team. This accolade recognises excellence across the

Wiseman Dairies supplier base. Previous winners include the Clydesdale Bank who has worked with Wiseman for over 60 years and Isoma, who has designed and developed much of the machinery for the filling lines at the company’s dairies.

First Milk Executive Director, Mark McQuade, said: "We have worked hard to understand the needs of the Wiseman business as it has evolved over the years. We are delighted to have won this award and it is testament to the quality of our members milk and the hard work, flexibility and dedication of our sales team."

Pictured above: Mark McQuade receives the ‘Supplier of the Year’ award.

DECEMBER 2009

ElectionReminder

www.firstmilk.co.uk

People Focus

StraightTalk has launched a new feature to inform members about our people.

This month, StraightTalk caught up with Paul Rowe to get an insight into his role as General Manager of Manufacturing. "My role is General Manager of Manufacturing and I lead a team covering manufacturing at our cheese packing plant and specialist dairy ingredients operation near Wrexham, plus the five creamery sites across the UK. In addition, I have responsibility for Safety, Health & Environmental (SHE) Management across the group. I have responsibility for 450 employees, which covers just under 75% of people in the business.

"The job requires me to get the right balance between developing and motivating the site managers to run their own unit, alongside pulling all this together to ensure we have common standards and practices across all our locations. I am helped by the fact that I have a team of people who are not only willing and able to take on board responsibility, but also passionate about improving the performance of our factories.

"We are all currently working on a range of plans to improve the profitability of our cheese division. This means that we have a number of projects on our plate and we have to deliver them all at pace as part of the chairman's 30/60/90 day plans.

"A good example of the speed at which we are moving is at our specialist dairy ingredients operation. We announced proposals to close the whey processing operation there at the start of November; we have just completed employee consultations, and will close the operation in early January. The business will get a significant financial benefit from this new route.

"In addition, we introduced flexible working at our cheese packing plant which gives us the ability to call on people when we need them. The Unions worked with us to implement this and is has made a big difference at the site where we have halved employee numbers over the last two years.

"I also have a number of longer-term strategic projects as part of my role. For instance, earlier this year I worked with Tesco and the Scottish Government to secure funding for a new creamery at Campbeltown.

I am still involved in the ongoing liaison with Tesco as we work through the public consultation and planning process with the local council. Theend result will be a new creamery that is cheaper to run and more environmentally and customer-friendly."

Paul Rowe, General Manager, Manufacturing

Election Districts

District Number District Name Local RepresentativeDistrict 1: Kintyre, Cowal & Islands Robert MillarDistrict 4: Mid Ayrshire Willie CampbellDistrict 6: Stranraer Hugh ParkerDistrict 10: West Cumbria Cathryn Pritt District 12: Mid & South Cumbria Steve DunningDistrict 21: Gwent & Glamorgan Clive PrichardDistrict 23: Shrops, Montgomery & W Worcester Roger EvansDistrict 25: North East Midlands Richard HollingsworthDistrict 27: Wiltshire & South Oxfordshire Joe Collingborn

Timetable

29 January Deadline for return of nomination forms which must be signed by at least ten members. 5 February Deadline for candidates to withdraw their nomination.5 February Voting papers dispatched to members in any district where there are two or more candidates and an election is to be held.26 February Deadline for return of voting papers. Successful candidates notified.1 March New or re-elected Local Representatives take office.

Election of Local Representatives Reminder

The Local Representative elections will be held for the districts set

out below on 26 February 2010. The Board will receive nominations

of candidates for these elections addressed to: The Company Secretary, First Milk Limited, Cirrus House, Glasgow Airport Business Park, Marchburn Drive, Paisley, PA3 2SJ, to arrive no later than 3pm on 29 January 2010.

For further information and a nomination form, please contact Nayar Hussain, legal administrator on 0141 847 6883.

John Gibson and his family joined First Milk in June 2009. They farm

200 acres at Bostern Grange near Ashbourne in Derbyshire as well as 120 acres nearby at Hulland Ward.

The main unit is at Bostern Grange where they keep 240 cows at 1000 feet above sea level. All dry stock and replacement heifers are kept at Hulland Ward.

Farming PracticeThe cows are looked after by John,

his daughter Debbie and son-in-law Gavin Redfern. They are milked 3 times a day and the family have targeted an average yield of 8000 litres. The cows are mainly Ayrshire and Ayrshire crosses and the family recently bought a bull at Carlisle that is ¾ Ayrshire and ¼ red and white Holstein.

The cows are housed in cubicles and are fed a T.M.R. mix of silage, brewer’s grains, molasses and nut, with a top up concentrate fed in the parlour, which is currently used at 0.35kg per litre.

Workshop BenefitsSince joining the business, the

family has embraced First Milk Academy with enthusiasm. They recently hosted a business club on animal nutrition but it is their attendance at the Professional Development Workshops that has

made the most impact on farm. The family recently attended a four day course on fertility and they have since reported clear improvements.

“The course cost £80 and it was worth every penny for what we learned on the first day,” said Gavin. “We didn’t realise how much money we could lose by not getting the cows in to calve quickly enough,” he explained.

“It was important that the three of us completed the course as we look after the cows as a team on a 3 times a day milking rotation and the workshops have helped us to

align our thinking and our breeding programme is now better co-ordinated.”

“As a result of completing the module, we now serve our cows at 42 days instead of 60 and so far they have all held. This is an important change in our management practice and has made us realise what we have missed out on in the past,” added Gavin.

Our Business Clubs and Professional Development Workshops are well supported by young enthusiastic people who have a positive outlook and are seeking to improve what they do on farm.

www.firstmilk.co.ukDECEMBER 2009

First Milk Academy

Embracing the benefits of First Milk Academy Workshops Coming Up

" The course cost £80 and was worth every penny"

The forthcoming workshops scheduled for January and February are as follows:

Area Manager Workshop Area DatesSamantha Price Lameness Carmarthenshire 6 JanuarySimon Pitt Lameness Ceredigion 7 JanuaryAndrew Pye Feeding the Dairy Herd North Lakes 19 JanuaryIan Critchley Lameness Lancashire 19 JanuaryAndrew Pye Feeding the Dairy Herd South Lakes 21 JanuaryChris Godfrey Lameness Derbyshire 21 JanuaryDrew Robertson Lameness Dumfries 2 FebruaryPeter Llewellin Feeding the Dairy Herd West Wales 3 FebruaryRichard Panes Feeding the Dairy Herd Wiltshire 12 FebruaryRoger Poynton Herd Health Walford 18 February

If you are interested in attending a workshop, please contact your Area Manager.

For Sale• Alfa Lavel dx tank 5000 litres • A G Maxi sawdust dispenserContact: Mr Hinton, Monmouthshire, 01291 690293

• 70 Quattro rubber mats, latex infill, quantity of pasture mats also available £5 per mat or nearest offer.Contact: Mr Shanks, Borders, 07974 968150

• AG150 Tractor mounted sawdust dispenser, five yrs old, good condition, Spare belt included in offer. £1500 or nearest offer.Contact : Mr Shelley, Staffordshire, 01630 620257

• Bulk tank for sale2900 litres dairycool milk tankContact : Mr Shelley, Staffordshire, 01630 620257

• 10000 litre Mueller EODC bulk tank complete with single phase compressors and plate cooler. Well maintained.• 18 point abreast parlour fitted with Westphalia ACR'S, 200ml claw pieces, milk transfer pump, vacuum pump etc.• Stallwork in good condition, no feeders. Option to purchase whole or split.Contact: Mr Twose, Carmarthen, 07811 207181

Wanted• FR3 Fullwood vacuum pumpContact: Mr Loake, Powys, 07536 097644

• Fullwood, Augermaster Electric Feeders or similar.Contact: Mr Jones, Chepstow, 01291 622024 or 07792 255416

Pictured: John Gibson (right) and Gavin Redfern (left)

Deosan Offer

First Milk Direct is delighted to introduce a new offer in partnership with Deosan, which is available until

30 March 2010.Members who purchase Deosan Hoof Care Plus (20

litre) will receive a free 25kg Deosan dry bed.Deosan Hoof Care Plus is a powerful broad spectrum

footbath disinfectant based on active ingredients, glutaraldehyde and quaternary ammonium compounds. Independent trials have indicated that these ingredients reduce the incidence of digital dermatitis and improve locomotion levels in dairy herds.

“Lameness continues to be a major problem on dairy farms, affecting both profitability and welfare and is believed to cost the average herd over £10,000 a year. Deosan Hoof Care Plus contains a specific blend of ingredients that are highly effective and easy to use,” said Louise Womersley of EMA and UK Agriculture with JohnsonDiversey.

Deosan Dry Bed is a fine powder designed for use in all farm animal housing and combines exceptional odour neutralising and absorbency capabilities. Dry Bed can

absorb up to 50% of its own dry weight in moisture and it is effective on all bedding materials including straw, sawdust, wood shavings and concrete or matted cubicles.

“Wet soiled bedding is a major breeding ground for the bacteria associated with a wide range of diseases in dairy cows, particularly mastitis,” advised Louise. “Deosan Dry Bed provides an effective solution which helps to maintain drier, healthier bedding.”

For further information on the offer or Deosan products, please call 0800 013 3044 and quote First Milk Direct.

www.firstmilk.co.ukDECEMBER 2009

First Milk Direct

K ilco’s new Nano Solutions mastitis control product range

was officially launched at the UK Dairy Event in September 2009 and has been a huge success during its initial sales promotion in October and November.

The Kilco Nano Solutions range is available along with Kilco’s innovative dairy hygiene products and attractive rebates are available

to members. Dr Matt Miller, General Manager

of Kilco, said: “The success of the teat dip product promotion completely overwhelmed us. We have had very positive feedback on the new Nano Solutions range during trials earlier this year and from farmers at the Dairy Event which was very encouraging.”

For more information on the Nano Solutions range or to locate the nearest Kilco, Emprasan or Northern Dairies supplier of dairy chemicals, please contact Nigel Hayton on 07840 550747 (Northern England & Scotland); Adrian Lawrence on 07973 956296 (Wales & Central England) or Mark Calverley on 07966 505853 (SE & SW England).

New Nano Solutions Range Available with Attractive Rebates

Fuel Desk Reminder

A s the winter weather continues, First Milk Direct would like to

remind members that heating oil can be purchased from the fuel desk along with gas oil, road diesel and a range of Shell oils.

Kilmarnock farmer, John Nairn from West Bloakhillhead Farm is a regular user of the fuel desk. “After doing a price comparison with other suppliers, it is clear that the fuel desk offers competitive prices and within

one phone call everything was arranged for me,” he said.

“I am very pleased with the service from First Milk Direct and now often place an order without even receiving a quotation. Fuel is a regular purchase for farmers and I would recommend the fuel desk to other members as there are cost savings to be made,” he added.

Over the last few months, there has been a significant increase in

the number of members using the fuel desk and due to high demand at this time of year, members should provide five days notice. To avoid disappointment, First Milk Direct advises members to contact the fuel desk as soon as possible.

To receive an up to date quotation for your area, please call 0141 847 6816.

" I now often place an order without even receiving a quotation"

Win a £20 Gift Voucher!

First Milk Direct is running a free prize draw in conjunction with our online cheddar store, The Little Cheese Shop. Any fuel orders placed between 17th

December and 17th January will automatically be entered into a draw for the chance to win a £20 gift voucher to spend at www.thelittlecheeseshop.co.uk

www.firstmilk.co.uk