Got Milk?

0:00BBC Sounds. Music, radio, podcasts. Wake up to money from BBC Five Live. Hello, welcome to Wake Up To Money. The Ministry of Defence has confirmed that British Armed Forces assisted the United States in seizing that Russian-flagged oil tanker in the Atlantic. We'll have a look at exactly what happened there, if there's been any reaction from investors around the world as well, as people look at the stability or instability of everything that's going on at the moment. Also, we're going to have a look at Warner Brothers again telling its shareholders to reject paramounts and a, quote, inferior deal.

0:39Why does it still want Netflix to be the buyer of all of those things it's got under its watch? We'll have a look at the latest twists and turns there, and there have been a few. We'll find out how a surplus of milk has affected prices, and particularly those who produce it. And we'll have a look back at, well, it was a retro favourite, but still going strong, Gola Trainers, the 120-year-old British sports brand that's just been sold to Japanese owners. Wake Up To Money with Sean Farrington Good morning to you Wake Up To Money on BBC 5 Live on this Thursday morning the 8th of January lots going on today I'd like your thoughts if you're a farmer in the milks, in the dairy sector perhaps 85058 you know is the number to get in touch so many of you do and you let us know what is going on for you in the production of so much of the food that we consume and the impact of that on our shelves what the long-term impact of the prices you're receiving will be on our food supply across the country.

1:38We're going to be having a look at milk in particular today, but it'll be interesting to check in with you in other aspects of the farming industry as well. We've got much to talk about. We're going to have a look at a de-ISA shortage a bit later in the programme. It's caused problems at one of the biggest airports in Europe, at Schiphol Airport in Amsterdam. And we'll hear just exactly what has gone on there. It may be the kind of thing you're trying to keep on top of with the weather forecast that we're hearing with the weather we've had in recent days as well. This is something that may be more at the moment impacting those airports around the world and could potentially.

2:17So we'll look at that as well. But weather-wise, again, we just want to keep hearing from you about what your plans are for the coming days, what the impact is right now, wherever you are across the UK, on the weather that we've had, the storm that is coming as well. So much for you to get in touch. So get that number written down, get it in your phone right now, 85058. Just let me know how you are, whatever the reason to get in touch. Please do. Right, let's cross to Nick Marsh, our correspondent in Singapore this morning. our Asia business reporter, who has been keeping a close eye on events right around the world while many of us here in the UK sleep.

2:55Nick, morning to you. What is the very latest you've got on this confirmation we've had from the Ministry of Defence that armed forces here have supported America in seizing this oil tanker in the North Atlantic? Yeah, that's right, Sean. Morning to you. This was one of two vessels. It was between Iceland and Scotland, basically, if you can picture that. It was carrying, the United States says, Venezuelan oil, which was under sanctions. It's been pursued for weeks. It radically changed course. It was in the kind of Caribbean area and then changed its flag to a Russian flag, actually, and therefore comes under this sort of the ownership of Moscow.

3:42But in any case, the United States Code Card boarded it, seized it, and said that essentially this is our property now. And that is basically what the argument of the United States, of the White House, has been consistently over the last few months, that all this oil under sanctions is essentially the property of the United States. Because if you go all the way back to the late 2000s, there were plenty of US oil companies operating in Venezuela. The industry got fully nationalized under Hugo Chavez. A lot of American companies got booted out and therefore lost billions in assets. So according to Donald Trump, and there are plenty of disagree, of course, this is taking back property that is owed to the US.

4:22And what is the general reaction across Asia been, Nick? Whether it's in stock markets or from various governments, obviously have very different views right across Asia. in the last few days and weeks as we've seen this sort of escalation in instability in different parts of the world? Well, the market reaction has been zero. The price of oil has barely changed because Venezuela basically isn't a big player when it comes to oil exports. It has the world's largest proven reserves of oil, but it only contributes about 1 % more or less to the world oil supply. So really anything that happens there doesn't have a big impact on the oil supply, which is quite oversupplied anyway.

5:05So from that pure market point of view, there's been no reaction. Much more interestingly, though, is the political reaction, the geopolitical reaction, if you want to call it that, in particular when it comes to China. Because China was the largest buyer of Venezuelan oil. China had made some really pretty big investments, actually, in Venezuela when it comes to infrastructure, railways, that sort of thing. in exchange for this cheap, sanctioned oil. And now, effectively, the United States says, we're taking over the industry in Venezuela. China's going to have to find somewhere else to buy its oil.

5:41That won't really be a problem. It's not like Venezuelan oil made up a huge amount of Chinese oil imports anyway, but it's a bit of an economic disruption. It might have to pay a little bit more for this oil from somewhere else. But it does sever an important relationship. It basically says to China, and there's no undertext here, by the way. You know, the White House, Marco Rubio, has been very clear about this. It's saying to the US adversaries, and that includes Iran and Russia, who also buy Venezuelan oil, this is our hemisphere, the United States should be running things. So in Beijing, they've come out basically saying this is US bullying.

6:17This is a typical unilateral decision. The use of force is completely brazen. They're not happy at all. Nick, thank you so much for that update. Nick Marsh, our reporter, correspondent in Singapore. Thank you, Nick. A very good morning to Tinika Fricke, who is Senior Fund Manager at W1M. Tinika, thanks for being with us on Wake Up to Money today. Are you well? Yes, thank you, Sean. Good morning. Good morning. Now, just following on from what Nick was discussing there, Tinika, See, another aspect of this that's developed overnight, Donald Trump has been calling for US defence spending to be increased to one and a half trillion dollars in 2027.

7:06So next year, that would be more than 50 percent of the current level of US military spending. What does that tell us about where investors might be thinking next, where the world might be heading next? Because we talk about defence stocks a little bit this week already. Yes, no, and it's interesting, isn't it? Because we've sort of last year, Trump sort of been pushing European countries to fulfil their commitment of spending more of their GDP on defence. Because the US has been doing that for years. And now they're spending more as well. I mean, as your previous speaker said, what does it all mean for the geopolitical risk?

7:50And from that point of view, markets have sort of been very becalmed. But yes, there's no doubt that we will see US defence stocks respond very positively when the US markets open this afternoon. Yeah, and when you see Donald Trump's posts on social media, he says, this will allow us to build the dream military that we have long been entitled to. And more importantly, that will keep us capitalised safe and secure, regardless of foe. If it feels like, I know he's talked a lot about trying to get other parts of the world, particularly around Europe, to spend more on defence. But a 50 % ratcheting up of the American defence budget is no small amount.

8:32Absolutely. It's a huge amount. And he obviously claims that he'll be funding it from the tariffs that he raised last year. So it's an interesting use of money, right? Because the whole idea was that it would support a wider base of the US economy. And this is probably arguably maybe quite a narrow base. So they're all, but, you know, these are obviously moving stories. What will actually happen, we will see. But it does what is clear that what you thought wouldn't happen now can happen. And therefore, it remains higher risk in our view on how the US is perceived on a global scale. Also got Lil Bremmerman, Richard with us this morning, who's the chief executive of Oxford International.

9:29That's a business that places international students into universities around the world, including the UK, the US, India, Australia as well. Lil, very good morning. Thanks for being with us. Good morning, Sean. Very good to be in the programme. Fascinating morning to have you on as well, or fascinating time to have you on the programme because of all we're discussing there. you will have a real insight into how the ripple effect of what people are thinking about the world and the way the world works, where people move around the world at the moment. Has any of this, even from the beginning of Donald Trump's time in this term as president, has any of it changed how international students are moving around the world?

10:16Actually, it has significantly impacted the way international students move around the world. So since Donald Trump has come into power, the U.S. has seen a significant drop. We are talking about 17.5 percent drop in international students going to the U.S. That is huge. The U.S. was the largest destination of students with over a million international students going into the U.S. annually. We see that drop continuing for the duration of Donald Trump. Also, with his approach of protectionism, if we can say that, there has been a trend emerging impacting Canada and somewhat Europe. simultaneously there has been a significant growth in demand for international students going into the Middle East, the UAE particularly, and countries in Asia like Japan, Korea and parts of China.

11:41So yes, there has been a significant change. More to come from Lil Antinica on everything we are discussing this morning and very interested to tap into a few more of those trends, Lil, how they're expecting the UK to react to what's going on globally, how students are reacting to their prospects and where they're considering moving to and if the UK becomes more or less of an option for them. We've had a latest twist and turn. There's been a few, actually, since we last spoke to you. And since you last heard Wake Up To Money on BBC Sounds, if you subscribe to the podcast there, on Warner Brothers Discovery, what will happen to it?

12:23Who is going to buy it? Will it be Paramount Skydance with Mission Impossible? They've got all those live TV networks in the US, plenty more films under its watch as well. Will it be Paramount Skydance or will it be Netflix? You might have heard of them. Big beast in the media world. The bosses at Warner Brothers Discovery keep saying to its shareholders that Netflix should be the deal that they should be accepting that Netflix offer. And in the last 24 hours, Warner Brothers has actually rejected another offer from Paramount, changed a little bit. This hostile takeover bid, as it's described, because the bosses there don't really want it.

13:02But Paramount keep coming back. $108 billion offer they've got for the entire Warner Brothers Discovery business. So they're saying we'll buy all your live TV channels around the world as well. Whereas Netflix is saying we're not going to buy the live stuff, but we will buy all of those. Harry Potter, HBO, everything that comes with having the HBO brand and production studios, Game of Thrones and the like. huge amounts that could end up on Netflix's streaming platforms and that it could make money out of. Tinnaker. So we're still talking about this and Paramount, they're hanging around, aren't they?

13:40A few times in recent weeks we've maybe thought, well, that's surely it now from Paramount, but they keep tweaking things. They've even had a little bit of support for one of Warner Brothers' shareholders in the last 24 hours. Yeah, no, it's interesting because they first approached, you know, so Paramount first approached Warner Brothers in September last year, got sort of sent away, tried again, and again was sort of rejected without much discussion. And I have to say I do, because obviously Warner Brothers have already agreed to deal with Netflix, yeah, so Paramount is trying to scupper this.

14:16But it's a very difficult scale, different scale bid. So Netflix is a company with a market cap of more than$400 billion. So, you know, their bid, which is about 80 billion, relative to Netflix is smaller than the group. Whereas Paramount, you know, this is a business of a size of 13, won$3 billion. And they are launching a$108 billion bid. So talking about David taking on Goliath. I mean, so there's a huge amount of debt involved. A lot of financing needed where father and son Alison has sort of personally sort of put some guarantees in. But, you know, any need for huge financing, and this is from a company that's junk rated, right?

15:05So this is not a straightforward deal. So I do understand the Warner Brothers board that it is more risky. So even if it gets through, there is no guarantee that it will complete. and there are costs to breaking an agreement with Netflix. The quote is about$4.7 billion. So I do see that for the long-term future of Warner Brothers employees, when you have so much more debt in the deal, it's risky. So given everything you've just laid out there, Tineke, what's the upside of a Paramount deal? Why are they sort of trying to cling on to being in the conversation? That's probably a question for them.

15:50But they obviously believe, because one of the differences is that they want the TV channels as well, which is sort of surprising because the live broadcasting is struggling relative to streaming. So it's all about having content and then streaming it to customers for wherever they are. and Warner Brothers does have some but yes, Paramount's also buying more cable TV assets which is puzzling. Hopefully, maybe they sort of expect that with the high levels of debt that have that much skin in the game and that we turn out work okay but it does feel quite a risky move from them, I have to say. Interesting.

16:38And Lil, from the perspective of the people who are going to be paying for this stuff, watching this stuff at the end of the day, Netflix has pushed us so much towards a streaming day-to-day way of watching films and box sets and consuming media. How much have you seen that change amongst those international students that you're placing in universities around the world? The habits and the spending habits and the way they consume things, how different they are and why it means we've got somebody like Netflix possibly taking over Warner Brothers Discovery. I mean, we have seen, I've been in international education now for 25 years.

17:22And, you know, on an annual basis, we are talking to around 100 ,000 students. We have seen a huge change in our students' behaviors and in youth. I mean, everything is happening on their phone and on their iPads. And I think it's a great move from Netflix because of the brands and the programs that they'll be buying, which are brands that use, that's recognised and are interested in.

17:55I think our students, you know, accessing Netflix and all of these streaming options is hugely affordable. You know, they are spending, you know, five pounds a month and they have all of these access and they have it all on their phones and their iPads. So they are clearly ensuring and confirming their place in the youth time. Fascinating. It is indeed. And I can see how Paramount is trying to see if they can build size for themselves and some power, because obviously Netflix is taking control of youth time. Yeah, I know. If you ask me. It'd be very, very interesting to see if they managed to pull that off, how either one of them actually deals with all this further down the line.

18:53We will be talking plenty more about that on Wake Up To Money in the coming days. The twists and turns aren't stopping there. Let's turn our attentions to milk now. UK dairy farmers facing further price cuts as an oversupply of milk continues, both here in the UK and abroad as well. So major dairy buyers like Arla Muller have cut their prices to around 35 pence a litre. Now, for context, the average price this time last year was around 46 pence a litre. So you hear about those tensions between farmers and buyers rising. Earlier this week, some farmers blockaded distribution depots, including those serving Tesco and Sainsbury's as well.

19:32As I said a little earlier, 85058, if you're already up for work on the farm that you run, work on this morning, if you're part of that supply chain at all, I'd be fascinated in your thoughts on this. I've got Paul Tompkins with me, who's the Dairy Board Chair at the National Farmers Union, also a third-generation dairy farmer himself. Paul, morning. Morning, Sean. So just explain a little bit. I've mentioned those numbers, now 35 pence a litre that farmers are getting, it was 46 pence a litre. How much does it generally jump around or is this quite a stark difference into your running of the business?

20:11Yeah, good question. It's like you suggested, behind each of these numbers is a real dairy farm like mine here in the Vale of York. is now facing the prospect of we're rolling out of bed every morning at the moment to produce milk for less than we are receiving that means that um so translating that into some figures for me this time last year i was receiving around 40 pence a litre my net milk price is now below 30 so we're looking at around a 25 reduction in the amount that we're receiving for our milk A headline price, a headline I think most of your listeners will think, crikey Sean that sounds a lot of money, especially as our margins are very slim.

21:02So it's tough out there at the moment for dairy farmers to be producing milk for more than it costs us to produce. So have your costs reduced at all in that period? uh unfortunately not and this is um the the balance that we're trying to make every day it's a bit like energy prices you know when you look at those figures news and that they're so closely linked to international markets so you referenced earlier milk volumes around the world that in truth is one of the drivers from this but a bit like energy prices you do wonder why what dairy farmers in new zealand or america or indeed in on the continent are doing how that affects what's happening here in the UK.

21:50But a bit like oil and gas, it really does. What does that mean then? If your costs haven't reduced and yet the price you're receiving has reduced that much, is there a figure a day that you're not bringing in or even losing money on now compared to before? Hey, look, turning this into real figures, I'm not alone. The vast majority of dairy farms at the moment are being paid less than it costs to produce milk. On my farm every morning, every day that I milk my cows, I lose about£1 ,000. That's a significant amount of money to be swallowing each and every day and something that can't continue for the long term.

22:35long term we need to find ways of insulating our food production from such market shocks because we all depend on our food being produced each and every day it's something that dairy farmers farmers across the uk wants to continue to do uh all the time it's why we're here it's part of our heritage it's part of the uh our very beings so we want to continue doing it we do need to find a way of insulating us against such shocks and i guess it has been that cliff edge shock this time around which has made so many farmers sit up and and say this is just too much my business to sustain so why is there an oversupply of milk it's a perfect storm of um of a combination of factors that just means that in each part of the world there is more milk production that's largely weather driven believe it or not we are still vulnerable to weather conditions to produce our milk and last year in general across the world those conditions have been fair favorable as indeed has feed prices and we only need to just tip slightly into an excess of milk and markets respond by being saturated and then start tumbling.

23:57And that's the reasons why we're seeing lower prices. Can you produce less? If it's costing you that much a day and there's an oversupply, is that something you are able to consider doing? It's a great question. And it's one that I turn to my cows and ask every morning at the moment. And this is the truth. thought this is the truth of the problem is that it's we're asking you know live animals here to respond to global markets that are happening around the world and those two things just don't they don't listen to me really sure and that's the that's the issue so yes we can take some steps yes we can ask them to cut back but really we need to think about production in the food production in the long term it can't we can't just switch it up and switch it down as as markets demand we We have to provide a consistent amount, albeit slightly growing, all the year round.

24:50And then when markets give us shocks like this, we can't necessarily just ask the girls to cross their legs for a few weeks or a few months whilst things change. We have to keep producing the food, even though it's being done so at less than the cost of production. A couple of messages we've had here. Dave's been into it saying, I'd be happy to pay more for milk. whereas Michael in North Yorkshire says, why has my organic four pints of milk gone up to£2.75? That's a tempi increase since Christmas, he said. Profits, profits. There's two really good questions there. The latter one being that unlike the vast majority of the conventional milk, organic milk is still globally in a period of contractions, So there just isn't sufficient organic milk there at the moment.

25:41So that's one of the reasons that those price pressures haven't been seen at the shelf. But also it's important to point out here, Sean, that the price that we pay for a product on the shelf isn't necessarily what drives the price paid to farmers on farm. And again, I'll use that analogy again of what we pay for our energy costs in the country. sometimes people say well hang on a minute wholesale gas prices are doing x y and z why isn't that affecting my energy bill we know that there's lots of steps in that chain before it reaches the actual consumer and the price that we pay for a product that's produced from a farm so it's just too distant to actually draw that direct analogy of what i'm paying on the shelf is what ultimately gets paid on the farm nevertheless i will still add that both retailers and milk buyers have an important role to play here in ensuring sustainable prices for farmers in the long term because this is what we need to really keep focused on is that continuity of supply you and i you know we've lived through uh some recent quite turbulent times and we know that our food supply chain is really fragile so specifically what would you be asking those major dairy buyers to do right now?

27:06Okay so there is a code of compliance and fair dealings regulations which we are asking dairy processors those that purchase milk from dairy farms to really be careful that they are making sure that they're compliant with those regulations but also go one step further and talk to their buyers about this long-term continuity of supply. Because that's what we really can't do, is let market shocks reduce the amount of food that we're producing on our farms. Because that's no way to bring food security and sustainability to the food that we eat. Paul, thank you for your time this morning. Paul Tompkins, Dairy Board Chair at the National Farmers Union, a dairy farmer himself as well.

27:55Wake Up To Money with Sean Farrington. Good morning to you. Wake Up To Money on BBC Five Live Thursday morning, 8th January, 25 to 6. Thank you for being with us. Thank you for messaging us on 85058, as Anne has done from the Solway Firth. She says, insulating food production means returning to local markets and schools, going along with some buckets to the local farm with some cash, cut out the UK obsession with monetising everything. The French food philosophy is still about land, farm, table. That after our discussions on milk prices a little earlier in the programme. Do let me know your thoughts on all we are discussing.

28:34I've got Lil Brumman, Richard with me, who's the chief executive of Oxford International. I've been discussing about how goings on around the world in recent times, particularly since Donald Trump took office in America again, has impacted the way international students move around the world. That's exactly what Oxford International do. They place students in universities, including the UK, as well as America, India, Australia. Lil, I'm interested in the current trends and approach to the United Kingdom at the moment and how you're seeing students travel to the UK, maybe even students from the UK travel around the world.

29:12Have you seen many major changes of late? Well, we saw quite a big spike on international students coming to the UK in 2022-23, post-COVID. But that number has significantly declined since. first under the Conservative government in 2023-24 with the banning of dependents coming with students studying under the PhD level. And since then, we are seeing a slight recovery. The UK, for many decades, has been the second most attractive destination for international students because our universities have a very strong and positive reputation. So it is of prestige to study an undergraduate degree or a master's in the UK.

30:19And that has not gone away. And it's something that is a national treasure that we should support. And it is, we have stability now under the Labour government. When Labour came into power, they were very clear in their messaging that the UK welcomes international students to come and study at our universities. and the rules of how students can obtain visas and how they should behave with regards to their visas while they're here has been clarified and it is a stable environment to operate. Saying that, they didn't reverse any of the conservative government's changes and as a result we are not seeing significant increases.

31:25If anything, the number remains stable with a bit of recovery and competition is high. Competition is very high because, as you know, universities are struggling financially and as a result everybody is fighting for the best students and more students. so it's a it's a very competitive and challenging environment I would say but still the UK has a strong position 85058 if anybody has a view on that maybe you work in the university sector yourself here in the UK you've got kids heading off abroad somewhere has their mood changed about where they might want to go have you noticed moods change in your local universities about where people are coming from to travel, to study here in the UK.