Aurivo has launched a new fixed-price milk contract for NI suppliers, with a guaranteed base price of 27p/l.The latest scheme will run for a 12-month period, starting on 1 October 2019 and finishing on 30 September 2020.
Aurivo has launched a new fixed-price milk contract for NI suppliers, with a guaranteed base price of 27p/l.
The latest scheme will run for a 12-month period, starting on 1 October 2019 and finishing on 30 September 2020.
Farmers can commit up to 10% of their milk pool, based on their monthly production levels from October 2018 to September 2019.
On top of the 27p/l base price, normal premiums apply on milk quality, hygiene and volume. However, the winter bonus payment is excluded under the scheme. Closing date for applications is 4 October.
The latest scheme is the fourth fixed-price scheme to be offered by Aurivo to its NI suppliers.
Aurivo’s first fixed-price scheme, which was launched in 2016, paid a guaranteed price of 23p/l and expired earlier this year. The second scheme started on 1 January 2017 and paid a minimum base price of 25p/l. It expires on 31 December 2019.
The third fixed-price contract, which started on 1 January 2018, has a minimum base price of 29p/l on 10% of monthly milk production and runs to December 2020.
Other processors
A number of processors operating in NI currently have fixed price contracts in place and farmers that signed up to such schemes have benefitted in 2019.
August base price averaged 24.5p/l and is well short of the guaranteed prices under the fixed price schemes currently operating.
Dale Farm has two fixed price contracts which pay a guaranteed base of 27p/l and 28p/l respectively.
Around one third of its suppliers have signed up to these schemes.
Farmers that availed of the maximum production allowances under both fixed-price contracts have close on 45% of their annual milk pool at the outlined base prices.
By contrast, Dale Farm’s average base price on conventional milk is 25.6p/l for the year to date.
Elsewhere, Lakeland’s fixed price contract pays 26p/l from April to September and 28p/l from October to March on a maximum of 10% of annual supply and runs to December 2020.
Glanbia Milk also has fixed-price schemes which pay a base of 28p/l.
Price certainty
Banks generally like the certainty of fixed-price contracts, and have actively encouraged clients to enter such agreements to reduce lending risk.
Fixed-price contracts also help facilitate more accurate cashflow planning for repayment capacity.
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