Over the past few weeks, the issue of changing the payment system for milk in NI to one based on solids (A+B-C) has again been raised.To put the issue in simple terms, take a scenario where two cows produce the same total kilos of fat and protein, but cow 1 yields 6,000l of milk, whereas cow 2 yields 7,000l. Clearly cow 1 is producing milk of higher value, but in the NI payment system, cow 2 generates a significantly higher financial return to a farmer. The signal being given is to produce water rather than solids. It isn’t logical.
Over the past few weeks, the issue of changing the payment system for milk in NI to one based on solids (A+B-C) has again been raised.
To put the issue in simple terms, take a scenario where two cows produce the same total kilos of fat and protein, but cow 1 yields 6,000l of milk, whereas cow 2 yields 7,000l. Clearly cow 1 is producing milk of higher value, but in the NI payment system, cow 2 generates a significantly higher financial return to a farmer. The signal being given is to produce water rather than solids. It isn’t logical.
No one likes change
Nor is it logical (as some have suggested) to just pay on fat and protein (A+B) as this won’t actually encourage higher solids over volume. The C element (a processing cost) is a vital component.
That said, no one likes change, and with Brexit, etc, CEOs have their minds on other things.
There is also a fear that it would lead to some farmers switching to spring calving, upsetting the relatively flat production profile in NI (something which is key to processing efficiency).
However, it is hard to see that happening given that most farmers in NI are constrained by land.
To take the issue forward, the UFU has suggested that AFBI should undertake a study into a new pricing system.
That might have value, but is there really anything we don’t already know?
Hauling watery milk in tankers, and using energy to burn it off in processing, is only going to get harder to justify
The Republic of Ireland moved to A+B-C pricing between 2007 and 2009, and since then, the improvement in fat and protein has added around €15m per year in value to their milk pool.
There is also the issue of our carbon footprint, something that is only going to be more relevant in the future.
Hauling watery milk in tankers, and using energy to burn it off in processing, is only going to get harder to justify.
So from an environmental and efficiency point of view, the arguments for change are clear.
What is required is a consensus across the industry, combined with a sufficient lead-in time for farmers, giving everyone a period to adjust.
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Watch: full presentations from NI dairy conference
NI Farmers want milk solids pricing
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