Glanbia has moved to assist suppliers with significant volumes of milk tied into fixed milk price schemes (FMPS).
A new package of measures announced by the processor will enable farmers with more than 35% of their total milk pool tied into such schemes to increase the price achieved for agreed volumes to 40c/l for 2022.
The voluntary agreement stipulates that:
Glanbia will increase the fixed milk price paid on fixed milk to a base of 40c/l (VAT inclusive), plus constituents for all existing fixed milk price volumes above 35% of the supplier’s total supply in 2021.On top of this 40c/l, for relevant volumes milk suppliers will be paid the sustainability bonus of 0.5c/l in 2022 and all seasonality payments.In order to qualify for this 40c/l fixed milk Price in 2022, suppliers will be required to commit the same FMPS volumes in 2023 and 2024 at a base milk price of 38c/l (VAT inclusive), plus constituents and relevant bonuses or payments.Glanbia insisted that only volumes in excess of a 35% threshold will be eligible for the new package.
“For example, a 750,000-litre supplier with 75% of their annual supply volume contracted under FMPS will have 40% or 300,000 litres eligible for the milk price support scheme,” Glanbia stated.
“This is the equivalent of €27,000 in milk price support. In order to qualify, the supplier will be required to contract the same volume (300,000 litres) at 38c/l (including VAT) in 2023 and 2024,” the company added.
Based on the average milk constituents for 2021, the expected average milk price paid on volumes in FMPS above the 35% threshold would be 45.55cpl during 2022.
In addition to this, the supplier will receive other applicable payments.
Challenges faced by farmers
It is understood that around 2,000 of Glanbia’s 4,500 suppliers participate in FMPS. Around 500 are understood to have in excess of 35% of milk volumes tied into such contracts.
Many of these suppliers have suffered serious losses due to the hike in input costs over the past six months, with most farmers receiving milk prices that are below the cost of production.
The average return from fixed milk price contracts with Glanbia is 31c/l. However, the average cost of production has increased to 34c/l excluding labour.
Sean Molloy of Glanbia described the new package of measures as “an effort to help address the challenges faced by farmers with larger volumes contracted under FMPS”.
Glanbia has moved to assist suppliers with significant volumes of milk tied into fixed milk price schemes (FMPS).
A new package of measures announced by the processor will enable farmers with more than 35% of their total milk pool tied into such schemes to increase the price achieved for agreed volumes to 40c/l for 2022.
The voluntary agreement stipulates that:
Glanbia will increase the fixed milk price paid on fixed milk to a base of 40c/l (VAT inclusive), plus constituents for all existing fixed milk price volumes above 35% of the supplier’s total supply in 2021.On top of this 40c/l, for relevant volumes milk suppliers will be paid the sustainability bonus of 0.5c/l in 2022 and all seasonality payments.In order to qualify for this 40c/l fixed milk Price in 2022, suppliers will be required to commit the same FMPS volumes in 2023 and 2024 at a base milk price of 38c/l (VAT inclusive), plus constituents and relevant bonuses or payments.Glanbia insisted that only volumes in excess of a 35% threshold will be eligible for the new package.
“For example, a 750,000-litre supplier with 75% of their annual supply volume contracted under FMPS will have 40% or 300,000 litres eligible for the milk price support scheme,” Glanbia stated.
“This is the equivalent of €27,000 in milk price support. In order to qualify, the supplier will be required to contract the same volume (300,000 litres) at 38c/l (including VAT) in 2023 and 2024,” the company added.
Based on the average milk constituents for 2021, the expected average milk price paid on volumes in FMPS above the 35% threshold would be 45.55cpl during 2022.
In addition to this, the supplier will receive other applicable payments.
Challenges faced by farmers
It is understood that around 2,000 of Glanbia’s 4,500 suppliers participate in FMPS. Around 500 are understood to have in excess of 35% of milk volumes tied into such contracts.
Many of these suppliers have suffered serious losses due to the hike in input costs over the past six months, with most farmers receiving milk prices that are below the cost of production.
The average return from fixed milk price contracts with Glanbia is 31c/l. However, the average cost of production has increased to 34c/l excluding labour.
Sean Molloy of Glanbia described the new package of measures as “an effort to help address the challenges faced by farmers with larger volumes contracted under FMPS”.
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