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Around 90% of the Tirlán milk pool in NI have signed up to a new payment system designed to help them transition to being paid solely on the basis of milk solids by 2025.
The farmer-owned co-op, which lifts around 140m litres of milk from 180 NI suppliers mainly located in Fermanagh, announced in October 2022 that it was giving farmers two options ahead of the introduction of an A+B-C model from January 2025.
The first was to remain on the payment schedule originally released in March 2021, whereby increments for butterfat and protein will increase in value each year to 2024. It is a principle that others have since replicated, with both Dale Farm and Aurivo also confirming increment changes to encourage higher butterfat and protein.
The second Tirlán option allows farmers to have 25% of their milk supply paid on the basis of A+B-C, backdated to 1 April 2022.
From 1 January 2023 this increases to 50% of milk supply, and from 1 January 2024 it is 75%, before the final switch to A+B-C from 1 January 2025.
Earlier in the year, Tirlán had indicated its intention to eventually move suppliers to this payment model, where A is the value for each kg of protein, B the value of each kg of butterfat, and C is a processing charge per litre of milk.
Driver of performance
Speaking at a breakfast event organised by the NI Institute of Agricultural Science (NIIAS) ahead of last Thursday’s Winter Fair, Gordon Grey from Tirlán said the co-op is focused on milk quality as it is “a very big driver for business performance”.
He said that producers had already responded to the signals, with solids up significantly, and well ahead of the NI average (In October 2022 NI Tirlán average of 4.45% butterfat and 3.55% protein). Much of this has been achieved by changes to cow diets.
Despite the increase to butterfat and protein increments announced in March 2021, he said that some suppliers were still complaining that the co-op was not paying enough for milk solids. Under those changes, from 1 April 2022 Tirlán was effectively valuing butterfat and protein in each litre at 23p, moving to around 29p/l from 1 April 2024. With milk close to the 50p/l mark, there is still a strong incentive to produce volume, not solids.
“We were blind-sided by milk prices so were sending the signal again to go for volume. It is not what we wanted. So now, you have the option to move to A+B-C quicker,” said Grey.
He maintained that when an A+B-C payment model in NI was first raised, a lot of suppliers were initially against it. “But now, 90% are going to opt in because their solids have improved so much. In fact, there is a pushback that we are not going quickly enough,” he said.
SHARING OPTIONS: