Three big players – Lakeland, Kerry and Glanbia – have announced various changes or options for those in fixed-milk-price schemes this week. Further co-op board meetings are ongoing and some sources are suggesting there will be further changes in coming days.

Lakeland Dairies

Ultimately, Lakeland Dairies is leading the way on managing the difference between the current market price and the fixed-milk-price scheme that suppliers have signed up to. If we estimate that between 3% and 5% of the Lakeland milk pool is involved in a fixed-milk-price contract, the cost of doing what Lakeland announced last week is in the order of €3m to €6m. The Irish Farmers Journal is led to believe that Lakeland went back to customers that had contracted the milk at a price and renegotiated the deals made. This is a step the other processors and Ornua, which most of the other fixed-milk-price schemes are backed into, have not taken.

Lakeland announced it would pay 8c/l (7 p/l in NI) of a top-up to those who had locked into their fixed-milk-price scheme over the period April to December 2022.

Other co-ops have made moves also, but this Lakeland move is the most significant. We don’t know the exact volumes Lakeland has in fixed-milk-price contracts. Lakeland has more of its product mix in the food service sector than most other processors.

A spokesperson for Lakeland said: “The initiative is underpinned by fixed-price customers and we continue to negotiate with them on these contracts. For commercial reasons, we’re not commenting on the figures as you outline.”

Carbery

The west Cork co-ops that process milk at Ballineen under the Carbery banner – Drinagh, Lisavaird, Barryroe and Bandon – announced they would top up fixed-milk-price contracts to the order of 5c/l. In total, the four co-ops process about 600m litres of milk. The volume of milk in fixed-milk-price schemes in west Cork is estimated at around 1%, which is very small on a national scale. Irish Farmers Journal estimates suggest this top-up payment would have cost Carbery in the order of €250,000 in total for the four co-ops. It is understood that Ornua has paid a small proportion of this while the rest has come from Carbery central as a package to reflect the once-off significant difference between market and fixed price and the higher cost of inputs etc.

North Cork Co-op

North Cork Co-op based in Kanturk is processing about 315m litres of milk and unusually a large volume of milk is in a fixed-milk-price scheme. As previously published we understand over 25% of the milk pool is in a fixed scheme. Last month (March supply) the board of North Cork decided to pay a 2 c/l supplementary bonus on all milk including that in fixed-milk-price schemes. The Irish Farmers Journal estimates this would have cost the co-op over €200,000 in the March milk payment run but really some of this is base price as the base price didn’t move and was instead paid out as a supplementary payment so all supply would get it, not just the unfixed volumes.

Glanbia

Glanbia has done two things recently for those badly exposed to fixed-milk-price offerings. Late last week it announced it would hold base milk price and instead create a 3c/l (2.5p/l in NI) supplementary payment for April volumes (the same as what North Cork did in March). The effect of this is that the gap between the open market price and the fixed price does not get any bigger and all milk (fixed and open) gets the 3 c/l April bonus. Glanbia also created a new fixed-milk-price scheme open to farmers with over 35% in fixed-milk-price schemes at a higher fixed price but, a requirement for fixing in 2023 and 2024.

Glanbia has over 500 suppliers with over 35% in fixed milk price contracts.

Dale Farm

On Monday this week the Dale Farm board meeting decided not to do anything specifically for those in fixed-milk-price schemes.

Dairygold Co-op

The board of Dairygold met this week to set April milk price and, while aware of the gap between prices, again decided not to do anything specifically for those in fixed-milk-price contracts. The decision was to pay the highest open-market milk price.

The Irish Farmers Journal estimates about 4% of Dairygold’s annual volume is in fixed-milk-price contracts, with maximum exposure of 20% to any one milk supplier.

Aurivo co-op

Aurivo met on Wednesday and a discussion on fixed milk price contracts was on the agenda. A spokesperson said Aurivo was reviewing the fixed-milk-price scheme situation and its impact on customers.

Kerry Group

This week Kerry Group announced it will pay a top-up of 5c/l on 2022 fixed-milk-price scheme volumes once farmers commit to a further fixed volume in 2023.

Again, the proportion of Kerry milk in fixed-milk-price schemes is relatively small but the fact that there are almost 3,000 suppliers and nearly 2bn litres of milk means there are a good few Kerry milk suppliers with fixed-milk-price volumes.