Glanbia Ireland has launched its fourth fixed price milk scheme for suppliers based in Northern Ireland.

The latest version runs from 1 April 2022 to 31 December 2024. Existing suppliers must commit a minimum of 10,000 litres per annum with no upper volume cap. New entrants can commit 10% of annual supply.

During 2022, the scheme pays a guaranteed base price of 38p/l, reducing to 36p/l for 2023 and 2024. Winter bonus payments, volume bonuses and the 0.4p/l sustainability premium are also applicable on all litres committed under the latest scheme. But in a move to be more innovative, Glanbia has provided two options for farmers to avail of payments on butterfat and protein under the latest scheme.

Under option one, farmers will be paid under the current framework for fat and protein. This means in 2022, every 0.01% increase in butterfat above a base of 3.87% will be worth 0.024p/l. This rises to 0.027p/l in 2023 and 0.03p/l by 2024, although the base level also rises to 3.88% and 3.9% during this period.

Every 0.01% increment increase in protein is worth 0.043p/l in 2022, rising to 0.049p/l for 2023 and 0.05p/l by 2024. Again, the base value increases annually and Glanbia states this option is the best fit for its suppliers on low to average solids.

A+B-C option

However, in option two, Glanbia is offering an A+B-C payment that places a greater financial weighting on butterfat and protein, rather than yield. This will be more attractive to a select number of suppliers.

The proposal sees butterfat paid at 0.036p/l for every 0.01% increment above base in 2022, but this falls to 0.034p/l for 2023/24. Protein will be worth 0.071p/l in 2022 for every 0.01% increment, reducing to 0.068p/l for the next two years.

Another aspect of the Glanbia fixed price scheme is the inclusion of a feed price tracker. Its purpose is to insulate farmers with milk committed under contract against inflationary rises in feed to the end of 2023.

The tracker works off forward pricing for wheat, maize and soya on industry leading price mechanisms such as Matif and Chicago Mercantile Exchange, which are updated quarterly. For every €50/t increase in feed prices, the contract base milk price will increase by 0.42p/l.

Should feed price fall during the next two years, the fixed price payable under the contract will not be reduced.

Closing date for applications under the fourth fixed price scheme is 13 May 2022.