This is a subscriber-only article
The official line coming from LacPatrick is that just over 20 suppliers with a combined total of around 22m litres of milk decided to switch from the co-op to other milk buyers from 1 December.
The majority switched to either Dale Farm or Glanbia Cheese, with a couple also going to Aurivo. However, sources in the industry suggest that the amount of litres leaving from the start of this month could be higher once all calculations are done.
Either way, assuming the 22m litres turns out to be correct, it represents around 4% of the total LacPatrick milk pool, and is probably less than feared at one stage late last week. Around half the LacPatrick milk pool in NI operates without a contract, so can move without notice. There is also a group of around 30 contracted suppliers in NI who have served a notice to leave from 1 January 2019.
Unsettled
Farmers in NI have become increasingly unsettled after the co-op decided not to pay a winter bonus for October supplies (3p/l in October 2017) and cut base price that month by 1p/l. It left LacPatrick 3.5p/l off the likes of Glanbia Cheese and Dale Farm.
However, last Thursday the LacPatrick board moved to try to stem the flow by confirming that it will pay a winter bonus of 2p/l in November and 1p/l in December, with a decision for January being taken at a later date.
The November bonus is conditional on a farmer continuing to supply milk to LacPatrick into December. Therefore, if a supplier left LacPatrick on 1 December, they will not receive the 2p/l bonus.
Assurances have also been given that a cut in base price over those months will not be used to fund the winter bonus. In October, LacPatrick paid from a base of 26.5p/l. The co-op is expected to hold base around the 26-26.5p/l mark for the rest of the year.
Merger
LacPatrick Dairies and Lakeland are currently closing in on a merger to be complete in early 2019. As reported last week, both parties are now subject to an initial enforcement order from the UK Competition and Markets Authority (CMA), which makes it clear that they must operate as separate businesses until the merger is approved.
It effectively prevents Lakeland from supporting the LacPatrick milk price (and helping to keep the remaining milk pool intact), however, it does not mean that the merger process will be delayed.
SHARING OPTIONS: