Dairy processors will be adding an extra line to their milk price announcements to reflect a higher standard fat and protein percentage, but will not quote the euro per kilo milk solids figure.

Processors will now express their milk price on the basis of 4.2% butterfat and 3.4% protein, which is the European standard and close to the average milk constituents in Ireland, Dairy Industry Ireland (DII) announced.

The current 3.6%/3.3% pricing model to allow comparison between years will be also retained, with processors expected to quote the two prices starting with January 2021 price announcements.

Comparison

DII stated the change would allow for a better comparison of Irish milk prices and those quoted across the continent.

Offering explanation, DII said: “In 1990 the average milk butterfat content produced by Irish farmers was 3.51% and the average milk protein content was 3.20%, pretty close to today's standard of 3.6/3.3.

“By 2019 the average solids were 4.17% butterfat and 3.54% protein. So, it is time to choose a new base which more accurately reflects the milk produced in Ireland.”

Pricing

There will be no change in total amounts paid for milk as suppliers will receive the same payment as per their internal co-op constituent payment formula (A+B-C).

For example, if a processor pays €5.90 per kg of protein, €3.605 per kg of fat and has a volume adjustment of 4c/l, then the reported prices would be calculated as follows:

At 3.3/3.4 solids

(0.033*5.90 + 0.036*3.605)*1.0297 – 0.04) = €0.2941 (excluding VAT).

At 4.2/3.6 solids

(0.034*5.90 + 0.042*3.605)*1.0297 – 0.04) = €0.3225 (excluding VAT).

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Milk prices to be quoted at 4.2% fat and 3.4% protein

Starting with January 2021 milk price announcements, co-ops will set out prices using two different pricing models. Barry Cassidy and Jack Kennedy report.