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Lakeland Dairies’ new loyalty bonus will only be available to suppliers that have not submitted notice to leave the co-op.
Announced last week, the loyalty bonus is set at 0.65p/l and payable on all litres supplied to the co-op in 2024.
For a farmer supplying 1m litres during 2024, it amounts to £6,500, with payments issued as a lump sum on 15 January 2025.
NI’s largest milk processor clarified the eligibility criteria in the December edition of its monthly newsletter. Only those with a signed milk supply agreement in place qualify for the loyalty bonus. In addition, any farmer who has a termination notice in place when the payment is made will not receive the bonus.
Finally, should a farmer switch to a competing processor within 24 months of receiving the loyalty bonus, Lakeland will automatically recoup that payment before their supply agreement terminates.
The co-op has confirmed that the loyalty bonus will be issued to at least 98% of NI suppliers, which would suggest around 20 farmers have notice in to leave.
Legislation
In the future, it looks unlikely that Lakeland or any other company, will be able to effectively penalise farmers who wish to switch processors.
Under the UK-wide Fair Dealing Obligations (Milk) Regulations 2024, once a notice to terminate has been given, a processor cannot “alter the pricing method or price per unit of milk”.
However, while the legislation came into effect on 9 July 2024, there is a 12-month transition period for existing contracts, which means all processors must comply with this law from 9 July 2025.
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