While most other dairy companies have either switched to a milk solids-based payment model, or are in the process of doing so, the board at Dale Farm remain resistant to that change.

Instead, the NI farmer-owned co-op has continued to put a higher value on each incremental adjustment in butterfat and protein percentage. That process started in April 2022 and in each year since then, those increments have been revised upwards.

From 1 April 2025, members will now be paid 0.038p/l for each 0.01% above or below a butterfat base of 3.95% and 0.062p/l for each 0.01% above or below 3.24% protein.

Prior to April 2022, suppliers were paid butterfat increments of 0.022p/l off a base of 3.85% and protein increments of 0.036p/l from a base of 3.18%.

In effect, the payment system used by Dale Farm was valuing the fat and protein content of milk at just under 20p/l (calculated by multiplying the fat and protein in a standard litre by the incremental value of each).

Doing the same calculation for the new increments to apply from April 2025, the value has increased significantly to 35p/l.

However, at a base price at 40p/l, it still means the co-op is paying 5p/l for the water in milk.

To assess what signal this is sending to producers, we have taken an example of two cows, producing the same kg of fat and protein (around 475kg). Cow one produces 7,000l at 3.8% fat and 3% protein, while cow two produces 6,000l cow at 4.4% fat and 3.4% protein. Base price is 40p/l.

As shown in the table, the old system pre-April 2022 rewarded cow one, with over £200 more output, despite the animal producing much lower quality milk – the message to producers was clear – drive volume, not milk solids.

With higher value put on increments, that message has changed.

From April 2025, the total value of the milk produced by cow two will be up £57, while the milk produced by cow one will be down £91. However, cow one still grosses £57 more income than cow two.