Over the last five years, there has been a significant shift in how processors pay for milk in NI, with much greater incentives to encourage farmers to produce high solids.

Perhaps the most abrupt change was made by Lakeland Dairies, when the co-op announced in May 2024 that it would be moving all suppliers over to a solids-based payment. The model used is similar to that implemented in the Republic of Ireland, with milk valued using A+B-C, where A and B relate to the total value of protein and butterfat, with a deduction then made for processing (the C element).

Most Lakeland suppliers have been paid using A+B-C from 1 January 2025, with the remaining cohort switching over from 1 January 2026.

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By our calculations, those who did go with the new payment model from 1 January 2025, have been better off throughout most of the year compared to those who remained on the traditional increment model.

At NI average solids and including the various bonuses paid to a typical 750,000l producer, the difference started off in January at 0.42p/l and peaked in September at 0.55p/l. Over the first 10 months of 2025, the average NI supplier was over 0.3p better off on the A+B-C model.

Increment

However, November 2025 has brought a slightly different dynamic, mainly due to base prices dropping below 30p/l.

To understand that, it is necessary to consider the traditional Lakeland payment model, which currently pays 0.034p/l for each 0.01% incremental change in butterfat above or below a base of 3.9%. Protein is paid at 0.056p/l for each 0.01% increment from a 3.22% base.

In practice, it means that Lakeland is putting a value on butterfat and protein in milk of 31.29p/l (calculated by multiplying the base percentage by the value of each 0.01%).

However, if base price is over 31.29p/l, then both butterfat and protein are being under-valued in this traditional model. The higher the base price and the higher the solids, the greater is the impact.

But once the starting price drops below 31.29p/l, then the opposite is the case and the co-op is over-valuing the milk solids being produced.

As a result, at low milk prices, Lakeland suppliers are actually better off on the traditional increment model, than switching to A+B-C.

In November 2025, at NI average solids, the difference is 0.11p/l. At high milk qualities of 4.70% butterfat and 3.6% protein, this differential widens to 0.17p/l.

Change

To solve this issue, the simple thing for a processor to do is either to require all suppliers to switch to A+B-C (as in the case of Lakeland) or alternatively, to amend the butterfat and protein increments in line with base price.

The pressure to do that is probably currently greatest at Dale Farm, which has retained its traditional increment model, but put high values on both butterfat and protein.

Since April 2025 the co-op has paid 0.041p/l for each 0.01% incremental change in butterfat above or below a base of 3.95%. Protein is paid at 0.067p/l for each 0.01% increment from a 3.24% base. In effect, Dale Farm is currently putting a value on milk solids of 37.9p/l. As a result, with base prices around 30p/l, the co-op is actually paying more for butterfat and protein than if an A+B-C payment model is used.

To illustrate the point, for a 750,000l producer with the NI average solids, the Dale Farm price paid is 0.15p behind the leading price from the Tirlán A+B-C model. However, at very high solids of 4.8% butterfat and 3.6% protein, Dale Farm is actually paying a higher price per litre than Tirlán.

It is understood that Dale Farm is likely to revise the butterfat and protein increments, to apply from 1 January 2026. Last April, the co-op did confirm it would review the payments every three months.

Strathroy

Among the other major NI milk processors, Strathroy does have some suppliers on an A+B-C model, although most are still paid using the traditional increment approach.

Those increments are changing from 1 January 2026, with the value of each 0.01% butterfat increment going from 0.03 to 0.036p/l and the base moving from 3.9 to 3.95%. For protein, each 0.01% increment is remaining at 0.048p/l, but the base is increasing from 3.22 to 3.25%. It means that the value being put on milk solids by Strathroy is increasing from 27.2p to 29.8p/l.

That potentially leaves Aurivo as the processor with the lowest value put on butterfat and protein at just 26p/l. However, some changes in how the co-op pays for milk are expected in the New Year.

By contrast, Leprino Foods, put in place a new increment model from April 2025 which values butterfat and protein at 34.75p/l.

Comment – no need for two models

As highlighted in the above article, it is likely that some changes will be made to traditional increment payment models in 2026 to bring the values put on butterfat and protein broadly into line with the market for dairy commodities.

Once that happens, it is virtually irrelevant which payment approach is used – both the increment or the A+B-C model will deliver very similar outcomes.

But rather than having to revise the payment increments every so often, surely it would be a lot simpler if everyone adopted an A+B-C payment model.

There is just no logical argument for continuing with two different approaches.