Most Lakeland suppliers better off under A+B-C

Last May, Lakeland Dairies announced it would be switching over to a new milk solids payment model, to be implemented across all suppliers from 1 January 2026.

Under the A+B-C model, there is a value put on each kg of protein (A) and butterfat (B), with a deduction made per litre (C).

While Lakeland suppliers were given over 18 months to adjust to A+B-C, they could switch over to the new system from 1 January 2025.

It is understood that close to 70% of Lakeland suppliers in NI have taken up this option.

As a result, the co-op’s January milk price on page 9 has been calculated using A+B-C.

Whether this is the correct decision for each individual farm supplier is mainly dependent on the constituent quality of milk produced.

Difference

Before calculating any potential difference, it is important to note that Lakeland has changed base solids from 1 January 2025.

In its traditional increment model, butterfat is now paid at 0.034p/l for each 0.01% increment above or below a base of 3.9%, up from the previous 3.85% base.

Protein is paid at 0.056p/l for each 0.01% increment from a 3.22% base, up from a 3.19% base.

In practice, the change to the base values effectively takes just over 0.3p/l off final prices paid.

It also means that Lakeland is now valuing butterfat and protein at 31.29p/l, compared to just under 31p/l last month.

NI average

For those who remain on the traditional payment model during 2025, our calculations show that at the NI average solids for January (4.27% BF; 3.29% Prot.), a 750,000l Lakeland producer received a final price of 46.25p/l.

As shown on page 9, that is 0.42p/l below that received by the same producer who opted for the A+B-C model. If we assume much higher solids (4.40% BF; 3.50% protein) this gap widens to 1.13p/l.

At base solids (3.90% BF; 3.22% protein) the price paid is exactly the same at 44.60p/l. However, if solids are low (3.80% BF; 3.05% protein) a 750,000l producer on the traditional payment model is better off, with a final price of 43.31p/l, compared to 42.73p/l.

Principle

The example calculations highlight an important principle. Where a farmer has milk solids above base levels, they are generally better off under the A+B-C model – the higher the solids, the greater is this benefit.

However, there is one caveat relating to base milk price. If base prices were to drop below the value put on fat and protein by Lakeland (31.29p/l), farmers would actually be better off being paid using a traditional increment model.