What new pricing means for Dale Farm suppliers

From 1 April 2025, suppliers to NI’s largest dairy co-op, Dale Farm, will see a number of changes made to their pricing arrangements, including to the value put on butterfat and protein.

At present, suppliers are paid from a butterfat base of 3.95% and a protein base of 3.24%. Every 0.01% change in butterfat is valued at 0.031p/l, with each 0.01% change in protein valued at 0.048p/l.

From 1 April 2025, while base levels are remaining the same, these increments change significantly to 0.041p/l and 0.067p/l for butterfat and protein respectively. The values will be reviewed quarterly by the co-op.

Scenarios

To highlight what impact this change will have in practice, it is worth looking at a number of scenarios.

Firstly, there is the current Dale Farm price to a 750,000l supplier in February 2025, calculated at the NI average solids of 4.23% butterfat and 3.28% protein. As shown in our main milk league analysis on p13, this comes out at 45.96p/l.

If we apply the new price increments, but assume everything else stays the same, it works out at 46.32p/l, which is an additional 0.36p/l. In other words, where actual solids are above the base of 3.95% and 3.24% set by Dale Farm, suppliers will be better off under the new pricing arrangements.

However, if suppliers have low solids, they will be worse off from 1 April 2025. If a Dale Farm member produced milk at 3.90% butterfat and 3.16% protein in February 2025, they would have received a final price of 44.36p/l.

At the new increments to apply from 1 April 2025, this price drops to 44.16p/l, a reduction of 0.2p/l.

Alternative model

While Dale Farm has decided to increase the value put on butterfat and protein increments, most other processors have either implemented an A+B-C payment model or offered it as an option to suppliers.

Even at the new Dale Farm increments, in general, an A+B-C model will better reward high solids milk and impose greater penalties on low solids milk.

To illustrate the difference, we have taken the prices paid in our milk league at 4.23% fat and 3.28% protein and compared against much higher solids of 4.50% fat and 3.60% protein.

At current Dale Farm increments, this high solids milk is worth an additional 2.37p/l, but at the new increments, it is an extra 3.61p/l.

However, the 3.61p/l increase is still less than the price increase we would see from running the high solids milk through A+B-C payment models from other processors that applied in February 2025.

That said, the difference is reasonably small, especially to the model used by Lakeland Dairies.