Our monthly milk league analysis for a dairy farmer supplying 750,000 litres per annum shows that at the NI average for milk solids, farm gate milk price averaged 41.3p/l across all processors in April.

Monthly base prices have been on an upward trajectory since last August.

From September to April, all processors have increased their respective base prices month on month.

Prices have also been rising in the Republic of Ireland (ROI) and in Britain, but some initial analysis of what was paid for milk produced in March 2022, suggests that NI might be just ahead of the rest.

As we move to peak milk production in April and May, below we have taken a more detailed look at how prices compare on either side of the Irish border.

NI payments

Calculating the final milk price paid in NI is relatively straightforward.

All processors issue a base price as a starting point. On top of this are incremental payments for butterfat, protein and in the case of Lakeland Dairies and Glanbia Cheese, a lactose payment.

These premiums are usually paid at a set rate for every 0.01% increase above a base value for butterfat and protein, normally in the region of 3.84% to 3.88% and 3.15% to 3.2%, respectively.

Premiums are also paid relating to TBC and SCC, with a volume bonus dependent on the number of litres supplied either on a monthly or annual basis.

Republic of Ireland payments

In contrast, comparing milk pricing in the ROI is less straightforward as processors operate an A+B-C model.

While processors do issue a monthly base price at a standard 3.6% butterfat and 3.3% protein, this value has limited correlation to the end price a farmer will be paid each month.

Instead, processors issue a separate price for 1kg of protein (the A element) and 1kg of butterfat (the B element), based on what the market is returning.

These values will frequently change from month to month, unlike in NI where the value of solids remain constant throughout the year.

ROI processors also apply a price deduction on volume (the C element), rather than a volume bonus as in NI.

Keeping milk solids in line with the NI average, butterfat is 4.11% and protein is 3.27%

No payments are routinely made on TBC and SCC, although a number of processors have additional premiums and top ups applicable at various stages of the year.

Comparison

To compare milk pricing between NI and the ROI, we have taken a dairy farmer supplying 750,000 litres per year with a supply profile similar to the NI average.

For April, this means monthly production was 69,797 litres. Keeping milk solids in line with the NI average, butterfat is 4.11% and protein is 3.27%.

Our example assumes the farmer is supplying Glanbia Ireland as it is a processor operating on both sides of the border.

Based on our NI monthly milk league analysis for April, the farmer’s final milk price is 43.27p/for milk collected on alternate days.

Using the A+B-C values for Glanbia in the ROI, protein (A) is valued at €9.675/kg including VAT, with butterfat (B) worth €4.835/kg including VAT.

Both convert to a sterling equivalent, excluding 5.5% VAT, of £7.41/kg for protein and £3.71/kg of butterfat.

The volume adjustment (C) is set at €0.0422/litre, which converts to 3.36p/l excluding VAT.

Milk solids value

The monthly volume of 69,797 has to be converted to kg of milk and comes to 71,890kg.

At the outlined figure, our average farmer produces 2,350kg of protein and 2,954kg of butterfat.

Applying the A+B elements, protein is worth £17,399, while butterfat is worth £10,932.

Making the deduction for volume (C), the monthly milk sales come to £25,985.

However, in the case of Glanbia Ireland, the example farmer is paid a top up of 0.4p/l under the processor’s sustainability bonus, plus an additional 2.5p/l under its new agri-input support payment.

All combined, the final milk price under the ROI payment is 40.13p/l, which is 3.14p/l below the equivalent price paid in NI.

At the outlined monthly volume, the example farmer would have an additional £2,193 in income under the NI price model.

It must be stressed that this is a basic calculation between payments north and south and as milk solids increase, the price differential closes rapidly.

Similar analysis

Similar analysis completed for Lakeland and Aurivo show that the difference in prices is not as pronounced, but at the solids used in the example, it is still slightly in favour of a NI supplier.

The calculations dismiss any suggestion that processors coming north for milk are currently getting this at significantly lower prices than what they have to pay in the Republic of Ireland.