More Irish dairy processors are offering fixed milk price contracts to their farmer suppliers in a bid, they say, to reduce price drop risks and to ensure a constant milk supply.
The fixed price offer is voluntary, with advantages and disadvantages to farmers.
Back in August, Irish dairy co-op Glanbia announced its five-year, fixed-price milk contract, calling it a world first.
Milk producers were able to sign up any quantity from 10 percent to 100 percent of their supply for a five-year period at 31 euro cents (C$0.46) per litre at 3.6 percent butterfat and 3.3 percent protein.
The co-op also offered its 4,800 farmers a five-year feed contract with Glanbia Ireland’s Gain Animal Nutrition range.
Those who did so, receive a €30 (C$44.36) per tonne loyalty discount on dairy feed that must be bought from the processor for the duration of the contract.
With that deal came another incentive of between two and three euro cents per litre as a “feed adjuster” bonus.
“If producers can get their cost of production down to 25 to 26p per litre and guarantee profit margins, there is so much planning and reinvestment they can achieve across a five-year period,” said dairy specialist Chris Walkland.
Northern Ireland milk processor Dale Farm has also offered its suppliers a fixed milk price contract of 27 pence (C$0.46) per litre for a three-year period.
The voluntary option is being offered by the farmers’ co-op in a bid to grow its milk pool and help reduce the risk to the suppliers.
However, some Dale Farm members said 27 pence was low considering milk prices across Europe were on the rise, hitting up to 36 euro cents per litre in some countries.