LacPatrick has announced that it is to introduce a fixed milk price scheme for its suppliers both in the Republic of Ireland and Northern Ireland.
The scheme will provide an option for producers to LacPatrick to ‘fix’ a price for a portion of their milk supplied in 2017, thus providing for greater certainty and stability in their dairy enterprises.
This is the first such scheme offered by LacPatrick, and it is been offered over a relatively short time period (2017).
The co-op expects to be offering further such schemes in the years ahead as it continues to endeavour to reduce the impact of ever-increasing market volatility on its supplying members.
Fixing milk price enables producers to lock in a milk price that leaves a level of profit and reduces exposure to milk price drops that come with dairy market volatility, a spokesperson for the co-op said.
Severe milk price swings have caused considerable cash flow and financial planning difficulties for producers over the last two years.
It is hoped that this new initiative will contribute to reducing such an impact on participating producers during the contracted period.
Gabriel D’Arcy CEO of LacPatrick said the scheme is being developed in conjunction with key partners and would help to cushion volatility for LacPatrick suppliers.
“This is a great initiative and I encourage all suppliers to consider participating. While the current rally in dairy markets is to be welcomed, there is no guarantee that it will continue into the New Year.
“Oil prices, on the other hand, could make a strong recovery and drive dairy markets even further ahead. These are the sorts of geopolitical issues that make for a volatile future.
“LacPatrick’s ambition is to constantly seek opportunities to ‘lock in’ situations that provide for sustainable and predictable prices for our suppliers. This scheme is the first small but significant step in this direction.”
6 Key Details of the Scheme
1. This scheme is for 12 months, from January 1, 2017 to December 31, 2017.
2. Subject to sufficient interest from producers, the co-op will fix the price of 10% of total supply with interested customers for our dairy products.
3. Participation by producers is voluntary. Interested producers will have the option to fix up to 20% of their 2017 supply, depending on demand.
4. The price will be at least 30c/L including VAT or 25p/L at the standard milk constituent level. Prices will vary with the level of constituents which gives producers an opportunity to achieve a higher fixed price.
5. Payment for the fixed price volumes will be on the 10th of each month.
6. Qualifying criteria are having a milk supply agreement signed and participation in a Quality Assurance Scheme ie Bord Bia SDAS Scheme or Red Tractor Scheme
Full details of the scheme will be made available to all milk suppliers in the coming days.