There is an “appetite” among some dairy farmers for new fixed milk price schemes, according to the Irish Farmers’ Association (IFA) National Dairy Committee chair, Stephen Arthur.
But Arthur has warned that he believes any new fixed milk price schemes should come with an “inputs cost clause” because of the inflationary pressures which farmers are currently contending with.
Earlier this week Lakeland Dairies launched a new voluntary fixed milk price scheme in the Republic of Ireland and Northern Ireland.
The scheme, which will run from January to December 2024, will give all of its 3,200 farm family suppliers the opportunity to lock in either 5% or 10% of their milk volumes based on 2022 volumes.
According to the IFA National Dairy Committee chair the move by Lakeland Dairies is “positive”.
The Lakeland Dairies new voluntary fixed milk price will offer farmers in the Republic of Ireland 39.5c/L (including VAT) for the months of April to September with a price of 40.5c/L (including VAT) available from October to March. This is based on 3.3% protein and 3.6% butterfat.
In Northern Ireland, a price of 32.5p/L is available for the period April to September with a price of to 33.5p/L available for October to March.
Meanwhile Kerry Group also announced a new forward price scheme offer this month to suppliers, which would set a price of 38.5c/L inclusive of VAT, a significant increase on the price it was offering in its previous scheme.
This would be at constituents of 3.6% butterfat and 3.3% protein and the scheme applies for the period March-October 2024.
Fixed milk price
Arthur believes that other processors may now look to launch new voluntary fixed milk price schemes which he said will definitely appeal to some dairy farmers.
“The thinking farmer who is planning their business and operating on margins, may want to hedge on the price and may think it is prudent to put up to 10% of their volumes into a fixed milk price scheme,” he said.
“But we do need to look at a built-in inhibitor when it comes to inputs because there could be pressure on prices, especially fertiliser prices, because of what is happening in the Middle East. Previously we had seen that because of the war in Ukraine.
“There are already some very stubborn prices that are not coming down and there is no doubt that winter suppliers will find that very difficult,” Arthur added.