Dairygold co-op has said it is confident it will "pay a competitive milk price relative to its industry peers" this year.

But it has also warned that the nitrates derogation is the "biggest risk" facing the sector at this time.

In a letter issued to suppliers the co-op said its performance for the first half of 2025 "has been generally in line with budget".

According to Dairygold thanks to "favourable dairy markets and weather conditions, 2025 should be a very positive year for milk and grain suppliers and the business".

Dairygold also outlined that both the favourable spring weather and improved milk prices have delivered a boost to milk production.

The co-op detailed in its latest letter to suppliers that its 2025 YTD [yield to date] milk supply to 17th August was c. 1.018 billion litres - up 4.7% or 45.5 million litres, versus last year.

However, Dairygold also warned that this this growth has been "somewhat tempered" by later calving and a 3% decrease in cow numbers but overall, the co-op expects 2025 milk supply to be c. 1.420 billion litres, up approximately 2.7% versus 2024.

In relation to dairy markets, the co-op highlighted that global supply continues to grow across the main exporting regions and is currently outpacing demand growth, which has led to "prices easing".

This trend was evident in Dairygold's most recent milk price for July supplies.

The co-op dropped its milk price by 1c/L, to a base price of 46.53c/L. All co-op prices for July supplies can be seen on the Milk Price Tracker, click here to see the latest prices.

Meanwhile Dairygold also highlighted that "ongoing geopolitical tensions and risks continue to pose a challenge to buyers in the immediate term."

Dairygold’s milk price to July was c. 8c/L above last year’s quoted price to July 2024, and its milk payments to July were c. €105m higher than for the same period in 2024.

Dairygold milk price relativity for 2025 has improved versus 2024 and the co-op said that it "is in line with the weighted average of its peers".

It also further highlighted to suppliers that "Dairygold milk price should be assessed based on annual performance rather than an individual month. "

Meanwhile grain harvest intake for 2025 is much earlier than last year, according to the co-op with intake volume up to August 20, 2025 at c. 95,000 tonnes vs 31,850 tonnes for the same period in 2024.

It also stated that while grain quality is very good, markets are weak and the market outlook is challenging.

In the letter to members, the co-op starkly warned that "environmental sustainability continues to be the biggest challenge, and the nitrates derogation our biggest risk."

But it emphasised that it is continuing to "collaborate with government and Industry partners, at national and EU level to ensure the current nitrates derogation is retained."