Dairygold has confirmed that it will not be progressing an offer from Ornua on fixed milk-price contracts with its suppliers.

Earlier this month, Ornua announced that it had offered 10c/L on 10% of the fixed-product volume that it currently purchases from its member co-ops, back to those co-ops for 2022.

The company said that the measure aimed to provide a flexibility to help ease the financial strain being experienced by some farmers who have fixed milk-price contracts.

In 2020, Ornua purchased 400 million litres from its eight member co-ops, which includes Dairygold.

However, the milk processor has told Agriland that it will not be moving ahead with the Ornua offer.

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“Ornua is the customer that underwrites the current Dairygold fixed milk-price schemes,” a spokesperson for the processor said.

“Ornua is offering support of less than 1c/L on 2022 milk volumes included in Dairygold’s fixed milk-price schemes. This support is conditional on Dairygold suppliers committing to additional fixed milk-price volumes in 2023 at 42c/L.

“The fixed milk-price of 42c/L offered by Ornua for 2023 is significantly lower than the current market expectations, so a milk price in 2023 of greater than 42c/L will see Ornua recoup all or a significant portion of the support offered this year.

“On this basis, Dairygold will not be progressing the Ornua offer with members,” the spokesperson concluded.

There are currently three active Fixed Milk Price (FMP) Schemes operated by Dairygold, with suppliers allowed to commit a maximum of 10% of their annual milk volumes.

The processor said that the current one-year scheme price is 42c/L.

The volume of milk committed to the two earlier schemes is around 4% of Dairygold’s 2022 intake.

The maximum any supplier will have committed to any of these two schemes is 20% of their annual volume, the processor stated.