A solicitor representing a group of fixed-price dairy farmers who supply Glanbia, is to issue a letter to management requesting the commencement of negotiations in relation to fixed milk-price contracts.
The letter is to be sent to the processor tomorrow (Thursday, August 4), the group confirmed.
The southern-based group, whose core members are from Waterford Irish Farmers’ Association (IFA), was established in response to financial strains incurred by their fixed-price contracts in what the group has described as “unprecedented” times.
The group’s formation was also spurred on by a condition contained within Glanbia’s milk-support scheme, announced in March.
Fixed-price supports
This scheme is aimed at Glanbia suppliers on existing fixed-price contracts that are paying base prices of between 30-32c/L.
Under the scheme, these fixed prices would rise to 40c/L.
But the enhanced price applies to milk volume in excess of 35% of the total supply.
And, to qualify for the 40c/L payment, farmers had to commit to supply the same volume (above 35%) in 2023 and 2024 at a base price of 38c/L.
This latter point is at the heart of the Glanbia farmers’ gripe.
On one hand, they say, they are being offered a support scheme that is desperately needed and very much welcomed.
But on the other, they are being tied into another two-year contract at a price that could see them continue to lose money.
The current non-contracted base price-per-litre of milk from Glanbia is 49.58c/L
Within the Waterford group, the average volume of contracted milk is about 55% per farmer, but ranges from 40% to as high as 90%, it is understood.
A spokesperson for the group told Agriland that availing of the milk-support scheme this year could be worth around €20,000, but next year and the year after, they’d be agreeing to lose money.
The spokesperson said that legal and farm-advisory opinions recommended that they “take the hit” this year, advising them not to sign up to the scheme because of the two-year condition.
Input-cost support
In addition to the milk-support scheme, Glanbia also offered its suppliers an input-cost support scheme last March.
This gave farmers the option to avail of a milk-price pre-payment of 5c/L above the 35% volume threshold mentioned above.
This would be paid as a lump sum into suppliers’ trading accounts. This was due to happen in April-May 2022.
The pre-payment will then be deducted in six instalments from milk payments from March to August, inclusive, in 2025 and 2026.
In May this year, Glanbia said that around half of eligible milk suppliers had applied for the fixed milk-price support schemes.
It is believed that this figure is around 250 but it is not certain what the breakdown is between the milk support-scheme and the input-cost support scheme.
An additional 5c/L agri-input support payment has also been introduced for fixed-contract suppliers.
‘There needs to be an element of goodwill’
Seeking legal advice in relation to fixed milk-price contracts has not been standard practice for farmers -until now.
One farmer told Agriland:
“My solicitor has told me that if I had shown him the [existing] fixed-price milk contract previously, he would have said by no means should I sign it, as there is nothing protecting me from a market-price increase, and an input-cost increase.
“A lot of the farmers in the group are young farmers with another 30 years’ farming in them, there needs to be an element of goodwill here,” the farmer said.
The spokesperson referenced the “caveat-free” supports offered to farmers recently by Lakelands and Dairygold, calling them the “gold standard” of supports.
Mediation
If the request for negotiations to commence between the co-op and farmers is not successful, mediation will be the next step, the spokesperson said.
The group said it is urging other farmers who are impacted financially by fixed milk-price contracts to get in touch through the relevant IFA channels.
Glanbia told Agriland it didn’t have a comment on the matter at this time.