Kinisla has confirmed the price it will pay for July milk supplies, while also announcing an increase in its discount on dairy feeds.

The processor's milk price for last month has been set at 39.1c/L, including VAT, and quality and sustainability bonuses.

This is an increase of 1.1c/L on the price announced last month for June milk, the company said.

According to Kinisla, the milk price return, inclusive of VAT and bonuses, will be 42.25c/L, based on average milk solids received in July.

The business said that, if the emerging contraction in European milk supply persists through the second half of the year, the resulting tightening in product availability could provide support to European dairy prices later in the year, particularly if demand improves from current levels.

Kinisla has also announced a drought support measure that will increase the discount available on animal feed.

The processor said that it has increased the discount available on selected dairy feeds to €50/t to "assist milk suppliers managing the impact of prolonged dry weather".

The higher rate of discount kicked in last Friday (August 14) and is set to remain in place until September 5, Kinisla said.

Kinisla top-up

Last week Kinisla announced that a payment of 1.3c/L will be paid on milk supplied under its milk supply contract from January to April this year.

The processor said that Kerry Creameries Limited, the Kinisla subsidiary which actually purchases the milk from farmers, will pay an additional 1.3c/L, including VAT, in respect of all milk supplied under the milk supply contract during the period from January 1 and April 30.

The payment will be based on average Kerry Creameries Limited milk solids.

Kinisla said that the decision followed consultation with the board of Kerry Co-op, the majority owner of Kinisla.

According to the processor, the additional payment will amount to €4 million.

The top up payment covers the final four months of the last milk supply contract between suppliers and the business then known as Kerry Dairy Ireland.