The recent news of Lakeland Dairies‘ introduction of a milk supply management scheme came as shock to many suppliers.
Lakeland had revealed that, over the last 10 years, the volume of milk supplied to it for processing has more than doubled to a current rate of over two billion litres per year.
The processor said that the peak milk supply period of April, May and June “is particularly challenging on an annual basis”.
It also noted that milk supply is set to continue increasing in the coming years based on supplier survey responses and current run rates.
Milk supply management
The scheme will see farmers penalised for exceeding a base peak reference volume in the months of April, May and June.
From 2023 onwards, any ‘new’ volumes of milk supplied during April, May and June above a base peak reference volume will be paid 4c/L less than the price set for each of those months.
While an increase in volume in the month of January for Republic of Ireland suppliers will see a bonus of 4c/L.
It was also announced that no new entrants will commence supply in 2023 and new entrants from 2024 will have to go through an application process.
Winter bonus
When the news broke, there was a concern among a number of suppliers that the new bonus for January milk would see the removal of the winter bonus for this month.
This would result in a 1c/L reduction in milk price being paid to suppliers for their milk – based on the bonus offered to suppliers in January 2022.
It has been revealed to Agriland that milk supplied in January by existing and/or new suppliers will still be eligible for the winter bonus.
This means that farmers will be able to obtain the winter bonus in addition to the 4c/L milk supply management bonus.
Lakeland currently offers winter bonuses for November, December, January and February, if suppliers meet the criteria.
The current bonus for January is 5c/L if more than 45% of May milk production was supplied in January.
So, this means that all milk over this 45% will be eligible for the existing bonus and the milk supply management bonus.