There is to be a widening of the price gap between Red Tractor farm assured milk and other milk sold to United Dairy Farmers from this month on. In effect, the gap will double to 2.5p/litre and could possibly be increased further from 1 April.

The Irish Farmers Journal understands that the Dale Farm Red Tractor price is to be regarded as the base price from now on and there will be a deduction of 2.5p/l for the non-accredited milk, which is believed to be less than 5% of the total volume collected by United.

However, members of the United Dairy Farmers co-op who register before 31 December for their farms to be inspected and whose farms become Red Tractor accredited before 1 April 2016 will have an incentive to do so. They will qualify for a retrospective rebate in May. The rebate will be the amount of premium the member would have earned if their milk had been Red Tractor from 1 December through to the time that the accreditation is achieved.

ADVERTISEMENT

It’s understood that the incentive won’t be available to anyone who applies for the Red Tractor scheme after 31 December, nor to anyone who leaves the co-op by April 2016.

Currently, 96% of the United Dairy Farmers’ milk pool is believed to be Red Tractor or in the process of attaining the assured status.

This means that it is becoming increasingly costly for United to collect non-assured milk separately and segregate it from Red Tractor milk for processing. It is proposed that these extra costs should all be included in the penalty deduction that is applied to non-assured milk after 1 April. If that occurs, the deduction may be well in excess of 2.5p/l.

Loyalty bonus

It’s also understood that United is introducing a loyalty bonus from 1 January. This seems to be aimed as a deterrent to members who habitually lodge notices with United that they plan to cease membership and to terminate their milk supply contract in 12 months’ time (the required notice period to avoid a penalty on quitting the contract).Those who don’t serve a notice will get a bonus of 0.1p/l paid on top of the milk price each month.

Anyone who rescinds a notice before the end of any month will qualify to receive the new loyalty bonus from the beginning of the next month. So, anyone who rescinds a notice before the end of December 2015 will qualify to get the loyalty bonus from the start of the new year.

It is expected that if a member does not rescind a quit notice but subsequently remains with United and lodges a fresh 12 months’ notice, then that member will have a penalty of 0.1p/l applied to their milk price each month. That would make their price 0.2p/l worse than the price paid for similar quality milk supplied by the loyal member.