There has been a good uptake of LacPatrick’s fixed-price milk scheme by suppliers on both sides of the Irish border.

On enquiry, LacPatrick chief executive Gabriel D’Arcy told the Irish Farmers Journal that the final figure was yet to be finalised, but that the milk signed up for the 12-month scheme, starting on 1 January 2017, represented double-digit millions of litres.

“There was a lot of debate, but in the end we are very happy with the uptake by our farmers, given that it is our first step into fixed-price schemes. It is not a gamble – it is an option for our farmers. We have locked in all the elements – the customers, the volume and the price,” he said.

Farmers had the option of putting 10%, 15% or 20% of their annual milk supply to the contract, at a minimum price of at least 25p/l in NI, or 30c/l in the Republic of Ireland. In the end, it looks as if the actual price paid will be slightly higher than these initial estimates, and probably around 25.5p/l in NI. Farmers must be members, or have applied for, Red Tractor assurance.

Normal bonuses for milk quality and volume still apply, although the milk in the fixed-price scheme is not eligible for winter bonus payments. LacPatrick hopes to come forward with a second fixed-price scheme, possibly at some point in mid-2017.

By then, the co-op should have their new facility at Artigarvan up and running. The £30m investment in high-quality milk powder production effectively doubles processing capacity at the plant. In many ways, it is a game-changer for the dairy industry in NI, as it means that all milk produced here could, in theory, in a post-Brexit scenario, be processed within NI. “The project is on time and on budget. Hopefully, we will have saleable product through the facility in March or April 2017,” confirmed D’Arcy.

On dairy markets, he accepts that markets for cream and butter are very strong, and new contracts set in January will be at much higher prices than available in 2016. Some of the price increases seen for October milk in NI are probably on the expectation of these higher-priced contracts in the new year.

But he urges some caution, with oil price still below $50 per barrel, uncertain Chinese demand and milk production increases in the US on the back of low grain prices. “A lot of the turn in markets has been supply driven. But we really need to see strong lifts in demand, which isn’t there at present. We all hope the market continues to improve, but looking to the second half of 2017 it is anyone’s guess at present. In that context, we believe our fixed price scheme is a good scheme,” suggested D’Arcy.