On average, the Irish processors lifted milk price by about 2.5c/litre for September and October (0.35c/kg milk solids). This pales into insignificance when we compare it with the Dutch processor FrieslandCampina, which has decided to lift milk price by over 8c/l in the last two months for November and December. It heaps significant pressure on Irish processors as board members gather to set November price.

The west Cork co-ops continue to lead the way for the October milk league. West Cork co-op Drinagh tops the league despite the fact it controls the catchment area furthest away from Ballineen (the Carbery central processing site) and is also the co-op where the suppliers are most dispersed. Lisavaird only lifted price by 1c/l for October and this allowed Drinagh jump ahead. The other two co-ops, Bandon and Barryroe, follow closely in third and fourth spot respectively.

Kerry Group steps up to reach unfamiliar and dizzy heights on top of division two. Hot on the heels of Kerry are the main processors and really there is little or nothing to separate all of those in division two. All the big players are bunched in right behind Kerry and this grouping includes Glanbia, Dairygold, Arrabawn and Tipperary Co-op. They are all paying about €3.71c/kg milk solids at national average milk solids. In old money, that’s about 26.5c/l excluding VAT at 3.3% protein and 3.6% fat.

Aurvio in the west (formerly Connacht Gold) brings up the rear of division two, paying about €3.62/kg milk solids or about 1c/l less than the rest in division two. Aurivo only lifted price about 1.2c/litre for October when most of the other co-ops had lifted 1.5c/l or 2c/l.

Division three contains the all too familiar L&L – LacPatrick and Lakeland. LacPatrick had an unconditional bonus in September but this got the heave-ho for October so, while it might have sounded like they were making progress on price, the net result was they went up about 1.25c/l for October milk supplies. Lakeland only increased by 1c/l for October. From an already poor position relative to the other processors, this didn’t help them when it came to comparing prices.

The average October milk league price is 3.73c/kg milk solids (26.6c/l excl VAT at 3.49% protein and 4.11% fat). On average, the price rose 0.21c/kg MS (up 1.5c/litre) on September prices, on top of the 1c/l for August. This price excludes bonuses available for lower somatic cell count. The October price rises come in response to rising international and domestic market values for butter and cheese.

This week, the GDT, which gives us some transparency on whole milk powder prices, rose 3.5%. Also this week, FrieslandCampina rose the base December price by 4.5c/l to 37.5 c/kg – that’s up over 8c/l in two months. Now that’s what you call a very fast lift in price and a quick response to the market signals.

Difference of €624 in October’s milk cheque

When we compare the milk prices at the same milk solids, there is over €624 of a difference in the base October milk cheque between the west Cork co-ops at the top and the Northern co-ops at the bottom.

Figure 1 shows the difference in payout between processors for the standardised litre at 3.49% protein and 4.11% fat supplied during October. It shows the difference in the October milk cheque for a supplier with a normal seasonal spring supply curve (8% in October) for a farm that will produce 300,000 litres (66,000 gallons) in the year.

Actual October price

Figure 2 shows the difference in the actual October milk cheque delivered. When I say actual, I mean the money paid out for the different milk solids collected from each of the different processors.

Milk processors collect milk that varies in fat and protein percentage so in effect the quality of milk goes some way to deciding the milk price paid out.

The processor can’t pay top price if the quality is poor. The higher the milk solids (fat and protein percentage), the higher the milk cheque.

Farmers should be rewarded for better milk solids so if a processor is getting less milk solids, it will pay a lower price and rightly so as it can make less product from that milk.

The combination of good milk price and good milk solids puts Drinagh top of this graph for October.