Last night Glanbia launched preliminary details of phase seven of its voluntary fixed milk price scheme.

On the face of it the price 27.6 c/litre excluding VAT at 3.3% protein/3.6% fat looks good, given where markets are, even if it is slightly behind what Dairygold released a few weeks back.

However there is a twist or two for Glanbia suppliers to consider before they sign up. The first thing to note is that milk volumes locked into this new Glanbia scheme will be locked in for two years and nine months (33 months) as opposed to the 18-month duration of phase six. Dairygold’s most recent offering was for 18 months.

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Two periods

The second thing to note is phase seven is split into two periods; Period one of phase seven is for months one to 15 (Apr 16 to June 17). For this period the price is locked at 27.6c/litre excluding VAT at 3.3% protein/3.6% fat. Irrespective of what base price and co-op top-ups are this will be the price of milk. So in effect for this period whether it's 1c/l, 2c/l, 3c/l or 4c/l of a top-up it makes no difference – the price is 27.6c/l plus VAT and that’s it.

For the second period (months 15 to 33), which is July 17 to December 18, the fixed price will be 27.7c/l excluding VAT at 3.3/3.6 plus the co-op top up’s if there will be a co-op top-up during that period.

Volume of fixed milk doubles

The next most important point is that the volume of milk fixed automatically doubles for this period two of phase seven. So if a farmer gets 30,000 litres accepted into this phase seven for the first 15 months the price will be 27.6c/l plus VAT on 30,000 litres but for the second period (15 to 33 months) the price will be 27.6c/l plus VAT, plus co-op top-ups, if any, for 60,000 litres (not 30,000 litres).

The Dairygold fixed scheme detailed a few weeks ago is offering 28.21c/l plus a milk quality bonus of 0.5 if you meet quality standards, whic in round figures means it’s about 1c/l ahead of Glanbia’s most recent offering.

It is for a shorter period. Kerry boss Stan McCarthy said to us this week that they couldn’t get customers, farmers and Kerry Group Management to agree on a price and hence they have no ‘fixed’ offering this spring.

We await more details from Glanbia which will arrive over coming weeks to allow us understand the various twists, ifs, double volumes and prices on offer. Terms and conditions seem to evolve with every new development, but it is voluntary so there is no compulsion to fix anything.