Over the coming weeks, the annual KPMG/Irish Farmers Journal milk price review will be completed.
The evolution of the dairy business means milk price alone is no longer the sole determinant of the success, or otherwise, of many dairy businesses. With this in mind, we will attempt to outline some of the evolving funding structures and audited profitability of Irish milk processors, while at the same time looking at the independently assessed milk price review completed by KPMG. The aim is to inform dairy farmers so they can make measured decisions.
Each year, farmers ask us what is the difference between the annual KPMG/Irish Farmers Journal Milk Price Review and the monthly Milk League in the Irish Farmers Journal. If we were to summarise in one line for each:
The KPMG figure for each processor is the total amount of money paid out to dairy farmers for milk divided by the total volume of litres collected to arrive at an average price per litre for all manufacturing litres. The monthly milk league price ranks what is paid out to farmers as the net monthly milk price per kilo of milk solids using national average solids. That point on solids is important. Remember, the monthly league is standardised at 3.99% fat and 3.43% protein, the national average milk solids (CSO 2014).
The KPMG/Irish Farmers Journal annual price review is not standardised. Hence, those processors that get good milk solids from their farmers have to pay a higher price for that milk, and hence more money is paid out by the processor for that higher-value product.
Conditional bonuses are not included in the monthly leagues as we want to establish a standard price per litre for comparison purposes that is paid to most farmers. Hence, milk quality bonuses that reward milk of very low cell count that only some farmers achieve are not included in the monthly league. However, in the KPMG league this counts as money paid out for milk and is in the pot to be divided against all litres collected.
Over the coming weeks, the annual KPMG/Irish Farmers Journal milk price review will be completed.
The evolution of the dairy business means milk price alone is no longer the sole determinant of the success, or otherwise, of many dairy businesses. With this in mind, we will attempt to outline some of the evolving funding structures and audited profitability of Irish milk processors, while at the same time looking at the independently assessed milk price review completed by KPMG. The aim is to inform dairy farmers so they can make measured decisions.
Each year, farmers ask us what is the difference between the annual KPMG/Irish Farmers Journal Milk Price Review and the monthly Milk League in the Irish Farmers Journal. If we were to summarise in one line for each:
The KPMG figure for each processor is the total amount of money paid out to dairy farmers for milk divided by the total volume of litres collected to arrive at an average price per litre for all manufacturing litres. The monthly milk league price ranks what is paid out to farmers as the net monthly milk price per kilo of milk solids using national average solids. That point on solids is important. Remember, the monthly league is standardised at 3.99% fat and 3.43% protein, the national average milk solids (CSO 2014).
The KPMG/Irish Farmers Journal annual price review is not standardised. Hence, those processors that get good milk solids from their farmers have to pay a higher price for that milk, and hence more money is paid out by the processor for that higher-value product.
Conditional bonuses are not included in the monthly leagues as we want to establish a standard price per litre for comparison purposes that is paid to most farmers. Hence, milk quality bonuses that reward milk of very low cell count that only some farmers achieve are not included in the monthly league. However, in the KPMG league this counts as money paid out for milk and is in the pot to be divided against all litres collected.
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