The board at LacPatrick Co-op has given approval to management to offer suppliers fixed-price contracts for Red Tractor-assured milk.

The initial offer to go out in the coming days is an option to lock in 10% of milk supplied at a price of 25p/l for an initial 12-month period, starting on 1 January 2017.

According to LacPatrick chief executive Gabriel D’Arcy more details will follow in the coming days, but he highlighted that the co-op has been considering a fixed-price scheme and has been discussing plans with customers for a number of months.

However, in principle, he said that the co-op has refused to lock in farmers to prices that were below the cost of production.

“We are not going to lock in farmers to losses,” he said.

Given that market returns are improving, D’Arcy maintains that this is his first opportunity to launch a fixed-price scheme. The offer is significantly ahead of other similar schemes offered by rival co-ops in NI this year.

He hopes to come forward with more overlapping fixed-price schemes over time, with the eventual target to have 50% of milk from every farmer in fixed-price deals within the next two to three years.

“It will be subject to markets at the time being at or above the cost of production (25p/l).

‘‘But if next year we can fix prices at 27p/l we will offer a deal at 27p/l. If markets are at 30p/l, we will offer 30p/l,” D’Arcy told the Irish Farmers Journal.

There will also be a change in payment date, with farmers paid for milk in fixed-price schemes on the 10th of every month, which should help to improve cashflows on to farms.

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