LacPatrick’s fixed-price milk agreement got under way on 1 January with 70 suppliers signed up for the 12-month period.

Suppliers had the option to fix 10%, 15% or 20% of their 2017 milk pool under the agreement, which will be calculated on a monthly basis rather than an annual figure.

The majority of farmers opted to fix 20% of their milk at a guaranteed base price, which has now been confirmed at 25.75p/l.

This fixed price excludes top-up payments on milk quality and volume which apply as normal. However, the winter bonus payment is not applicable to milk sold under the fixed price agreement.

Based on last year’s supply figures, the estimated volume of milk likely to be supplied under the agreement will be approximately 14m litres.

Payment differs under the fixed-price agreement. Farmers signed up to the agreement will be paid on the 10th day of each month for the amount of fixed milk they supplied. The remainder of their milk supply will be paid as normal on the 25th of the month.

Therefore, a farmer supplying 80,000 litres of milk in January, who has fixed 20% of their supply, will receive a milk cheque based on 16,000 fixed litres on 10 February. A further cheque will be received on 25 February payable on the remaining 64,000 litres.

LacPatrick indicates that it is considering a second fixed-price agreement for later this year, but that will depend on the market prospects for the second half of 2017.

Strathroy

According to sources in the dairy industry, Omagh-based Strathroy Dairies has managed to add over 20 suppliers to its milk pool from 1 January 2017, bringing with them an additional 35m litres of milk.

The new suppliers are mainly producers who had supplied Donegal-based Green Pastures, and had signalled their intention to leave at the end of last year.

That prompted Green Pastures to seek new suppliers, particularly in the west, with reports of attractive offers being made to new recruits that involved a 3p bonus on winter milk and a commitment to match the best base prices available elsewhere.

The latest indications are that they haven’t yet managed to make up for the total shortfall, but have been successful in taking around six producers from each of LacPatrick and Lakeland, and combined total of approximately 12m litres.

Milk reduction levels off in the UK

The sharp reduction in milk supply across the UK has begun to level off, provisional figures from the Agriculture and Horticulture Development Board (AHDB) suggest.

The most figures indicate that milk supply was 5.4% lower than year earlier levels for the two weeks up to 17 December 2016. Average daily milk production in the UK stood at 2.1m litres over this two-week period which is 2.3% lower than the three-year average.

Earlier in the year, UK milk supply was typically running 6% to 8% behind the previous year levels.