This week in the print edition, we profiled the various changes that co-ops were making to fixed milk price schemes, as the gap between the open market price and what some farmers have fixed at opens up even further.
Since we went to press on Wednesday, the board of Arrabawn met and they have also decided to put 5c/l on the fixed milk price, similar to what Lakeland and Carbery have done.
The statement from Arrabawn says: “At its monthly meeting, board members also signed off on a 5cent per litre support for its fixed-price scheme for the remainder of 2022. This, together with other already announced commitments, brings the support for the fixed scheme to 6.5cent/litre.”
Kerry announced on Wednesday this week that it would up the fixed price if farmers signed up for 2023.
The statement from Kerry was: “The subvention available to suppliers in forward price schemes in 2022 is 5cent per litre (inc VAT) at 3.60% butterfat and 3.30% protein.
"In order to avail of this subvention, milk suppliers must commit milk volume to a 2023 forward price scheme (March to October), which will open for participation on Friday 20 May.
"The maximum allowable volume commitment is the total volume that each milk supplier has committed to forward price schemes in 2022.
"The subvention for 2022 will be paid pro-rata to volume committed to this 2023 forward price scheme. The closing date for entry is Monday 23 May at 2pm.
"Milk suppliers will receive an indicative price for the 2023 forward price scheme on Thursday 19 May.”
The forward price Kerry set in January was 40.75c/l ex-VAT.
Update on Kerry
Since this statement was published, Kerry circulated the details of the 2023 milk price at 43.1c/l ex-VAT at base solids.
This compares with 38c/l ex-VAT at base solids that Glanbia announced for 2023 and 2024 a number of weeks ago.
The Glanbia statement at the time was: “The latest phase of our fixed milk price scheme provides an option to deliver an element of security at a strong price compared to historical norms.
"This three-year scheme sets a base milk price of 42 (39.8c/l ex-VAT), 40 (38c/l ex-VAT) and 40cpl (38c/l ex-VAT) for 2022, 2023 and 2024, plus constituents and any applicable bonus payments.
"There is also a new feed price adjuster to help protect against input cost volatility. It should be considered by suppliers as an option to mitigate against the risk of any future change from current market dynamics.”
More changes to come
So, now you’re up to speed on the fixed milk price changes. On Monday (tomorrow morning), we will update further on the Kerry fixed price offer that is closing at 2pm, as it might well increase from the milk price released on Friday morning.
I still expect some more changes next week from some of the other co-ops.
Fixed price changes with a catch
For those co-ops changing the fixed price up but expecting farmers to sign up for another year, I hear little enthusiasm.
Despite the relatively good milk prices compared with historical norms, I see farmers reluctant to sign up to new fixed schemes unless they can protect their margin further with a hedge on input prices that continue to rise squeezing the farmers margin.
See more on pages 22 and 23 in print edition this week.