Milk processors could be in line to benefit from a package of measures which would see heavy industrial users of gas and other fuels receive a taxation or excise rebate due to the surge in energy prices.

The Irish Farmers Journal understands that the business lobby Ibec is in negotiations with Government to introduce a similar initiative for industry to that delivered earlier this month for motorists.

The package is likely to be available to high thermal load manufacturing, such as dairy processing, brewing and concrete plants.

Clearance for any aid package for industry will have to be sought from Brussels but dairy industry officials are optimistic that the measure will get the green light.

Dairy industry officials insisted that the availability of gas supplies will not be an issue in the short-term

The recent hike in wholesale gas prices has seen costs reach €110 to €120 per megawatt hour this week. The current price is back from a February high of close to €220 per megawatt hour, but it is almost 500% higher than January 2021 when costs were around €20 per megawatt hour.

Dairy industry officials insisted that the availability of gas supplies will not be an issue in the short-term, or for peak milk production, although the situation for later in the year is less clear.

However, higher gas prices are feeding into increased processing costs for co-ops.

It is understood that at least three processors will have to forward buy more expensive gas from April.

It has been suggested that the increased gas price will put an additional 6c/l on overall processing costs.

Gas costs for individual processors vary depending on their product mix.

However, a dairy sector source claimed that the hike in energy costs had “burned processor margins” despite the strong demand and higher prices being paid for dairy commodities.