This is a subscriber-only article
Suppliers of Dale Farm have until 9 November to decide if they want to take up the offer of a second fixed price milk scheme from the co-op.
The scheme, which is due to start from 1 January 2019 and run for three years, will pay a fixed price of 28p/l. It is being backed by a couple of new customers keen to remove volatility in pricing and guarantee supply over the next few years.
Fixed price
The second fixed price scheme is different to the one offered to suppliers just over a year ago.
In it, the fixed price was calculated on the basis of the last 12 months of production, to August 2017.
The trough month was taken, and a producer could lock in anywhere between 10% and 60% of production in that month, using this as the amount of litres to be supplied each month over the next three years at a fixed price of 27p/litre.
While the scheme proved popular, and those who took up the offer locked in close to 30% of their annual production, it did effectively exclude block calving herds with low or zero litres in a month.
This time around, the fixed price is open to these herds as the new scheme allows producers to lock at either 5%, 10% or 15% of the monthly supply during the production period from October 2017 to September 2018. So if a farmer chooses the 15% option, and supplied 100,000l in January 2018, they would receive a fixed price of 28p/l on 15,000l supplied each January for the next three years.
However, with Dale Farm looking to secure a defined amount of milk, these calculations could be revised if the scheme is over-subscribed.
New scheme
The new scheme is to run concurrently with the first fixed price scheme, which started 1 January 2018, so it could mean that some suppliers have a high proportion of their total supply on a fixed price.
The winter bonus and the 0.3p/l loyalty bonus is not added to the fixed price, although there are adjustments made for quality, and the large producer rebate applies to all litres.
SHARING OPTIONS: