The announcement last week that the board of Lakeland Dairies has agreed to introduce a two-tiered pricing policy on milk produced during the peak milk period of April to June is hugely significant. It is the first time we have seen a co-op voluntarily decide to curtail peak milk production and pause new entrants. In the case of Glanbia, the decision was forced upon them due to planning delays.
The reason for the move by Lakeland is far from clear. The obvious conclusion is that the board took the decision to restrict seasonal grass-based production rather than making the necessary investment in additional processing capacity. But a price penalty does not remove the need to have adequate capacity in place to process increased volumes during peak months. While incentivising farmers to produce more milk from an emission intensive indoor system, it does ultimately limit cow numbers. Is this the objective?