Glanbia has announced that it is going to offer suppliers caught with large volumes of milk in fixed milk price schemes a loan to pay for the higher cost of inputs.

In response to questions and comments that some suppliers with a large proportion of supply in fixed milk schemes are tracking below market value and the fact input costs have risen sharply, Glanbia is going to offer farmers an upfront payment of 5c/l, depending on the proportion of supply in fixed price contracts.

Glanbia will then take the money back from farmers in 2023 and 2024.

Volumes above 35%

The offer only stands for those with over 35% in fixed contracts and they can only get the 5c/l payment on the volumes above 35%.

So, if a supplier has 60% of supply in a fixed price contract they have an option to get a loan of 5c/l on the 25% of volume above 35%. No detail on the cost of this scheme is available yet.

Some farmers in fixed milk price contracts are losing out on around 10c/l

The money will land into agri-trading accounts to pay for inputs. When asked why adjustments had been taken out of fixed milk offerings in a statement, Glanbia said: “Earlier versions of fixed milk price schemes had market adjuster mechanisms and ‘farm input inflation adjustment’ but, in line with feedback from farmers, these adjustment mechanisms were removed.”

Earlier in the week, chair of the Oireachtas committee on agriculture, Deputy Jackie Cahill said: “Some farmers in fixed milk price contracts are losing out on around 10c/l, as a result of milk prices increasing above the 40c/l mark.”

He went on to say that forward selling contracts had been promoted “very strongly” by dairy processors.

When contacted by the Irish Farmers Journal, he said: “contract adjustment happens for some inputs in extreme situations so why can’t it happen on output prices? Farmers are in a real cost price squeeze right now, especially with fertiliser prices.”