Farmers need to satisfy themselves that the €30/t rebate is real and that they will not merely be cross-subsidising their meal bill with their milk cheque.
The closing date for Glanbia’s five-year voluntary fixed milk price scheme is next Wednesday. Farmers are naturally highlighting the difference between the fixed price being offered and the current market price (29.4c/l fixed v 34c/l market average). While understandable, it is not the basis on which a decision should be made, as we can be certain that markets will go up as well as down over the next five years.
Of more relevance is how the fixed price relates to other recently announced fixed milk price offerings, your costs of production and the extent to which it will help de-risk the business and improve resilience.
There is the added dimensions this time of no link to inflation, no high and low market thresholds and preference to those who opt to tie to feed supply alongside a €30/t rebate.
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While ticking the box to fix a percentage of annual milk supply is a straightforward proposition given Glanbia farmers have already participated in schemes like this for over five years, tying into one meal supplier requires a bigger leap of faith. Farmers need to be satisfied that the €30/t rebate is real and that they will not be cross-subsidising their meal bill with their milk cheque. It is important that farmer board members provide these necessary safeguards.
It’s worth noting that the volume of feed eligible for the discount is relatively small given the herd size in the Glanbia catchment area, no feed price has been set, and if any long-term consequences on future market feed prices exist.
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Title: Glanbia's fixed milk price scheme
Farmers need to satisfy themselves that the €30/t rebate is real and that they will not merely be cross-subsidising their meal bill with their milk cheque.
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The closing date for Glanbia’s five-year voluntary fixed milk price scheme is next Wednesday. Farmers are naturally highlighting the difference between the fixed price being offered and the current market price (29.4c/l fixed v 34c/l market average). While understandable, it is not the basis on which a decision should be made, as we can be certain that markets will go up as well as down over the next five years.
Of more relevance is how the fixed price relates to other recently announced fixed milk price offerings, your costs of production and the extent to which it will help de-risk the business and improve resilience.
There is the added dimensions this time of no link to inflation, no high and low market thresholds and preference to those who opt to tie to feed supply alongside a €30/t rebate.
While ticking the box to fix a percentage of annual milk supply is a straightforward proposition given Glanbia farmers have already participated in schemes like this for over five years, tying into one meal supplier requires a bigger leap of faith. Farmers need to be satisfied that the €30/t rebate is real and that they will not be cross-subsidising their meal bill with their milk cheque. It is important that farmer board members provide these necessary safeguards.
It’s worth noting that the volume of feed eligible for the discount is relatively small given the herd size in the Glanbia catchment area, no feed price has been set, and if any long-term consequences on future market feed prices exist.
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