Supplying milk less than 200,000 cells/ml is worth between €5 and €50 per cow depending on what co-op you are supplying.
For the average 80 cow herd this translates to a bonus of between €400 and €4,000 per herd per year depending on processor (See Figure 1).
This money windfall is an added incentive for those farmers producing quality milk on top of the normal bonuses you will get for low cell count like more milk per cow and less culling.
The value of good quality milk seems to be increasing year to year. International customers are demanding high quality product and processors want to achieve efficiencies of production.
When I first started reviewing pricing structures in co-ops there was less emphasis on somatic cell count bonuses and penalties.
You can see from our national survey most are now striving to incentivise good quality, low somatic cell count milk.
Low somatic cell count is a win win situation for both the processor and the farmer. The production benefits for the farmer are significant but often go unnoticed.
Below we review the current status of somatic cell count programs and the expected pricing changes in the coming years.
Dairygold bonus points
Dairygold operate a bonus points system where; (1) TBC, (2) Thermodurics, (3) Sediment, (4) SCC and (5) Lactose are bundled together and each item is given a points score.
For example, TBC less than 30,000 will get you 10 points, an SCC less than 200,000 will get you 20 points etc.
Each supplier is allocated a monthly score and the maximum score in any month is 55 points. To achieve the 0.4 c/litre milk price bonus a farmer must obtain a score of greater than 50 points each month. If he scores 45 points he gets 0.2 c/litre bonus and if he/she only gets 40 points a 0.1 c/litre bonus is paid. This all means for the average Dairygold producer supplying 350,000 litres if he obtains the milk quality bonus on all milk supplied it’s worth €1.400 per year or €20 per cow for the 70 cow herd (see Figure 1).
Glanbia to reduce base threshold
Unlike the majority of the co-ops Glanbia don’t operate a bonus structure for somatic cell count for milk supplied under 200,000 cells/ml.
They focus on operating a policy of penalising the poor performers but also resourcing staff within Glanbia to deal with farmers on a one to one basis if there is a somatic cell count (SCC) problem on farm.
They have a team of fully trained milk quality farm advisors, a full time vet and a fully trained machine technician.
In April 2012 Glanbia indicated its policy to reduce the standard threshold for base price from 400,000 cells/ml to 300,000 cells/ml over a four year period. This means the threshold for achieving base price will reduce by 25,000 cells per year eg 400 to 375, 375 to 350, etc.
For the farmer this means from April 2013 milk supplied between 350,000 and 500,000 will be penalised by 1 c/litre.
From April 2014 milk supplied between 325,000 and 500,000 will be penalised to the tune of 1 c/litre and so on. Milk supplied between 500 and 600,000 will suffer a reduction of 2 c/litre and over 600,000 will be a 4 c/litre penalty.
Lakeland to reduce base
Similar to Glanbia, Lakeland Co-op have also released details that they intend to reduce the 400,000 cells/ml SCC threshold for base price to 300,000, by 2015.
Base price is still achievable at 400,000 for 2013 but in January 2014 base price will be set at 350,000 and by January 2015 this will be reduced further to 300,000 cells/ml.
In January 2015 Lakeland will also introduce a bonus system where milk supplied less than 200,000 cells/ml will get a 1 c/litre bonus.
Carbery to increase bonus, lower threshold
The four West Cork co-ops (Bandon, Barryroe, Lisavaird & Drinagh) supply milk under the Carbery banner processed at their plant in Ballineen in West Cork.
At the moment Carbery offer a 0.4 c/litre bonus for milk supplied below 200,000 cells/ml for the eight months from March to October.
From July 1, 2013 this incentive is going to increase to 0.5 c/litre. In the four winter months (Nov to Feb) the bonus for milk supplied below 200,000 SCC is 0.88 c/litre – this will stay the same.
Carbery are also lowering the threshold for base milk price from 400,000 down to 300,000. The threshold will fall to 350,000 on the first of July 2013 and drop to 300,000 for the 1 January 2014.
Kerry bonus under review
At the moment Kerry don’t have a bonus structure of milk supplied below 200,000 SCC but I’m told it is currently under review with proposals on the table to implement a bonus payment for milk supplied under 200,000 cells/ml.
At the moment all Kerry have is a penalty structure where they penalise milk supplied over 400,000 SCC. Milk supplied between 400 and 500,000 is penalised by 1 c/litre, between 500 and 600,000 by 2 c/l and milk supplied over 600,000 is penalised by 3 c/litre.
United Dairies
The main purchaser of milk in Northern Ireland, United Dairy Farmers co-op has seven levels to its SCC milk payment system. The base price is paid at an SCC level of 151-300,000. Milk from 101-150,000 qualifies for a bonus of 0.15p/l (0.17c/l) and milk supplied under 100,000 qualifies for 0.3p/l (0.35c/l).
Milk supplied from 301-400,000 SCC is penalised at 0.25p/l (0.29c/l) but this rises quickly to 2p/l (2.3c/l) for milk from 401-500,000 SCC, 3p/l (3.48c/l), between 501-800,000 and 5p/l (5.8c/l) for milk supplied over 800,000 SCC.
Arrabawn
Arrabawn don’t operate a bonus payment for milk supplied below 400,000 SCC.
Tipperary
Tipperary Co-op pay an additional 0.1 c/litre bonus plus VAT on all milk supplied less than 200,000 SCC. However, they also have a 0.3 c/litre bonus for milk supplied between 200 and 400,000 cells/ml So for milk supplied below 200,000 cells/ml a farmer will get 0.4 c/litre bonus on all milk supplied.
This bonus structure is currently under review.
Centenary Thurles
The Thurles based co-op Centenary Thurles pay an additional 0.2 c/litre bonus on all milk supplied less than 200,000 SCC. No change to this policy is expected in the short term.
Connacht Gold
The Western Co-op Connacht Gold pay a bonus of 0.28 c/litre for milk supplied under 250,000 SCC. Milk supplied between 250 and 300,000 cells/ml receives a penalty of 0.14 c/litre and milk supplied between 300 and 400,000 cells/ml is penalised by a further 0.14 c/litre also.
Town of Monaghan Co-op
Town of Monaghan don’t incentivise milk supplied less than 200,000 cells/ml. Milk supplied less than 400,000 gets a bonus of 0.56 c/litre, between 400 and 500,000 is base price and over 500,000 gets deducted 0.56 c/litre.
Wexford
Wexford operate a bonus 0.3 c/litre for milk supplied under 200,000 cells/ml (average for month) and base price is delivered for milk between 200,000 cells/ml and 400. Milk between 400 and 500,000 gets a 1 c/litre deduction and milk between 500 and 600 is minus 1.5 c/litre.
KEY POINTS
Very soon three large processors will set base price for milk at 300,000 cells/ml rather than the 400,000 cells/ml EU rejection standard – Carbery by 2014, Glanbia and Lakeland by 2015.
Worthwhile incentives in eleven of the co-ops surveyed for supplying milk less than 200,000 SCC. For an 80 cow herd the annual bonus ranges from €400 to €4,000 (Lakeland 1 c/l bonus in 2015) per herd depending on what processor you supply.
No incentive in four co-ops for supplying milk less than 200,000 SCC
Supplying milk less than 200,000 cells/ml is worth between €5 and €50 per cow depending on what co-op you are supplying.
For the average 80 cow herd this translates to a bonus of between €400 and €4,000 per herd per year depending on processor (See Figure 1).
This money windfall is an added incentive for those farmers producing quality milk on top of the normal bonuses you will get for low cell count like more milk per cow and less culling.
The value of good quality milk seems to be increasing year to year. International customers are demanding high quality product and processors want to achieve efficiencies of production.
When I first started reviewing pricing structures in co-ops there was less emphasis on somatic cell count bonuses and penalties.
You can see from our national survey most are now striving to incentivise good quality, low somatic cell count milk.
Low somatic cell count is a win win situation for both the processor and the farmer. The production benefits for the farmer are significant but often go unnoticed.
Below we review the current status of somatic cell count programs and the expected pricing changes in the coming years.
Dairygold bonus points
Dairygold operate a bonus points system where; (1) TBC, (2) Thermodurics, (3) Sediment, (4) SCC and (5) Lactose are bundled together and each item is given a points score.
For example, TBC less than 30,000 will get you 10 points, an SCC less than 200,000 will get you 20 points etc.
Each supplier is allocated a monthly score and the maximum score in any month is 55 points. To achieve the 0.4 c/litre milk price bonus a farmer must obtain a score of greater than 50 points each month. If he scores 45 points he gets 0.2 c/litre bonus and if he/she only gets 40 points a 0.1 c/litre bonus is paid. This all means for the average Dairygold producer supplying 350,000 litres if he obtains the milk quality bonus on all milk supplied it’s worth €1.400 per year or €20 per cow for the 70 cow herd (see Figure 1).
Glanbia to reduce base threshold
Unlike the majority of the co-ops Glanbia don’t operate a bonus structure for somatic cell count for milk supplied under 200,000 cells/ml.
They focus on operating a policy of penalising the poor performers but also resourcing staff within Glanbia to deal with farmers on a one to one basis if there is a somatic cell count (SCC) problem on farm.
They have a team of fully trained milk quality farm advisors, a full time vet and a fully trained machine technician.
In April 2012 Glanbia indicated its policy to reduce the standard threshold for base price from 400,000 cells/ml to 300,000 cells/ml over a four year period. This means the threshold for achieving base price will reduce by 25,000 cells per year eg 400 to 375, 375 to 350, etc.
For the farmer this means from April 2013 milk supplied between 350,000 and 500,000 will be penalised by 1 c/litre.
From April 2014 milk supplied between 325,000 and 500,000 will be penalised to the tune of 1 c/litre and so on. Milk supplied between 500 and 600,000 will suffer a reduction of 2 c/litre and over 600,000 will be a 4 c/litre penalty.
Lakeland to reduce base
Similar to Glanbia, Lakeland Co-op have also released details that they intend to reduce the 400,000 cells/ml SCC threshold for base price to 300,000, by 2015.
Base price is still achievable at 400,000 for 2013 but in January 2014 base price will be set at 350,000 and by January 2015 this will be reduced further to 300,000 cells/ml.
In January 2015 Lakeland will also introduce a bonus system where milk supplied less than 200,000 cells/ml will get a 1 c/litre bonus.
Carbery to increase bonus, lower threshold
The four West Cork co-ops (Bandon, Barryroe, Lisavaird & Drinagh) supply milk under the Carbery banner processed at their plant in Ballineen in West Cork.
At the moment Carbery offer a 0.4 c/litre bonus for milk supplied below 200,000 cells/ml for the eight months from March to October.
From July 1, 2013 this incentive is going to increase to 0.5 c/litre. In the four winter months (Nov to Feb) the bonus for milk supplied below 200,000 SCC is 0.88 c/litre – this will stay the same.
Carbery are also lowering the threshold for base milk price from 400,000 down to 300,000. The threshold will fall to 350,000 on the first of July 2013 and drop to 300,000 for the 1 January 2014.
Kerry bonus under review
At the moment Kerry don’t have a bonus structure of milk supplied below 200,000 SCC but I’m told it is currently under review with proposals on the table to implement a bonus payment for milk supplied under 200,000 cells/ml.
At the moment all Kerry have is a penalty structure where they penalise milk supplied over 400,000 SCC. Milk supplied between 400 and 500,000 is penalised by 1 c/litre, between 500 and 600,000 by 2 c/l and milk supplied over 600,000 is penalised by 3 c/litre.
United Dairies
The main purchaser of milk in Northern Ireland, United Dairy Farmers co-op has seven levels to its SCC milk payment system. The base price is paid at an SCC level of 151-300,000. Milk from 101-150,000 qualifies for a bonus of 0.15p/l (0.17c/l) and milk supplied under 100,000 qualifies for 0.3p/l (0.35c/l).
Milk supplied from 301-400,000 SCC is penalised at 0.25p/l (0.29c/l) but this rises quickly to 2p/l (2.3c/l) for milk from 401-500,000 SCC, 3p/l (3.48c/l), between 501-800,000 and 5p/l (5.8c/l) for milk supplied over 800,000 SCC.
Arrabawn
Arrabawn don’t operate a bonus payment for milk supplied below 400,000 SCC.
Tipperary
Tipperary Co-op pay an additional 0.1 c/litre bonus plus VAT on all milk supplied less than 200,000 SCC. However, they also have a 0.3 c/litre bonus for milk supplied between 200 and 400,000 cells/ml So for milk supplied below 200,000 cells/ml a farmer will get 0.4 c/litre bonus on all milk supplied.
This bonus structure is currently under review.
Centenary Thurles
The Thurles based co-op Centenary Thurles pay an additional 0.2 c/litre bonus on all milk supplied less than 200,000 SCC. No change to this policy is expected in the short term.
Connacht Gold
The Western Co-op Connacht Gold pay a bonus of 0.28 c/litre for milk supplied under 250,000 SCC. Milk supplied between 250 and 300,000 cells/ml receives a penalty of 0.14 c/litre and milk supplied between 300 and 400,000 cells/ml is penalised by a further 0.14 c/litre also.
Town of Monaghan Co-op
Town of Monaghan don’t incentivise milk supplied less than 200,000 cells/ml. Milk supplied less than 400,000 gets a bonus of 0.56 c/litre, between 400 and 500,000 is base price and over 500,000 gets deducted 0.56 c/litre.
Wexford
Wexford operate a bonus 0.3 c/litre for milk supplied under 200,000 cells/ml (average for month) and base price is delivered for milk between 200,000 cells/ml and 400. Milk between 400 and 500,000 gets a 1 c/litre deduction and milk between 500 and 600 is minus 1.5 c/litre.
KEY POINTS
Very soon three large processors will set base price for milk at 300,000 cells/ml rather than the 400,000 cells/ml EU rejection standard – Carbery by 2014, Glanbia and Lakeland by 2015.
Worthwhile incentives in eleven of the co-ops surveyed for supplying milk less than 200,000 SCC. For an 80 cow herd the annual bonus ranges from €400 to €4,000 (Lakeland 1 c/l bonus in 2015) per herd depending on what processor you supply.
No incentive in four co-ops for supplying milk less than 200,000 SCC
SHARING OPTIONS