Most of the milk buyers in Northern Ireland have held their base prices for June milk unchanged at the level they set for May supplies (Table 1).

But there are notable exceptions, in particular LacPatrick Co-op adding 1p/litre to its price, which is being referred to as a ‘‘currency advance payment’’. This places LacPatrick apart from all of the other buyers in that it is paying more for June milk than they did for April supplies this year.

Meanwhile, Lakeland Dairies’ price for June does not include the exceptional top-up of 0.75p/l that applied for May milk, which effectively means that the base price cut of 1p/l that was announced last month has full effect for June supplies.

Apart from that, a portion of the milk supply to Lakeland Dairies in June qualifies for the fixed-price contract for which the base price is 20.75p/l. According to Lakeland Dairies, that applies to around 40% of its suppliers in NI, with almost all of those having opted to assign 10% of milk to the fixed-price contract for 31 months beginning 1 June 2016.

The only other month-on-month reduction for June milk is 0.25p/l cut by Aurivo Co-op.

The base price at Glanbia Cheese has been unchanged for six months, as it made its cut at the beginning of the year.

Dale Farm’s base price has been steady for the past four months, having been reduced by 1p/l from February to March, while all others held their base at that time (except for Aurivo, which cut by 0.25p/l at that time and 0.5p/l the month before).

Reductions

All of the others held for longer before making reductions this year but have done so in May and/or June. Milk buyers indicated that they were supporting prices as much as possible during this period, in recognition of financial pressure on producers.

Comparing base prices with those of June 2015, it can be seen that the biggest reductions are at Dale Farm and Strathroy. However, their prices a year ago were strong relative to the other buyers and remain so, with the exception of LacPatrick this month.

LacPatrick’s currency advance payment on June milk this year is an adjustment in anticipation of better returns flowing through from a weakening of the sterling exchange rate. It is a bonus that can be applied to the price in NI, while the base price set for milk purchased in the Republic of Ireland remains unchanged.

Most dairy co-ops in the Republic have held their base prices for June supplies.

Increase in Britain

Meanwhile, a milk price increase of 1.5p/litre from 1 August has been announced by Glanbia Cheese in Britain. It is one of a number of price increases to emerge there, following some change in sentiment in the market related mainly to a drop in milk output. The reduction by over 9% during the second half of June was described as a step change’

Milk purchase contracts in Britain are complicated, with some on differing prices for A and B milk and some on prices aligned to costs of production, with milk going to supermarket retailers for sale as liquid milk.

Meadow Foods has announced an increase of 1p/l for July milk and another 1p/l for August. This applies to the A deliveries of milk, which are around 80% of the supply. Prices for the other 20% of supply, known as B deliveries, are left to reflect spot market prices and these are also believed to be on the way up from below 12p/l reportedly paid for April and May milk.

Some of the August price increases announced follow reductions previously set for July milk. There have also been cuts announced for July to September prices payable for milk on aligned contracts, where the reduction in price is related to lower costs of inputs such as feed and fertiliser. The prices on the aligned contracts don’t follow dairy markets down or up.