A 5-year scheme to encourage NI suppliers to produce higher fat and protein milk is to be introduced by Lakeland Dairies from January 2022.

The processor set out the new payment system to NI farmer committee members last Friday, ahead of letters being sent out to suppliers this week.

The correspondence shows each supplier the fat and protein of the milk they supplied in each of 2018, 2019 and 2020. The supplier can then pick which of these years they want to act as a reference year going forward.

Once this is done they will be allocated a monthly milk constituent base figure for each of the 12 months of that year. The actual milk supplied from January 2022 onwards will then be paid relative to this base figure for constituents.

For all new milk solids produced by any supplier above their chosen base constituent level, an enhanced payment will be paid for each unit of butterfat and protein.

The enhanced payments will be 0.029p/l for every 0.01% of extra fat, and 0.056p/l for every 0.01% of extra protein produced.

Between the Lakeland base (3.85% protein and 3.19% fat) and the constituent levels taken from each farmer’s reference year, old increments of 0.02p/l for fat and 0.034p/l for protein, still apply.


While the scheme is designed to encourage farmers to increase milk solids, there were some dissenting voices at the Friday meeting. Farmers who already have good solids point out that if someone catches them up in 2022, then this person will actually be getting paid more for the same quality of milk.

The other main issue raised is that it is much more difficult for a farmer already with high solids to increase this further, than someone with a low starting point.

According to Niall Matthews, chair of Lakeland Dairies, the feedback received from milk suppliers is that they would generally favour a system of the type proposed.

Lakeland rewards farmers who catch up

To analyse how the Lakeland incentive scheme might impact suppliers we have assumed that a farmer is at the NI average for fat and protein in 2018 of 4.03% butterfat and 3.28% protein.

Where a 1m litre supplier increases 2022 milk solids by 0.1% for both butterfat and protein, the new payment rates are worth an additional £3,100 at a standardised base milk price.

In the unlikely scenario that milk solids continue to rise by 0.1% over the five years, milk sales in 2027 are worth an additional £15,500.

High solids

However, for someone who has focused on breeding for higher solids during the past five to 10 years, there is less scope to continue increasing butterfat and protein levels.

For example, if producing solids that are 0.5% above the average, the reference year value for butterfat is 4.53% and protein is 3.78%. Assuming that butterfat is increased by 0.05% and protein rises by 0.025% over the baseline reference year, milk sales in 2022 will increase by £1,000.

But if we take an extreme example, and assume that this farmer does not increase milk solids by 2027, and is still producing 1m litres of milk at 4.53% butterfat and 3.78% protein, at a base price of 30.5p/l, they will be receiving 33.9p/l.

However, the farmer at the NI average has now caught them up, and for the same constituent milk, their price is 35.4p/l.


Lakeland’s new payment scheme does differ significantly from the one introduced by Glanbia Ireland in April 2021, with Glanbia increasing butterfat and protein increments annually for four years.

By 2024, if base price is 30.5p/l, a Glanbia supplier with milk at 4.53% butterfat and 3.78% protein will receive a milk price of 35.2p/l. That is over 1p/l more than the high-solids Lakeland supplier who has not changed over the years, but actually less than the Lakeland supplier who started out at the NI average.

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