Two payment options for dairy farmers in NI

The decision by Tirlán, Lakeland and Strathroy to pay suppliers on the basis of milk solids, using an A+B-C type model, has created a new dynamic in the NI dairy industry.

In the case of Lakeland, the co-op announced at this years’ Balmoral Show that suppliers will be able to switch to A+B-C from 1 January 2025, with all payments made using this model by 2026.

Most Tirlán suppliers in NI are already on the payment model, with Strathroy making it optional from August 2024 onwards. Others are likely to follow.

That leaves Dale Farm, which remains committed to a different path, based on putting higher values on each incremental change in both butterfat and protein percentages.

Either way, the message to farmers is to produce higher solids milk and to be fair to Dale Farm, the co-op is trying to chart a way through that causes minimal disruption to members.

But it was still surprising at Balmoral Show to hear how adamant their leadership was that they would not be introducing an A+B-C payment.

Core group

That creates an issue for the co-op as it has a core group of suppliers with high solids, who have lost out on tens of thousands in income in recent years, compared to what they would have been paid using an A+B-C model.

However, any criticism around this extends to everyone. Since deregulation, co-op boards across NI sat on a payment system that valued the butterfat and protein in milk at around 20p/l. It was fundamentally unfair on those with high solids.

Decision

With legislation now in place that prevents co-ops from financially penalising farmers who serve their notice periods, there is nothing to stop producers from making a decision that is right for their business.

But it is always important to take stock and carefully consider all options. And as shown in our analysis on page 8, irrespective of the payment model that applies from 2025 and beyond, base price will be king.