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The board of Dale Farm has agreed to implement new milk component pricing starting from 1 April 2022.
The changes are being phased in over a three-year period (see Table 1). For the 12 months from 1 April 2022 the base level for butterfat is set to move from 3.85% to 3.88%, with the value for each 0.01% change above or below base going from 0.022p/l to 0.025p/l.
In terms of protein, the base level from next April goes from 3.18% to 3.20%, and the value of each 0.01% change moves from 0.036p/l to 0.039p/l.
By April 2024, the butterfat base will have moved to 3.95%, with each 0.01% increment valued at 0.031p/l, while protein base will be 3.24%, with each increment set at 0.048p/l.
Glanbia Ireland
The changes are similar in principle to those announced by Glanbia Ireland earlier this year and introduced from 1 April 2021 for suppliers in NI.
Again Glanbia opted for a gradual shift, and from April 2024 will work from a 3.9% base for butterfat, with increments set at 0.03p/l for each 0.01% above or below, while the protein base will be 3.25%, with increments of 0.054p/l for each 0.01% change.
By that stage Glanbia will effectively be valuing the fat and protein component of the average litre of milk at over 29p/l (calculated by multiplying the standard litre protein and fat % by the payment increment for both).
In the case of Dale Farm, by April 2024 it will be valuing fat and protein at over 28p/l. That compares to around 20p/l at present, so it is a significant change being implemented by the NI co-op.
Lakeland
Lakeland Dairies is the other NI milk processor this year to confirm new incentives to encourage higher milk solids, although it has taken a cautious approach, with suppliers working from a reference year (2018, 2019 or 2020) for fat and protein.
For all new milk solids produced by any supplier above their reference year level, an enhanced payment will be paid for each unit of butterfat and protein supplied.
The enhanced payments per unit of constituents will be 0.029p/l for every 0.01% of extra fat, and 0.056p/l for every 0.01% of extra protein produced.
The scheme will operate from January 2022.
Letter to suppliers
Writing to Dale Farm suppliers, the co-op CEO Nick Whelan and board chair Fred Allen said that the changes were the result of a comprehensive piece of work by the company to establish the “true value of fat and protein”.
That work involved a study of the Dale Farm product mix and pricing over the last four years, with the changes phased in to allow producers time to adjust.
Ultimately the goal is to improve the overall average quality of the Dale Farm milk pool.
“We believe that this phased change is the correct action to take whilst holding true to our co-operative values,” states the letter.
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