Despite a 10th successive increase in the New Zealand Global Dairy Trade (GDT) auction, milk processors in NI have again moved to cut prices for milk supplied in March, with reductions ranging from 0.2/l to 0.5p/l.

The largest processor of NI milk, Lakeland Dairies, was the first to declare, taking 0.5p/l off its price – leaving the base for the month at 25.25p/l.

Former LacPatrick suppliers will be paid the same base price as Lakeland suppliers for March, however, adjustments for quality and volume will be based on LacPatrick’s terms. It won’t be until April supplies before everyone is paid using the same system.

Matched

The Lakeland price was matched by Glanbia Cheese, which has also reduced its price by 0.5p/l.

Slightly ahead is Glanbia Milk/Fivemiletown, which was well out in front for the first two months of the year, having paid a winter bonus of 3p/l.

That winter bonus does not apply in March, and with a cut to base of 0.5p/l, taking it to 25.5p/l, the price is now in line with the rest.

Elsewhere, Aurivo, applied a 0.25p/l cut, taking its base price for March to 25.75p/l, while Omagh-based Strathroy Dairies reduced its price by 0.5p/l. With a 1p/l winter bonus no longer applying, it leaves suppliers on a base of 26p/l.

Dale Farm

That leaves Dale Farm, which implemented a cut of 0.2p/l to its base, which now sits at 25.8p/l, a price which includes the 0.3p/l loyalty bonus.

However, the co-op has confirmed that it is making an additional payment to members in the March milk cheque worth 0.1p/l on all milk supplied in 2018/2019. On average, across milk supplied in March, it works out at an additional 1.1p/l.

But the payment is not going to everyone. While the vast majority of suppliers are members, there are those former members (estimated at between 50 to 60) who returned to the co-op as suppliers in the last couple of years. They are unable to come back as members.

It is also understood that they do not automatically receive the 0.3p/l loyalty bonus upon returning – that is only paid after six months of membership. It remains a strong view within the membership that those who stuck with the co-op during leaner times, should receive some financial recognition for that loyalty

Markets

With local processors taking 0.5/l to 1.25p/l off the base prices since January, it has left many farmers now facing prices at or below the cost of production.

Farmers have also questioned why prices are being cut at the same time as GDT is rising, and global commodity markets look reasonably strong. However, sources in the trade point to Brexit uncertainty, which has led to stockpiling of dairy products.

Also, strong UK and Irish supplies have left the local market awash with milk. In particular, there is a lot of cream, and a fear that this could put downward pressure on butter prices. In NI, production in the first two months of 2019 was at record levels, with 392m litres delivered, up 3.4% on the 2018 figure.

A similar increase has been seen south of the Irish border, while in Britain the latest figures for the week ending 6 April shows production up 4.9% on last year.

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