Several dairy processors have announced a cut of 1p/l to their February milk price, indicating that the downward price move is a direct result of forward milk contracts that were sold in late 2017 at lower prices.

First to declare was Lakeland Dairies, announcing it was cutting its NI price by 2p/l, but that a 1p/l “hardship payment” would be applied on top of the base price for all milk delivered in February. This effectively means that Lakeland is down 1p/l to a base of 28p/l. It is understood that the 1p/l hardship payment is being paid to Lakeland’s NI suppliers only.

Glanbia Milk has reduced its price by 1p/l, bringing it to an all-in base of 28p/l, which is inclusive of the 0.6p/l year round bonus.

Dale Farm declared its February price on Tuesday afternoon and has also taken the decision to reduce price by 1p, to a base of 27.7p/l. This becomes 28p/l when the 0.3p/l loyalty bonus is applied.

Strathroy Dairy has followed with a similar price reduction, bringing it to a base of 27p/l. However, the Omagh-based processor is still paying a 1p/l winter bonus on February milk, so the base is effectively 28p/l.

Also taking 1p off is Glanbia Cheese, taking its base to 27.5p/l for February.

MPI

With processors cutting February milk price to a base generally around 28p/l, it brings prices closer to the milk price indicator (MPI) reported by the UFU. The last MPI issued was on 24 February and was set at 27.01p/l. The MPI has been rising after positive GDT and Dutch Dairy Board auctions earlier this year. It started the year on 26.17p/l and has averaged 26.68p/l for the year to date.

The MPI does not allow for a processor margin or transport costs.