The majority of herds will calve the bulk of their cows from September to December, with the remaining animals calving during spring.

While the associated costs of producing winter milk are higher than grass based production, Northern Ireland milk processors pay a range of bonus payments on top of the monthly base price to help offset these costs.

Depending on the calving pattern and supply profile, these premiums can be extremely lucrative, as the more milk produced, the greater the bonus payment.

As the winter bonus payments vary depending the processor, a question rarely asked by farmers is how much are these premiums actually worth?

NI milk production usually reaches its annual low point during September, with production rising month-on-month towards peak production in May.

As the winter bonus payments vary depending the processor, a question rarely asked by farmers is how much are these premiums actually worth?

To compare the value of the various bonus payments, take a dairy farmer producing 1m litres annually.

Assuming the farm has a supply curve which reflects the Northern Ireland supply pattern as outlined by DAERA, its means the farmer has a peak-to-trough ratio of 1.35:1.

This puts October production on 73,715l, rising to 74,193l for November and close on 81,415l for December.

Dale Farm

From October to December, Dale Farm and Glanbia Cheese both pay an additional 2p/l on all milk delivered during the months outlined.

Therefore, the additional 2p/l payment would generate an extra £1,474 for October, £1,483 for November and £1,628 for December.

Across all three months, these payments amount to £4,585, or approximately 0.5p/l on all litres supplied yearly.

Lakeland

Lakeland Dairies pays an additional 3p/l on all milk delivered during November and December.Therefore, applying this bonus to the outlined monthly milk volumes would generate £2,225 and £2,442 for each month respectively. Combined, these payments will amount to an extra £4,667 for the farmer in the example, which is worth 0.5p/l across annual production.

Aurivo

Aurivo pays a winter bonus over four consecutive months from October to January. This breaks down to an extra 2p/l during October and November, before reducing to 1p/l on December and January milk deliveries.

Milk volume in January is 83,648l. Therefore, over the first two months when the higher winter bonus is applied, the payment generates £2,957.

The 1p/l payment generates £814 in December and £836 in January. Over the four-month period, Aurivo’s total payment is worth an additional £4,607 to the farmer.

Strathroy

Strathroy Dairies pays an additional 1p/l for five consecutive months from October to February. As February is a shorter month, the monthly milk volume in this example is 78,439l.

Therefore, over the five-month period under Strathroy’s winter bonus scheme, the payment would generate an additional £3,914.

Glanbia Milk

In February 2019, Glanbia Milk/Fivemiletown announced it would start paying a winter bonus payment to its NI supply base.

The payment will run over four months from November to February and is set at 1.5p/l on all litres produced during that period.

At the outlined production volumes, the combined payment is worth £4,765, making it the highest bonus payment across all processors in NI.

Supply contracts

There are some exceptions to the outlined winter bonus payments. Currently, where a farmer has a percentage of their annual supply committed under a fixed price contract, then the contracted volume of milk is not eligible for the winter bonus.

However, processors indicate this has been factored into the fixed price during the lifetime of any contract.

Overall, winter bonus payments are a valuable source of income to dairy farmers and can help offset some of the higher costs incurred when producing winter milk.

Read more

Will more milk per cow always mean more profit?