After Dale Farm announced plans to run a three-year fixed-price milk contract from 1 January, there are now several contracts in place for Northern Ireland’s milk pool.

Other processors with fixed-price contracts in place include Aurivo, LacPatrick and Lakeland Dairies.

To date, the fixed milk price agreements have met with varying levels of success.

Aurivo and Lakeland face growing frustration from suppliers as improving dairy markets over the past 12 months have left the fixed price well short of current base prices.

While fixed-price contracts are intended to help deal with milk price volatility, many dairy farmers say processors also use the contract period to protect their milk pool from other processors.

Lakeland

Lakeland Dairies was first to offer a fixed-price scheme, in May 2016. At the time, milk markets were facing serious downward pressure, with base prices averaging 17p/litre.

The fixed-price agreement started on 1 June 2016 and runs until 31 December 2018. Producers who signed up committed either 5% or 10% of their annual milk pool.

In return, producers were offered a guaranteed base price of 20.75p/l from April to September annually. The base price increases to 21.75p/l from October to March annually.

Aurivo

Aurivo has two fixed-price contracts operating in Northern Ireland. The first agreement started on 1 August 2016 and guarantees a base of 23p/l for a period of 30 months.

Indications are that about 30% of Aurivo’s northern suppliers signed up to the contract. Aurivo’s second fixed-price contract was less successful in terms of uptake.

Around 10% of their suppliers signed up to the second scheme, which offered a guaranteed base price of 25p/l from 1 January 2017 until 31 December 2019.

Producers could commit a maximum of 10% of their annual milk production under the agreement. Winter bonus payments are excluded under the arrangement, currently worth 2p/l for October and November and a further 1p/l in December and January.

Lacpatrick

LacPatrick’s fixed-price agreement started on 1 January 2017 and is due to expire on 31 December. The co-op has yet to announce details on a follow-up scheme for 2018.

Around 70 suppliers signed up for the 12-month scheme which had a guaranteed base price of 25.75p/l. The scheme has been much more reflective of milk prices throughout 2017, with LacPatrick’s base now averaging 26.28p/l.

Suppliers could fix 10%, 15% or 20% of their 2017 milk pool under the agreement, with sources indicating most farmers opted for the maximum of 20%.

Normal top-up payments on milk quality apply under the contract, but the winter bonus of 3p/l, 2p/l and 1p/l for October, November and December is not eligible.

Dale Farm

Last week, Dale Farm outlined its fixed-price scheme which offers a guaranteed base of 27p/l for a three-year period starting on 1 January 2018.

The scheme is also voluntary. Farmers can commit a minimum of 10%, rising in 10% increments to a maximum of 60% of the volume during the lowest production month of the year.