Winter milk schemes explained

In Northern Ireland most of the milk supplied to processors is further processed into cheese, powders and butter the same as in the Republic. However, there is a strong tradition of producing winter milk driven on climatic, cow type, and land fragmentation issues. A lot of Northern farmers will calve 70% of the herd from August to December keeping supply up over winter, but peaking in May when spring cows are calved and all cows are at grass. There is no such thing as liquid milk bonuses in Northern Ireland, but, there are winter milk bonus schemes. Processors incentivise volume bonuses over milk solids production.

In the Republic of Ireland there are two supply and payment options if you want to supply milk during the winter months. You can supply on a manufacturing contract and get a winter milk bonus if eligible, or, secondly, supply a liquid milk contract and get the agreed liquid milk bonus. You can of course also decide to supply milk and not get any bonus if agreed with your processor.

The difference between winter milk bonus schemes and liquid milk contracts in the Republic is that the winter milk scheme is effectively optional, while the liquid milk contract is set at an agreed delivered volume and price per day over a period.

If supplying a winter milk scheme, the farmer can decide to supply or not depending on what profit he/she feels they can make from it or not. The farmer should look at the bonuses, see what’s available and then assess for that extra output what additional cost will be to produce that milk and see if a farmer margin is possible.

Farmers in the Republic who want to produce milk and get a bonus during the winter months have to create an arrangement with their processor. Many farmers would like to produce more over winter months but processors have no value-added route for that milk supply and hence most winter milk bonus schemes and liquid milk contracts are capped or closed.

Most of the southern processors have between 10% and 15% of their total manufacturing pool involved in a winter milk supply arrangement (November to January inclusive). This does not include liquid milk where suppliers have a contract to supply a certain volume of milk. Winter milk schemes generally attract a premium over base manufacturing price (see Table 1).

Last year, Glanbia moved to paying a premium for winter milk from November to February. There are preconditions such as supplying 20% of annual supply over those four months, and a minimum of 3% in a month. The Glanbia premium is 8.5c/l above base price.

For the four Carbery west Cork co-ops – Drinagh, Lisavaird, Barryroe and Bandon – winter milk scheme is spread over five months (October to February) inclusive. The winter premium varies from 3.2c/l to 7.26c/l depending on the month.

Lactose needs to be above 4.35% at all times. In 2020, those not participating in the winter bonus scheme or the liquid contract can qualify for a seasonality bonus which is 4c/l on all January milk volume, 3c/l on all February milk volume and 2c/l on all December milk volume.

Lakeland has a winter scheme where the target is to supply a percentage of your monthly May supply over the four months of November to February inclusive. The target is to supply 50% of your May supply for November (3c/l bonus), and 45% of your May supply each month for December to February (5c/l bonus). Lakeland now also has a liquid milk business with the LacPatrick merger complete.

Dairygold operates a winter milk scheme confined to a small number of suppliers. The scheme pays a bonus of 5.6c/l to suppliers.

Kerry has no winter bonus structure. Aurivo and Arrabawn both have liquid milk schemes and no winter bonus schemes.

Clona suppliers have to produce greater than 35% of the annual supply in the five months November to February inclusive. If they do then they get a 6c/l bonus. To achieve this would mean mid-August onward for calving. If your supply volumes during this period are between 30% and 35% of your annual supply then the bonus is 4 c/l. If supply volume is less than 30% then it’s a 2 c/l bonus. Manufacturing milk gets a 2 c/l bonus for November and December.

Lee Strand down in Kerry operates a winter quota supply per farm with the milk price bonus decided on before winter supply starts (November to February inclusive). You must have a supply contract to attain the winter bonus. Bonus price has not yet been decided for this winter.

Centenary Thurles has a liquid milk pool that is priced separately based on contracts with no price fixed yet for this winter. In relation to manufacturing milk, it has some suppliers in the Glanbia winter milk scheme or the alternative Glanbia option of 2c including VAT for December, 4c/l for January and 3c/l for February.

Strathroy’s ROI winter bonuses focus on the December and January months in particular. Suppliers can supply as much as they like in these four months. Minimum quality standards apply and they must be supplying 365 days a year with 25% of annual volume over the four months (Nov to Feb).

Earlier this month, the Irish Farmers Journal outlined Northern Ireland’s winter bonus structures. Dale Farm and Glanbia Cheese will once again pay an additional 2p/l premium on every litre produced during the three-month period from October to December.

Strathroy will pay an additional 1p/l on all milk produced during the five months from October to February. Aurivo will pay 2p/l on all milk produced during October and November, reducing to 1p/l on milk produced during December and January.

Lakeland Dairies will continue to pay a premium of 3p/l on all milk produced during November and December.

This leaves Glanbia Milk/Fivemiletown who for the second year in a row will pay a premium of 1.5p/l on all milk produced over the four months from November to February.