Irish Milk Producers Interested in Fixed Price Contracts
Irish co-operative Dale Farm first announced their first fixed-priced contract for milk in 2018, but 2020 has brought a major interest in this solution with around 47% of their suppliers applying for the contract. The company announced this week “an almost 300%” increase in the volume of milk offered for its fixed-price contract. From the beginning of the year 2021, the fixed-price contract will last for 3 years. Milk producers were offered to choose from 10% up to 30% of their supply each month from October 2019 till September 2020 to be included. The price was set at a base price of 26p/L for April to September and 29p/L for October to March for milk of 3.85% butterfat and 3.18% protein.
The trend seems to endure within other companies as well. Glanbia recently announced around 60% of their producers will adopt a fixed-price scheme, guaranteeing the base of 27p/l and lasting from November 2020 until December 2022. Also, Paynes Dairies, Lakeland Dairies, and Aurivo report an intensified interest in fixed-price agreements from their suppliers.
Experts point that one of the reasons for this may be the fear of instability associated with ongoing trade deal negotiations between the UK and the EU. The Irish milk trade is worth around £200m/year, according to the Northern Ireland dairy council, and 800m liters of milk is exported annually across the Irish border, a large part of which is contracted to third world countries.