Glanbia Ireland’s Fixed Milk Price Scheme: 0.5c/L for every €50/t increase in feed prices
Glanbia Ireland has announced details surrounding the latest phase of its Fixed Milk Price Scheme.
It includes an innovative feed price adjuster to help protect against input cost volatility.
The Fixed Milk Price Scheme (Phase 18) will pay a base milk price of 42c/L (including VAT) for 2022 at 3.6% fat and 3.3% protein, with a price of 40cpl (including VAT) for 2023 and 2024.
The voluntary scheme runs from March 1st, 2022, until December 31st, 2024.
Feed Price Adjuster
Glanbia Ireland has established a feed price adjuster, which will increase the Fixed Milk Price under this scheme in the event that feed prices rise from current levels.
The feed price adjuster tracks recognised international feed price indices such as the Matif Wheat, the Chicago Board of Trade (CBOT) Corn and CBOT Soymeal.
Under the mechanism, in the event that feed prices rise, then the milk price it pays under Scheme 18 will also increase to reflect this.
According to a statement, which it released this morning (Friday, April 8th, 2021), for every €50/tonne increase in feed prices, the milk price it pays out under this scheme will rise by 0.5cpl (including VAT) or part thereof on an annualised basis.
For example, if the actual price of these commodities rises by €25/tonne, then the processor would increase the milk price for this period by 0.25cpl (including VAT). The feed adjuster applies from July 1st, 2022, to December 30th, 2023.
Other details of the scheme include:
- The processor confirmed that it will not reduce milk prices if feed prices reduce as defined by the international indices it outlined;
- It will pay the feed price adjuster at the end of each year. For example, for 2022, it will pay this in the first quarter of 2023;
- The feed price adjuster will apply for the period from 1 July 2022 to 30 December 2023;
- The feed price adjuster tracks global indices. Therefore, according to the processor, there is no link to the volume, type or source of feed used;
- The processor will adjust the Fixed Milk Price for constituents in 2022, 2023 and 2024. For instance, based on the average constituents of GI suppliers in 2021, a supplier on average would receive a price of 48.82cpl for 2022, including adjusted constituents and applicable payments with a price of 46.57cpl and 46.57cpl possible in 2023 and 2024 on the same basis. This works out at over 47cpl over the duration of this scheme;
- The processor will pay the seasonality, sustainability action payment, liquid premium, autumn calving scheme payment or other relevant payments to qualifying suppliers on top of the fixed milk price payment.