Lakeland Dairies has announced a new enhanced solids-based payment system for its milk suppliers in Northern Ireland.
The milk processor believes that the new model will encourage suppliers to produce milk with higher protein and butterfat contents.
A spokesperson explained that the new system offers all suppliers an “equal opportunity” to benefit from enhanced payments for increased constituents over current levels.
The spokesperson highlighted the benefits of the change:
- Ensure “stability and fairness” for all Lakeland Dairies milk suppliers in Northern Ireland;
- It will not impact any supplier’s base payments going forward;
- It enables those who wish to focus on increasing milk solids to receive additional payments. This is in line with the future increased levels of protein and butterfat they can supply.
Lakeland Dairies emphasised that the new system:
- Will not impact negatively on any supplier’s current payments;
- It does not require it to increase the existing payment base to create a payment fund.
Lakeland Dairies new payment system
Firstly, each milk supplier will choose a base year from as an average benchmark.
Secondly, the processor will price milk supplies in January 2022 and onwards on both a base level and with regard to subsequently increased milk solids for additional payments.
Furthermore, after each NI supplier selects a preferred benchmark year, the processor will allocate a monthly milk constituent base figure for each of the 12 months of that year.
The actual milk farmers supply from January 2022 onwards will then be paid relative to this base figure for constituents.
For all new milk solids produced by any supplier above their chosen base constituents level, an enhanced payment will be paid for each new unit of butterfat and protein supplied.
The enhanced payments per unit of constituents will be:
- 0.029 pence per litre for every 0.01% of extra fat;
- 0.056 pence per litre for every 0.01% of extra protein produced.
According to Lakeland Dairies, all other existing milk payment elements remain as they are currently.
The extra revenue generated from the extra fat and protein sold in the dairy markets will fund the enhanced milk payment system.
Also, Lakeland Dairies, in a statement, confirmed that it would contact milk suppliers directly with information on the new system.
Highest possible milk price
Niall Matthews, chair of Lakeland Dairies, said,
“As a farmer-owned dairy co-operative, Lakeland Dairies’ consistent policy is at all times to pay our milk suppliers the highest possible milk price in line with market conditions.”
“The feedback we have received from our milk suppliers, given the existing range of milk solids currently supplied, is that they would generally favour a system of this type. “
He said this will incentivise and reward the production of extra solids.
Furthermore, he stated it would also ensure that the processor will continue to pay the “highest possible” base price to all milk suppliers in line with market conditions.
“This is a positive development. We are pleased to introduce this new system for our milk producers from January 2022 onwards,” he concluded.