United Dairy Farmers (UDF) will no longer set its milk price using monthly milk auctions.
Last week (21 February) the dairy co-op confirmed monthly milk auctions will no longer continue. Instead, the milk price will be set through bilateral negotiations with individual milk buyers.
The decision was made following calls from members that the monthly milk auctions were not delivering a competitive milk price in the Nothern Ireland marketplace, said the co-op’s chairman John Dunlop.
“United was the only milk seller in the world, that we are aware of, that was still using an auction process to sell its milk,” said Mr Dunlop.
“We will now be setting our milk price by direct negotiation with individual customers/buyers in the same way prices are set for the final dairy produce such as powder, cheese, butter, liquid milk, etc.”
It was hoped the new arrangement would be more flexible and result in more stable prices for producers, especially during peak supply periods, he said.
The Ulster Farmers’ Union (UFU) expressed concern about the sudden stop to the auctions process and warned the move could create further volatility and uncertainty in the market.
UFU president Harry Sinclair said going forward there needed to be improved trust and transparency between producers and processors, and a new pricing mechanism was needed to establish the value of milk-on farm – something which could be delivered by the voluntary code of practice.
Dairy industry commentator Ian Potter said few UDF members would miss the monthly auctions as they had been accused of returning volatile prices in the spring flush.
“But it did provide a benchmark for milk prices, and acted as an indicator of demand for milk. As the subject of formulae pricing comes to the fore, we have lost one indicator,” said Mr Potter, writing in his weekly market report (22 February).