Lakeland to offer enhanced payments for extra milk solids

Lakeland Dairies is introducing a new payment system from 1 January, which offers enhanced payments for milk with higher protein and butterfat.

The farmer-owned co-operative, which operates across the northern half of the island of Ireland, will be offering farmers a base payment and then 0.029p/litre for every 0.01% of extra fat and 0.056p/litre for every 0.01% of extra protein produced.

Each milk supplier will be able to choose a base year from either of 2018, 2019 or 2020, to help determine what their baseline is for butterfat and protein.

See also: Read more from Farmers Weekly on milk prices and trends

After they have selected their preferred benchmark year, they will be allocated a monthly milk constituent base figure for each of the 12 months of that year.

The actual milk supplied from January 2022 onwards will then be paid relative to this base figure.

Strong global markets

The enhanced payments will be funded by the extra revenue generated from the additional fat and protein sold in the dairy markets.

The global markets for dairy commodities are currently strong, with the GDT online dairy commodity auction on 2 November seeing a 4.3% rise in its price index.

The next fortnightly GDT auction will take place on 16 November.

Lakeland Dairies said that the new system would not negatively impact any supplier’s current payments and would not require the existing payment base to be increased to create a payment fund.

Niall Matthews, chairman of Lakeland Dairies, said that, as a co-operative, Lakeland Dairies’ policy was to pay 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. 

“This will incentivise and reward the production of extra solids, while ensuring that the highest possible base price will continue to be paid to all milk suppliers in line with market conditions.”

Last week, the business announced a price increase for milk supplied during October.

For suppliers in Northern Ireland, the rise was 0.4p/litre, taking the standard milk price to 30.5p/litre.