Lakeland Dairies announces new payment system for milk suppliers in NI

It’s aimed at encouraging suppliers to produce milk with higher protein and butterfat content.

The new system is offering all suppliers an “equal opportunity” to benefit from enhanced payments for increased constituents over current levels.

In the first instance, it will ensure stability and fairness for all Lakeland Dairies milk suppliers in Northern Ireland, as it will not impact any supplier’s base payments going forward, while enabling those who wish to focus on increasing milk solids to receive additional payments in line with the future increased levels of protein and butterfat they are able to supply.

Each milk supplier will be able to choose a base year from 2018, 2019 or 2020, as an average benchmark, from which milk supplies in January 2022 and onwards will then be priced on both a base level and also with regard to subsequently increased milk solids, for additional payments.

After each Northern Ireland supplier selects a 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 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 per cent of extra fat and 0.056 pence per litre for every 0.01 per cent of extra protein produced.

All other existing milk payment elements remain as they are currently.

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

The enhanced milk payment system will be funded by the extra revenue generated from the extra fat and protein sold in the dairy markets.

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.

“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.

“This is a positive development and we are pleased to introduce this new system for our milk producers from January 2022 onwards.”

Lakeland Dairies will be contacting milk suppliers directly with information on the new system.