Dale Farm has been encouraged by the number of its membership who have turned out, thus far, to hear the details of its new, fixed-price milk contract offer.
The final producer meeting on the issue will be held next Monday night in the La Mon House Hotel, Castlereagh.
“We have had a good series of producer meetings up to this point,” confirmed Dale Farm Group CEO Nick Whelan.
“The contract offer represents a completely new development, both for the co-op and the opportunities it presents to farmer-members.”
According to Mr Whelan, the contract price initiative reflects the interest expressed by a number of its customers in fixing prices for a basket of fresh products over a three-year period.
He added: “In essence, the co-op is acting as a broker in this process. Our customers are happy to enter into a contract arrangement, in terms of the price they pay. This then gives us the opportunity to enter into similar contract supply arrangements with our farmers.”
The Dale Farm representative made it clear that the proposed contract arrangements are voluntary in nature.
“Each member is free to make up his or her mind on the matter,” he said.
“The Dale Farm Board will not be seeking to sway minds on the issue. However, it is Dale Farm policy that no contract price arrangements would be put on the table that did not, at least, cover the cost of production for milk supplied in such circumstances. And, we believe that such is most definitely the case, where the current offer is concerned.”
At the heart of the proposed contract supply deal is a guaranteed producer price of 27.0 pence per litre (ppl), fixed for three years.
Product supplied on-contract will be eligible for quality payments for SCC, Bactocount, protein and butterfat as per the standard quality payments of Dale Farm Cooperative, as well as the large producer rebate bonus. However, loyalty payment bonuses and winter production incentives will not be included, where contract milk is concerned.
Mr Whelan pointed out that the average milk price paid in Northern Ireland over the past five years was 25.1 ppl.
“This figure has been independently verified,” he added.
“The 10-year equivalent average was 23.8 ppl. And again, this figure has been independently verified.”
Producers committing to the new contracts will be expected to supply a fixed volume of milk per month over a three year period, which commences on January 1st 2017.
“We are currently providing all members with updated, monthly production profiles. Those committing to the new contracts will have the option to supply between 10% and 60% of the milk which they produce during their trough output month. The reference period for this purpose will be taken as the twelve months between September 2016 and August 2017,” Mr Whelan said.
Applications for Dale Farm members and suppliers are now open and expressions of interest are to be returned to Dale Farm by 6th October. Contracts will be agreed at the end of October, with the contract becoming effective 1st January 2018.
Mr Whelan continued: “It will take a few weeks for Dale Farm staff to gauge the level of interest expressed by members and to discuss the business options, which this represents, with our customers.
“Once the final contracts are signed these will be legal and binding documents. I can also confirm that members who do not sign up to contracts will not be expected to subsidise those who do, under any circumstances.
He concluded: “We are keen to grow our milk pool whilst at the same time providing our producers with the tools they need to reduce risk. A fixed price contract gives the dairy farmer a guaranteed 27ppl for three years.
“We are happy to be offering our suppliers and members a choice on how to manage their business. It is however a decision for each farmer to consider based on their own circumstances as, of course, markets can go up as well as down.”