Dairy giant Dale Farm has introduced a fixed milk price contract option to its producers — the first of its kind for the business. The option is due to commence in January 2018.
However, the new arrangement, which will allow farmers to sign up to a voluntary three-year fixed contract to supply an agreed fixed amount of milk per month at a base price of 27 price per litre, may not suit every farmer, according to the Ulster Farmers Union (UFU).
A spokeswoman for the UFU said: “Price and volatility continues to be a significant issue for farmers. Providing farmers with certainty is to be encouraged and contracts are one way to do it.
“While a fixed price contract will suit some, it will not suit others. Like with any major business decision, we encourage farmers to give careful consideration to all options and chose the one that best suits them.”
Dale Farm Group chief executive Nick Whelan said: “We are delighted 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.”
Under the new scheme producers will now be able to offer up to 60% of their trough month supply for inclusion as the monthly fixed volume in the fixed price contract.
Trough month supply is the volume of milk in a supplier’s lowest volume supply month, between September 2016 and August 2017.
Stephen Cameron, group commercial director of Dale Farm, said: “The contract is targeted at current suppliers to and members of the Dale Farm co-operative.
“However, the co-operative is always keen that new entrants into dairy join Dale Farm.”