British dairy processors set sights on Irish milk supplies
Dairy farmers in the southeast have been approached by representatives from British processors with a view to supplying milk to Britain from 2015.
A number of large dairy farmers in Wexford, Wicklow and Kilkenny are believed to have been approached by agents acting for processors based in England and Wales.
While the exact details of what has been offered to farmers remains unclear, it is understood that supply contracts will be offered to some farmers within the next month.
These contracts will cover the period from 2015 to 2020 and are rumoured to give an initial base price of 32c/l plus VAT, with a commitment to match the price offered by Irish processors up to 40c/l.
The approaches to milk suppliers in the southeast were believed to have been made by an agent working for a 'middle ground' processor. These are processors who supply large liquid milk contracts for hospitals and nursing homes.
Up to 50pc of the milk pool in Britain goes to the liquid milk sector. Milk supplies in Britain have tightened – they are back 10pc to the end of March – and prices have increased to 32p/l, or 37.5c/l, as a consequence.
The farmers being targeted are operators with large and expanding herds, whose farms are close to the M11 south from Dublin to Wexford and also around Rosslare.
Industry sources said the volumes of milk being sought by the English traders were small and would only account for "four or five tanker loads a week".
However, the entry of British processors into the Irish market will be viewed as a worrying development by established players here, given that competition for suppliers has traditionally been restricted.
Meanwhile, in a letter to its suppliers this week, Glanbia confirmed that it had increased the base price for the first year of its Fixed Milk Price Scheme.
The base for the first 12 months of the three-year scheme has moved from 31.5c/l to 33.5c/l including VAT.
Glanbia also stated that the price paid out under this scheme in 2013 would never be more than 1.5c/l under its weighted average open market milk price.
Sean Molloy of Glanbia said the move was in response to the recent hike in dairy commodity prices internationally and milk prices locally.
Mr Molloy said farmers interested in joining the scheme had pointed to the differential that had developed between the original base price and the 35c/l available from Glanbia for March supplies.
Milk prices have continued to harden, with more dairies increasing their quotes. A 3c/l jump has taken Wexford Creameries price for March supplies to 34.37c/l.
Quotes for March milk were also up at Lakeland Dairies and Centenary Thurles. Lakelands has gone to 35.28c/l including VAT, while Centenary is on 35c/l including VAT. The boards of Connacht Gold and Tipperary Co-op are to meet to set prices this week.
In other dairy news, Glanbia suppliers from the Barrowvale and East Waterford regions are to protest today outside the co-op's headquarters in Kilkenny.
The protest relates to a decision taken last month by Glanbia Council to reject the nominations of Brendan Hayes and Robert Prendergast to the company's board.
Mr Hayes and Mr Prendergast were among four directors who opposed last year's move to establish Glanbia Ingredients Ireland.
They have been nominated again to represent their East Waterford and Barrowvale regions on the Glanbia board and the issue is due to be discussed again today by the Glanbia Council.