Has a fixed milk price option boosted dairy farmers' earnings?

Milk price fixing is new to this country
Milk price fixing is new to this country

Martin Ryan

Milk suppliers who tied a quarter of their delivery into a fixed-price scheme for 2016 were well rewarded.

There was an extra €8,250 for the 100-cow farmer, average yield 4,500 litres, for fixing a quarter of the milk supply in 2016. This boosted income in a difficult season by an extra 7.3c/L from the floating price.

The first in-depth analysis since the option became available to the country's dairy men has exposed huge variations for individual seasons at the Teagasc Greenfield Farm with winning and losing years.

Losses of almost €16,000 which the farm experienced in 2013 - when 24.4pc of the supply was at a fixed price - contrasted with an income boost of over €26,000 in 2016, when 22.7pc of the supply was fixed.

The findings, which were were outined at the Teagasc National Dairy Conference, showed that over the period 2011-2015, fixing returned an average benefit of 0.65c/L at the Co Kilkenny research farm.

With the milk price at floor level this year the overall benefit of the fixed price was 7.3c/L, with the fixed price returning 35.4c/L compared to the general base price of 28.1c/L.

However when the period 2011-2016 is taken in aggregrate the average benefit was 1.86c/L.

Milk price fixing is new to this country, having been introduced over the past five years.

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In the US, a 14-year study has shown that on average the fixed pricing returned 0.9c/L, while the extremes in milk price volatility was avoided.

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