Farm Ireland
Independent.ie

Wednesday 17 January 2018

Northern milk wars spill South

Gerard Sherlock reckons his average milk price for 2013 will be 5c a litre on 2012
Gerard Sherlock reckons his average milk price for 2013 will be 5c a litre on 2012

Darragh McCullough and Declan O'Brien

Northern Ireland's milk wars have spilled over the Border, with at least one Northern dairy processor actively courting suppliers.

Northern processor Strath-roy's call for new suppliers in the Republic is gaining momentum, with at least one bus-load of dairy farmers from the Dublin region travelling to the processor's Tyrone base last week to discuss the possibility of switching from Glanbia.

While many Southern dairy farmers are wary of making such a major move, especially with the end of quotas looming in 19 months' time, Northern dairy companies are making very strong pitches for extra supplies from the Republic.

Capacity

All of the Co Monaghan-based Emmet milk pool was recently contracted to Northern processor Linwoods for the first time this month. However, Strathroy's approach to Glanbia suppliers in Louth, Meath and Dublin has moved the process up a gear.

Strathroy has not limited its approaches to liquid milk suppliers but is understood to be targeting operators who have large winter milk capacity.

The Tyrone-based outfit is reported to be offering a package that beats liquid milk suppliers' price by an average of 3c/l, on an annualised basis.

This is largely because the Omagh dairy is extending its offer to cover each farmer's entire supply.

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Currently, the typical liquid milk contract only covers half of each farmer's output.

Glanbia liquid milk suppliers are being paid a VAT exclusive price of 37.2c/l before additions for milk solids. However, suppliers are being deducted approximately 2.6c/l due to the 'working band' calculation that dampens the impact of peaks and troughs in the base manufacturing price on the final price paid to liquid suppliers.

While Rory Cunningham of Strathroy would not be drawn on the offer made to Southern milk suppliers, he said it would obviously have to be attractive to entice farmers to move.

"We know what liquid milk will return but we also realise that farmers need a far better return than the manufacturing price for winter milk," he said.

Mr Cunningham said the company had received a good response to adverts placed over the last week in the farming press, but he felt it was still too early to say whether farmers would move to Strathroy.

"Plenty of suppliers will put in notice to transfer their quota; there is no doubt about that. Whether they will still be moving on January 1 is the interesting thing," he said.

Milk suppliers must give three months' notice to their processor before they actually switch.

Mr Cunningham said Strathroy usually did not get involved in supply contracts but the company may do a rolling 12-month agreement with new suppliers.

A spokesperson for Glanbia said that the company would not be commenting on the Strathroy move.

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