Irish dairy company Glanbia plans to impose a temporary cap on milk production in the peak months of April, May and June 2022. This will allow the dairy to better manage the growth of milk supply at peak times. The plan cannot count on everyone's approval. "Glanbia's plan to manage milk production is effective as the first step towards a milk quota," says the Irish Farmers Association (IFA).
Tim Cullinan, the president of the IFA, believes Glanbia's move will negatively impact costs on the off-peak dairy farm. "The measure ensures that more milk is produced outside these peak months and that leads to higher costs," he explains. "It also plays a role that meadow grass is of the best quality in the months from April to June, which ensures a higher milk production. Dairy farmers benefit fully from this."
A maximum on extra production
The Irish dairy company's plan states that dairies producing less than 550.000 liters per year may supply a maximum of 5% more milk in peak months. The percentage has been set at 550.000% for Irish dairy farms that exceed this limit of 2,5 liters per year.
In addition, it reports: "Farmers who, on average, have a higher milk production in peak months than in other months, compared to Glanbia Ireland, are calculated back to the Glanbia Ireland average. Glanbia Ireland supply."
The point of discussion is mainly in the 'punishment' that Glanbia imposes if the ceiling is nevertheless exceeded, namely a discount of 30% on the milk price. "If it turns out that the costs for processing this extra milk are higher than the discount, the dairy farmer will be cut even further," reports the dairy.
Off-peak bonus
In order to provide some compensation for dairy farmers, Glanbia offers the opportunity to earn a bonus in the months outside the peak season. This bonus is paid out over 3 months: €0,04 per liter in January, €0,03 per liter in February and €0,04 per liter in December. In addition, the dairy has developed a so-called 'exit program' for entrepreneurs who now prefer to stop supplying Glanbia.
Finally, a buffer has been set up for Irish dairy farmers who, due to special circumstances, supply more milk than in other months, for example due to a disease outbreak in the livestock. Growing dairy farms can also submit an application to grow more in the peak months. There are, however, requirements attached to this.
Reason
Glanbia reports that this drastic measure is necessary because the construction of the cheese factory in Belview has been postponed. This makes it difficult for the Irish dairy company to process all the milk in the peak months. It is therefore unknown at the moment whether the measure will remain in place for a longer period of time. Glanbia paid a milk price of €34,90 per 100 kilos of milk in January.
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