Milk processors have confirmed they are reviewing the weighting applied to constituents as butter climbs to record highs of over €6,000/t. By: Louise Hogan
Glanbia is currently looking at the weighting it applies as it pays 2.3 times as much for one kilo of protein as one kilo of fat.
Dairygold Co-op moved to adjust its protein to butterfat ratio from 65:35 to 60:40 in May.
“This results in an increased payment to our milk suppliers where they have more kilos of fat than protein in their average litre of milk over and above the standard litre at 3.30pc protein and 3.60pc butterfat,” a spokesman said.
It will continue to review it on an on-going basis.
Those with higher butter fat content will benefit, which may favour those with Jersey animals in the herd.
However, the milk processors pointed out those with higher fat content also tend to have high protein levels.
The average fat and protein are now far ahead of the standard goalposts.
It comes as Milk prices moved up by around 1c/l across the board for June supplies.
Glanbia chair Henry Corbally said they would continue to monitor market developments.
“The market for butterfat in particular has been positive, helped by reduced milk supply from Europe’s largest producers, France and Germany, while in contrast, powder markets are more challenging,” he said.
The constituents will help boost the price by 1.3 – 1.5 c/l extra for the average Glanbia producer, and 1.6c/l on average for Kerry suppliers.
Ornua’s Joe Collins said the outlook in milk price remains “reasonable” with butter “carrying the can” for the weaker skim powder prices.
Ornua’s purchase price index for June rose by 3pc to 110.
The ICMSA’s Gerald Quain said the higher prices were overdue and should have been paid for May milk deliveries.
He said dairy returns had remained constant throughout June with the exception of butter which was still on a upward trajectory.
The IFA’s Sean O’Leary said the prices were lagging behind their European counterparts.
“Looking just at our main European competitors, Danish farmers will be paid 35.5c/l for June/July milk; German producers will receive around 35c/l for June milk; French producers around 33-34c/l,” he said.