Dairy processors are set to express their milk price on the basis of 4.2pc butterfat and 3.4pc protein, it has emerged.
Dairy Industry Ireland (DII) has confirmed that an extra line will be added to milk price announcements in order to present “a consistent reference price for milk” and to allow for a better comparison of Irish milk prices in line with the standard EU milk prices quoted across the continent.
In a statement Conor Mulvihill director of DII said: “In parallel with the current 3.6pc / 3.3pc model, each milk processor will now also express their milk price on the basis of 4.2pc butterfat and 3.4pc protein – which is the European standard and close to the average milk constituents in Ireland.
“The current pricing model will also be retained for full clarity,” DII stated.
It is understood that the move was suggested in a Teagasc/CIT October 2020 academic report which focused on ‘An analysis of the Irish dairy sector post quota’.
“The report recommended the implementation of the European standard as a key recommendation to help transparency in prices,.
“Ireland exports 95pc of the dairy it produces, so it is vitally important that we have internationally accepted benchmarks,” the DII statement concluded.
In light of the announcement the following questions and answers have been provided by DII for clarity and transparency on the development.
Q: Are the current standards being disposed of? A: “Not at all, the milk price reported at 3.6pc milk fat and 3.3pc milk protein will still be quoted, in parallel with the EU standard milk price at 4.2pc milk fat and 3.4pc milk protein.
Q: What are the advantages of the change from a farmer’s perspective? A: “It will be easier to compare prices as all processors will be using a common language. The price quoted will be reflective of the average milk constituents of milk from Irish farms.”
Q: Is there any change in the price of milk? A: “There is no change in total amount paid for milk. Milk suppliers will receive the same payment as per their internal co-op constituent payment formula.”
Q: Why 4.2pc milk fat and 3.4pc milk protein? A: “In 1990 the average milk butterfat content produced by Irish farmers was 3.51pc and the average milk protein content was 3.20pc, pretty close to todays’ standard of 3.6/3.3. By 2019 the average solids were 4.17pc butterfat and 3.54pc protein.
«So, it is time to choose a new base which more accurately reflects the milk produced in Ireland. The LTO publish a popular milk price comparison which uses 4.2pc/3.4pc as its base.”
Q: When will I see this? A: “It will be included in the milk price communications on January 2021 milk, subject to the implementation of local IT systems.”