Glanbia launches two new Fixed Milk Price Schemes

Thursday 15th December 2016
Offering milk suppliers protection from the extremes of market price volatility

15 December 2016

Glanbia Ingredients Ireland (GII) has launched two new Fixed Milk Price Schemes, offering milk suppliers the option to protect a portion of their milk supply from the extremes of market price volatility.

Phase 8 is a three year Fixed Milk Price Margin Scheme while Phase 9 is a one year Fixed Milk Price Scheme.

Glanbia chairman Henry Corbally said that GII is acknowledged as a global leader in the development of market price volatility tools, having launched a scheme every year since 2011. Over 1.7 billion litres of Glanbia milk supply has now been contracted through these Schemes.

“These schemes are totally voluntary, but I am delighted that over 2,000 of our farmers now avail of the option to reduce milk price risk on a portion of their milk supply,” Henry Corbally said.

Sean Molloy, Director of Strategy and Supply Development with GII, said that the Schemes had proven very beneficial to participating milk suppliers in 2015 and 2016.

“The average price paid for milk in the Schemes in 2016 was 5.2 cpl above the open market price,” he said. “We will continue to explore innovative ways to help our milk suppliers and customers cope with market price volatility, which is particularly challenging for family farms.”

Application forms for both Schemes will issue to all GII milk suppliers in early January. Suppliers can apply to participate in one or both Schemes. Any support payment made by Glanbia Co-operative Society to its members will be paid on top of the fixed milk price.

Phase 8 Fixed Milk Price Margin Scheme (“Fixed Milk 8”)
• Phase 8 is a three-year scheme running from 1 January 2017 to 31 December 2019.
• Fixed Milk 8 will use a reference milk price of 30.10 cent per litre (cpl) including VAT.
• The price paid in Fixed Milk 8 will be adjusted in line with movement in farm input costs, using 2016 as the base year.
• The forecast inflation for 2017 is 0.65cpl VAT Inclusive, generating an inflation adjusted base milk of 30.75cpl including VAT for 2017.
• If the actual input cost movement for 2017 is above or below the forecast 0.65cpl, Glanbia will spread the adjustment across 10 months in 2018.
• A Market Adjuster mechanism will apply when the open market price moves above 33.73 cpl including VAT and below 27.40 cpl including VAT. There will be an adjustment of 0.5 cpl for each 1.0 movement in price outside the range.
• Fixed Milk 8 is based on standard milk constituents (3.6% BF and 3.3% P). Actual constituents greater or less than standard constituents are paid at the prevailing open market price.
• In allocating available milk volumes, priority will be given to participants in Phase 3 and Phase 4 Fixed Milk Schemes.
• 10% of available volume will be ring-fenced for new entrants. The remaining volume will be allocated to all other applicants.

Phase 9 Fixed Milk Price Scheme (“Fixed Milk 9”)
• Phase 9 is a Fixed Milk Price Scheme running for one year, from 1 January to 31 December 2017.
• The Scheme will pay a base milk price of 31.75 cpl including VAT.
• There are no adjustments for market price movements or farm input cost movements.
• The Scheme price of 31.75 cpl is based on standard constituents of 3.6% butterfat and 3.3% protein. Actual constituents greater or less than standard constituents are paid for at the prevailing open market price.