April 18, 2013
Ireland may supply milk to Britain from 2015
Representatives from British processors have approached dairy farmers in the southeast with a view of obtaining milk supplies for Britain from 2015.
A number of large dairy farmers in Wexford, Wicklow and Kilkenny are believed to have been approached by agents acting for processors based in England and Wales. While the exact details of what has been offered to farmers remains unclear, it is understood that supply contracts will be offered to some farmers within the next month.
These contracts will cover the period from 2015-20 and are rumoured to give an initial base price of US$0.32 per litre plus VAT (value-added tax), with a commitment to match the price offered by Irish processors up to US$0.40 per litre.
The approaches to milk suppliers in the southeast were believed to have been made by an agent working for a middle ground processor. These are processors who supply large liquid milk contracts for hospitals and nursing homes.
Up to 50% of the milk pool in Britain goes to the liquid milk sector. Milk supplies in Britain have tightened and prices have increased to Â£0.32 per litre, or US$0.375 per litre.
The farmers being targeted are operators with large and expanding herds, whose farms are close to the M11 south from Dublin to Wexford and also around Rosslare. Industry sources said the volumes of milk being sought by the English traders were small and would only account for four or five tanker loads a week.
However, the entry of British processors into the Irish market will be viewed as a worrying development by established players here, given that competition for suppliers has traditionally been restricted. Meanwhile, international dairy product company based in Ireland, Glanbia confirmed that it had increased the base price for the first year of its Fixed Milk Price Scheme.
The base for the first 12 months of the three-year scheme has moved from US$0.315 per litre to US$0.335 per litre including VAT. Glanbia also stated that the price paid out under this scheme in 2013 would never be more than US$0.015 per litre under its weighted average open market milk price.