It was also underlined that it is not telling its suppliers that they can't grow - but that there will be a possible price risk to milk produced above this year's levels - dubbed "growth milk".
The letter stated: "If we are not able to process of our milk, we will have to try to find another processor with surplus capacity. In such a scenario, Strathroy will have to accept whatever price we can get for the milk." Proposing a "two-tier pricing system" for the four peak months from March to June, Strathroy's letter said:Suppliers can produce an agreed volume in these months, and it will be paid for in the current manner. However, any supplies in excess of the agreed volume (growth milk) will receive whatever we can get from the market."We are not restricting your growth. You are free to increase production in the peak months, but we cannot forecast what price growth milk will return. Agreed monthly volumes for each supplier will be the higher of their monthly production in 2020 and 2021." Noting that this "may impact some suppliers who had future growth plans", it was reiterated: "You are still free to produce additional milk in the peak months, but Strathroy cannot undertake to pay for it on the same terms as currently. "There are no restrictions on supply in the other eight months of the year. Strathroy are not accepting any new suppliers, despite numerous approaches." In addition, the processor claimed that "Strathroy have paid a base price in excess of 0.5c/L above that paid by Glanbia Ireland over the last seven years".
From May 2021 onwards, we will be setting our base price independently."Speaking to Agriland, a spokesperson for Strathroy said that the move is down to there not being enough stainless steel on the island. If there are no breakdowns and all additional milk can be processed without hitch, suppliers of "growth milk" will get full price, it was added, but if there is, whatever price that can be achieved will be returned.
