Fixing milk prices
Hedging milk prices got a bad reputation because of the unprecedented price volatility last year and, even after co-ops stepped in with expensive price buffering to reduce the hardship on individual milk producers, many farmers will be wary of securing a guaranteed price for a proportion of their milk output in the coming years.
But the reality is that hedging is still a valuable tool to reduce price volatility. Dairygold, Lakeland, and other processors have bitten the bullet and offered fixed-price options for the coming season. Tirlán, for example, has introduced a 40c/L fixed-price scheme for 2024 with a built-in 20 per cent production ceiling to avoid over-exposure, and an option to mirror the proportion of milk in the fixed-price scheme with a fixed-price option for feed and fertiliser. Retrospective wisdom is a perfect science and at least lessons have been learned by everyone concerned. Some other forward pricing offerings may have to be revisited as confidence grows that international dairy markets are trending upwards in the coming months.