Co-ops Must Commit to Holding Milk Prices at Least Until Spring 2018

Commenting on the very day that the GDT is having its 200th auction, IFA National Dairy Chairman Sean O’Leary said that while international dairy prices are easing, Irish co-ops are still benefiting from contract returns signed in better times, as evidenced by the September rise in the Ornua PPI.

Together with low winter volumes, this means they could comfortably afford to hold current milk prices at least until next spring, and he urged them to make this commitment to reassure farmers and help them plan for the New Year ahead.

He added that, while farmgate milk prices did increase, co-ops had a good opportunity in 2017 to rebuild their balance sheets, and should therefore be in a position to consider paying end-of-year bonuses.

“Irish farmgate milk prices increased by 52%, or 12 cents per litre, in the last 15 months, but this was after more than two years of falling prices, of which 20 months were below 30c/l. Farmers were 11 months, from October 15 to August 16, with prices below 25c/l. This year, 2017 was a good year for milk producers, but their increased turnover has served to catch up with cash flow shortages and other financial commitments. From May 2014 to July 2016, milk prices had fallen steadily by a total of 14.6c/l,” Mr O’Leary said.

“In this context, even allowing for the weaker outlook for 2018, it is crucial that co-ops would hold milk prices at the very least until next spring as they can afford to,” he added.

“I would also urge co-op boards to examine the co-op’s financial situation in detail, and seriously consider the option of end of year bonuses for their fellow-suppliers,” he concluded.