Co-ops Must Go a Step Further and Make Commitment to Year End – O’leary

Commenting on June milk price decisions, IFA National Dairy Chairman Sean O’Leary, while noting the Kerry decision to hold their milk price, said that suppliers to Glanbia and Lakeland would receive 1c/l less for their June milk than they received for May, because the May milk payout included a one-off Ornua 1c/l bonus from the proceeds of the sale by Ornua of DPI in the US.

Last week, IFA President Joe Healy and Mr O’Leary wrote to co-ops, urging them to go the extra mile by making a firm commitment to at least hold their payouts to year end, all the while exploring every opportunity to pass back as soon as possible to farmers the benefits of improving dairy market prices. They requested this letter to be read out at co-op board meetings this week.

“The 2015 Farmers’ Journal/KPMG Review showed the average milk price last year was 19.4% down on the previous year, with a differential of 3.31c/l between top and bottom. Last month, we showed that even before any price cuts in May and June, a farmer who was producing 400,000l in 2013 and increased his output on par with the national average to June 2016 would have seen his margin over basic costs for those two months fall by €11,600 in the last two years,” Sean O’Leary said.

“Farmers are now receiving unsustainable milk prices which fall well below production costs, and they are being starved of cash flow,” he said.

“With the Ornua PPI now stabilised at 81 points for June, and EU market returns firming for the last 9 weeks, I believe now is the time for co-ops, who have supported farmers, to have the confidence to make a solid milk price commitment. This must be, as a minimum, about taking a lead from Drinagh Co-op and holding current pay-outs to year end, and exploring every opportunity over the coming months to achieve efficiencies and pass back improving market returns to farmers,” Sean O’Leary concluded.