15 Apr 2020
DAIRY FARMERS ARE BEING ASKED TO PAY TOO MUCH, TOO SOONCOVID-19, Dairy, Dairy Markets, FMP, Liquid Milk
Commenting on the 1.8 to 2c/l price cuts implemented by Lakeland, Glanbia and Kerry for March milk, IFA National Dairy Committee Chairman Tom Phelan said COVID19 has impacted on every aspect of the global economy. “The dairy sector is no exception, and faces severe economic challenges. However, we believe dairy farmers are being asked to pay too much of the price, too soon.”
The National Dairy Committee has in recent weeks lobbied board members to maintain March milk prices. This campaign has been based on sound market research which showed that pre-COVID 19, the outlook for dairy markets was extremely positive. Spots quotes then suggested a milk price equivalent of around 34c/l, and co-ops would have sold forward at least some of the spring milk into that market as normal.
“Also, the Ornua PPI had been improving since September, and running above the average co-op payout by over 1c/l since October. Even despite the 2c/l cut in the Ornua PPI for March, at 31.8c/l incl VAT, it is still up to 2.4c/l above the March milk price announced by some milk processors,” he said.
“March has been a long and challenging month from a weather and cost perspective. Maintaining the milk price would have helped farmers pay bills and better position themselves for the difficult months ahead. IFA is now calling on those processors who have yet to decide on their March milk price to think harder on what their decision will mean for their suppliers. Cutting the milk price now to minimise what may be down the line is of no benefit to farmers today,” he stressed.
“IFA is lobbying, together with fellow European farm organisations and the Irish and European dairy industry, for the prompt introduction of a private storage scheme (APS) for SMP, butter and cheese. This would help support markets for the medium term while avoiding the price depressing and accumulation effect of intervention, and allow for the release of the product later this year into an improved dairy outlook. Co-ops need to focus their attention on maximising the milk price, and plotting a sustainable way through the crisis for their suppliers,” he concluded.