Co-ops Must Emulate Glanbia, Kerry and Lakeland and Hold April Milk Prices – O’leary

Welcoming the decision by Kerry and Lakeland to hold their April milk price, after the announcement by Glanbia that they would support prices at current level to May, IFA National Dairy Committee Chairman Sean O’Leary urged all other co-ops to hold prices for April and into peak.

“The National Dairy Committee met late last week in Dublin to examine milk prices in the context of market developments and significant farm income and cash flow challenges being faced by farmers this year,” he said.

“There is no denying that markets have weakened, but some of the commentary focussing on GDT auction results ignore the fact that EU dairy commodity prices have held far better. Late April returns for an Irish product mix, at around 34c/l before processing costs, about match what is being paid by most co-ops,” Mr O’Leary said.

“Also, the Ornua PPI for April, which at 98.9 was down 1.1 points on the March level, is equivalent to a VAT inclusive farm gate price of 30.4c/l – again suggesting that current milk prices are definitely sustainable for April,” he added.

Mr O’Leary said the Committee had examined closely rising production costs, and the fact that higher cow numbers were increasing proportionately expenditure on inputs. “Cash flow stress is the main problem for dairy farmers at the moment. Milk prices have come back by around 8c/l since last year’s peak, and in addition to rising production costs, many farmers are also having to factor in massive superlevy bills. Even allowing for the promised 3-year payment scheme, whose implementation is long overdue and anxiously awaited, this will put a huge strain on farm incomes,” he said.

“Most co-ops have filed strong profits for 2014 and have benefited from increased Ornua (IDB) payouts in cash and other bonuses worth €12m reflecting exceptionally good export trade in 2014. Co-ops expect increased output to fill newly built or increased processing capacity this year, and it is vital that they would support milk prices through peak as necessary,” he concluded.