Co-ops Must Hold Milk Prices as Farmers’ Margins Decimated – O’leary

IFA National Dairy Committee Chairman Sean O’Leary today (Friday) welcomed the decision this week by Kerry, Carbery and Dairygold to hold their August milk price. He said that farmers’ margins had all but disappeared, with serious consequences for their short-term cash flow, but also for their situation next spring. He urged co-ops to make every effort to hold milk prices.

He emphasised that today’s 16.5% massive lift in the GDT weighted average price, the third double digit price lift in succession, and the positive trend now being seen in most EU and international market indicators, should give comfort to co-op boards that the global market sentiment is changing for the better, and with it the medium term outlook for milk prices.

“I urge co-ops to continue supporting milk prices, at a time when farmers are more vulnerable than ever, having seen over 93% of their margin disappear in the last 18 months. With milk prices either at or below production costs, cash flow pressures from superlevy, tax and credit repayment liabilities are intense on all dairy farms,” Mr O’Leary said

“Also, farmers are genuinely and legitimately worried about the impact of lower constituents and higher feed bills on their incomes next spring, even if milk prices are held at current level over that period,” he added.

“Last month, IFA President Eddie Downey and I wrote to all co-op Chairmen to urge them to do a root and branch review of all their business processes to identify efficiencies and savings, and plan on how to deliver those, through co-operation and consolidation including mergers where this is in the best interest of dairy farmers,” he said.

“We also asked that every co-op Chairman would report on the outcome of this exercise to their shareholders by year end. This exercise should have absolute priority, so that farmers can be confident of the future competitiveness of their co-op and its ability to pay the strongest milk price possible now and for the longer term,” he concluded.