Co-ops Must Not Lose Sight of the Base Milk Price

Speaking after the first IFA National Dairy Committee meeting of 2020, Chairman Tom Phelan said the Committee had clearly identified a minimum 1c/l as a realistic and justified base price increase for January milk.

All market indicators suggest base price increases are fully justified, including the Ornua PPI, and board members, especially in some co-ops paying early calving bonuses, must not lose sight of the importance to farmers of base milk prices.

“In a number of co-ops, long established or newly introduced unconditional early calving bonuses are paid in the early months of the year to encourage earlier production.  Those are about influencing farmer behaviour, and are very much welcomed as they boost poor milk cheques at a time when volumes and solids are seasonally low and costs are high.  However, they have nothing to do with market returns and co-ops must not lose sight of the importance of base prices,” he said.

“We have demonstrated that the most relevant market indicators for dairy commodities relevant to the Irish product mix have risen substantially since last August, yet the milk price league suggest an average milk price rise of just over 1c/l, with the main co-ops having increased milk prices by around 2c/l (see graph overleaf).  The January Ornua PPI, which returns a milk price of 33.5c/l incl VAT, makes it clear that the December average milk price of 31.1c/l incl VAT must be upped for January, with further increases necessary and justified before large volumes of milk start to flow,” he said.

“National Dairy Committee members will this month lobby their co-op board members to ensure they prioritise those badly needed, and fully justified, milk price increases this month and before peak,” he concluded.

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