Farm Profitability Analysis Flawed
Failure of Glanbia to increase price this month is further evidence that farmers are carrying processors
IFA Dairy Chairman Tom Phelan said that the analysis published by Teagasc and CIT claiming Irish dairy farmers are the most profitable in Europe is flawed in that it does not include the cost of the farmers own labour or land.
“This makes a mockery of the cost analysis. We all know that farmers and their families are putting more and more of their own time into their farms for the same return,” he said.
Farmers are operating at higher standards and higher costs (21% rise in fixed costs in the past five years (NFS, 2019)) for a milk price similar to 30 years ago. Improvements in milk fat and protein and quality have failed to return any price gains. Processors are using improvements in milk quality delivered by farmers to imply that they are paying a better price – this is not the case.
“There is a real danger that these figures will contribute to complacency by our processors who have been able to pay the lowest milk price in Europe because farmers are working harder and harder and getting better at what they are doing,” he said.
“Are our processors working harder and getting better at what they are doing? We need to add value to our milk to increase margins so that farmers don’t have to keep getting bigger just to stand still from an income perspective,” he said.
The timing of the report’s publication drew this into sharp focus; Glanbia yet again failed to increase their milk price yesterday.
“Premium grass-fed dairy produce must command a premium price. It is time that farmers were properly compensated for their work and investment. This has to be reflected in an increased milk price for the remaining months of this year,” he said.
While average levels of debt of €64,868 on dairy farms are mentioned in the report, it is essential to remember that 64% of dairy farms have an average debt of €112,000 (National Farm Survey 2019).
“Let me be crystal clear on this – dairy farmers are under significant financial pressure and are working harder than they ever have before, this race to the bottom must stop.”
“The industry cannot sit back in smug satisfaction at this report as it does not give the full picture,” he said.