Farmers Disappointed by Milk Price Cuts

IFA National Dairy Chairman Tom Phelan said farmers were very disappointed that their first big milk cheque of the year had been reduced by price cuts when markets would have justified stability.  The prices cut by co-ops have fallen below the Ornua PPI equivalent, at a time when eight consecutive GDT auctions, including this week’s, show global dairy price improvements.

Compounding their annoyance, though, is the new trend among some co-ops when they cut milk prices to quote the month’s average milk price, inflated by the higher constituents achieved by farmers.

 

“The February milk pay-out was cut by between 0.5c/l and 1c/l by Glanbia, Kerry, Arrabawn and Dairygold thus far, to price levels below the Ornua PPI of 30.55c/l + VAT (32.2c/l incl VAT).  Those cuts are unfair to farmers who are still repaying bills from 2018,” Mr Phelan said.

 

“Farmers are even more annoyed with the new trend of some co-ops when they cut milk prices to quote the average price for the month in question, which always reflects the higher constituents achieved by the farmers’ hard work. This is value added to milk by the farmers’ efforts which ensures co-ops have more butterfat and protein to process and export profitably,” he said.

 

“If co-ops were coherent in this approach, they would also publish the higher price cut suffered by farmers at their actual constituent levels: a 1c/l price cut, measured at 3.3% protein and 3.6% butterfat, obviously equates to a higher price cut at higher constituents,” he said.

 

“We appreciate the uncertainty that Brexit in particular is creating for dairy markets.  However, global indicators, including GDT, the Ornua PPI and the EU MMO returns all suggest that Irish milk prices paid for January were sustainable for February milk.

Co-ops must make it clear to their suppliers urgently what their plans are to return optimum and objectively presented milk prices over the coming months,” he concluded.