Commenting on the announcement by Glanbia and Aurivo that they would hold the January milk price, IFA National Dairy Committee Chairman Sean O’Leary said this was a very positive move by both co-ops, and he urged others to follow suite.
Mr O’Leary also welcomed the introduction of the fifth Glanbia index-linked fixed milk price scheme: “The details of the scheme, including the price level and the level of index linking, must be such as to be attractive to farmers not just because of the certainty the scheme provides, but also because it proves reasonably competitive with actual market returns,” Mr O’Leary said.
Regarding the suggestion that Glanbia co-op resources may be used if necessary to at least hold the February and March milk price, Mr O’Leary said this too was a welcome move, in a year when low milk prices, high tax bills and superlevy fines would put farmers’ cash flow under serious pressure. However, he sounded a note of caution.
“Glanbia suppliers and other milk producers will rightly expect that their milk purchasers would in time pay the optimum returns the rising market justifies. It is important that recourse to alternative resources, such as Glanbia co-op payments, would be reserved to crisis situations, as farmers will be concerned that it could be used by to artificially influence the base milk price,” he said.
“It is crucial that all milk purchasers would drive efficiencies and value-adding to ensure they can pass back the absolute maximum milk prices markets allow, and in crisis situations are in a position to provide some price support,” he concluded.