With Town of Monaghan the last milk purchaser to cut its June milk price by 1c/l to 28c/l incl VAT this week, IFA National Dairy Chairman Sean O’Leary called on co-ops to arrest the milk price slide.
He said co-ops need to focus on internal efficiencies, lower margins, and where necessary consolidation with other co-ops to offset the kind of protracted market downturn which from time to time will be a feature of volatility.
“Milk prices are down around 11 c/l, since last April, that’s a 28% fall top to bottom, but it is equivalent to a 78% cut in our margins. This means most farmers are now in loss making territory, with massive demands on their cashflow from superlevy and tax liabilities, repayments and contributions to their co-ops’ development plans,” Mr O’Leary said.
“This is unsustainable, and we need our industry to start coming up with better strategies to offset poor market returns, especially in terms of internal efficiencies, including lowering their margins, and not shying away from consolidation decisions, where necessary,” he said.
“We know that we live in a more globalised dairy market, where wide price variations are influenced not just by global supply and demand, but also by demographics, weather events, geopolitical factors, currencies, economic trends, etc. Our industry has invested heavily to partake in the growing global dairy demand, now it must equip itself with strategies to improve efficiency and value adding to ensure that, in times of poor returns, it does not rely on the soft option of unsustainable farm gate prices,” he concluded.