Speaking after his first meeting as Chairman of the IFA National Liquid Milk Committee, recently elected John Finn said IFA calculations – based on two separate research projects carried out by Teagasc for IFA and FDC Accountants for Fresh Milk Producers – had shown farmers would need to be paid at least 55c/l over the winter months just to meet the 40c/l figure both projects had identified as the annualised price breakeven for specialist liquid milk producers.
“In the autumn and winter of 2015, the number of dairy calves born fell by 16%, while the overall 2015 number of dairy calves was up 8.5%. It is very clear that liquid milk producers are taking measures to either tighten their supply closer to their contracts, or indeed that some are voting with their feet and moving away from their high cost, high commitment systems,” Mr Finn said.
“Either way, this will tighten up winter supplies, and it is clear that dairies, retailers and consumers cannot take for granted adequate supplies of fresh, locally produced quality milk on the supermarket shelf year-round,” he said.
Mr Finn said the value of the national fresh milk market is around €530m, which is 16% of the overall value of Irish dairy exports (€3.24bn for 2015). He added that consumers value the product, and the success of the NDC mark campaign had shown they and retailers also value choosing locally produced milk.
“The fresh milk market, which we supply domestically is crucially important to the overall dairy sector. I am pretty confident that, with dairy commodity prices still very low, co-ops involved in liquid milk are benefiting significantly from the higher and more stable returns they get from the domestic milk market,” he said.
“I am equally clear that retailers’ margins have improved on fresh milk in the last year,” he added.
“Some of these margins will have to be redistributed in favour of farmers in very significantly increased winter payments if they are to have any hope of covering their costs, and paying themselves a modest wage – remember, we are not exaggerating when we say this will require around 55c/l over the 4 to 6 winter months operated by different dairies,” Mr Finn concluded.