The IFA National Dairy Committee has identified a realistic 1.5c/l January milk price increase as its first target for 2011. Chairman Kevin Kiersey said this price increase was made possible by rapidly rising but sustainable dairy commodity returns, and made absolutely necessary by fast increasing input costs eating into barely recovered dairy farmers’ margins.
He urged co-op boards, who would be meeting in coming days to set their January milk prices, to implement immediately this fully justified price increase.
Mr Kiersey said, “Rising European milk and whey powders and butter prices have meant that, by last week, gross returns from the main commodity combinations were between 37 and 39c/l, continuing an uninterrupted rising trend which started in late November. This is in the context of very firm international markets, and it is clear that the gap between market returns and the price paid to Irish farmers is widening to unjustifiable levels.”
“The Irish Dairy Board must now reflect the January average increase, which we estimate at around 6% over December returns, and bring its index for butter and skimmed milk powder traded during that month to around 35c/l. Improved returns have created a real opportunity for co-ops to immediately increase producer prices by at least 1.5c/l to 30c/l + VAT,” he added.
“Furthermore, input prices are on a fast rising trend, especially feed, fertiliser and fuel, which we expect could increase producer costs by as much as 14% in 2011, necessitating milk prices at least 3c/l in excess of the 2010 average just to preserve current levels of margins on farms,” he said.
Mr Kiersey warned co-op board members against using superlevy concerns as spurious excuses to delay a fully justified price increase. “Farmers know the score on superlevy fines and take their own responsibilities each year. Just because a minority run a serious risk of superlevy is not a valid reason to deprive farmers from a price increase.”
The IFA National Dairy Committee is now starting its 2011 Milk Price Campaign, which will see it lobby board members in all co-ops for an immediate 1.5c/l price increase.