Fear of Encouraging a Superlevy Is No Excuse for Failing to Pass Back Price Increase
IFA President John Bryan said that after some weakness in March and April, dairy markets had recovered strongly, and were now relatively stable, as evidenced by the Irish Dairy Board decision today to hold their June butter/SMP index at the same level as May. Mr Bryan said that, as the main commodities and commodity combinations, based on spot European quotes, returned between 38 and 41c/litre, there was scope for a milk price increase of up to 1.5c/l to 33c/l + VAT in most co-ops.
Mr Bryan criticised some co-ops for using the fear of encouraging a superlevy fine as an excuse to avoid increasing milk prices: “The argument made by some co-ops that a price increase at this point would worsen the superlevy situation is patronising and insulting to farmers. Co-ops owe it to milk suppliers to ensure that they receive full returns from the market place,“ Mr Bryan said.
IFA National Dairy Committee Chairman Kevin Kiersey added that robust demand, warm summer weather in Europe increasing ice cream consumption and low butter stocks were underpinning market returns for cream and butterfat. He added that a forthcoming Algerian tender and demand from Russia should help sustain reasonably solid protein (milk and whey powders) prices going forward. Overall, the market outlook to the end of the year was reasonably positive, and there was no reason for co-ops to be timid in passing back a justifiable increase to their producers at this time.