Speaking after most dairies have concluded their winter price negotiations with suppliers, IFA National Liquid Milk Committee Chairman Padraig Mulligan criticised dairies for leaving suppliers up to 4c/l short of covering their full costs, and for failing to face up to retailers and maximise market returns to secure viable producer prices.
He said, “We have demonstrated clearly this year, in co-operation with Teagasc, that to cover their variable and fixed costs, pay themselves the average industrial wage and provide for a small degree of maintenance on farm, liquid milk producers need a minimum price of 39c/l on average across the year.”
“Winter prices conceded by dairies to farmers after probably some of the most difficult negotiations ever will yield only around between 35 and 36 c/l, up to 4c/l short of costs,” he added.
“Dairies are taking the soft option, and pressing the farmer to avoid facing up to the retailers – worse again, they are so busy undercutting each other in a mad scramble for market share that it seems to us they cannot give enough of our money away,” he said.
“Input costs have increased massively between 2010 and 2011. CSO have just published their latest agricultural input price indices, which show that cattle feed costs are up 21.5%, energy is up 13% and fertiliser prices up 26.3%. Our earlier estimate of a 3c/l increase in costs for 2011 is now looking very conservative,” he said.
“Most of those input costs are on a continuing rising trend, so that we expect costs to increase further in 2012. This message must be heard loud and clear by both dairies and retailers. It is high time that both would revise their pricing policies, and that dairies would start facing up to retailers to deliver viable milk prices back to farmers. Without this, farmers will simply no longer be able to guarantee the high quality milk from freshly calved cows which Irish consumers value,” he concluded.