Co-ops Must Minimise Impact on Peak Month Profitability
As Town of Monaghan announced their 3c/l April milk price cut, IFA National Dairy Committee Chairman Kevin Kiersey said it was crucial that co-ops adjusting milk prices would seek to minimise the impact on peak month profitability, as failing to do so will dent farmer confidence and seriously affect their ability to plan the future of their business.
Pointing to the recent cut in the Irish Dairy Board Product Price Index, Mr Kiersey said the main reason for the reduction in the index was a cut in the butter price. He said that the IDB had been able to sustain its price well above EU averages for the last few months, to the benefit of all co-ops trading butter through the IDB since the end of 2011, when EU butter prices started to slip.
“While this month’s IDB index fall is significant, it is merely bringing the IDB butter price into line with current European levels, so this will not come as a sudden surprise to co-op boards when they meet in the coming days.”
Kevin Kiersey said, “I urge co-op board members, who will be making decisions on milk prices in the coming days, to do so prudently, and with a cool head uninfluenced by sensational reports or highly volatile auctions of limited relevance. How they adjust milk prices over the peak months will determine whether dairy farmers can start planning prudently for the development of their farms in coming years.”
“Farmers’ confidence is tightly linked with their profitability, especially over peak months. Co-ops have had an opportunity over the last two years to rebuild their balance sheets. They have also made tremendous efforts to develop higher value products and stronger customer relationships, and this must be reflected in a very careful milk price policy over peak months,” he concluded.