IFA National Dairy Committee Chairman Kevin Kiersey said suppliers of those co-ops which had decided against increasing their August milk prices were bitterly disappointed and felt let down at a time of massively increased costs.
Mr Kiersey said co-ops were being too cautious on prices at a time when the latest Fonterra auction results (+2.5% yesterday) confirmed the continued recovery in global commodity markets.
Mr Kiersey pointed that EU butter prices had increased by €600/t since May, SMP by €700/t and whole milk powder by over €500/t. For SMP/butter, this was equivalent to an increase in gross returns of 9c/l. Indeed, the IDB have also reflected price improvements on powder, whey and butter, with the index lifting by 6.2 points for August.
“Co-op boards must see to it that their September milk price is lifted to reflect continued improvements in markets, in order to offer farmers support who are facing an unprecedented cost/price squeeze,” Mr Kiersey said.
“Recent research by Teagasc has shown that additional costs from greater quantities of dearer bought in feed to compensate for insufficient quantities and quality of silage could add 2.2c/l to feeding costs for spring milk producers this year alone, and 3.6c/l to winter and liquid milk suppliers,” Mr Kiersey said.
“This is in addition to a 10% increase in fixed costs, and a squeeze from price cuts of up to 6c/l,” he added.
“Dairy farmers could face income falls of over 1/3 in 2012, and co-ops owe it to their suppliers to pass back as soon as possible milk price increases which are well justified by continued market improvements,” he concluded.