Farmers at IFA Dairy Income Meetings Firmly Focused on Cash Flow

National Dairy Chairman Sean O’Leary has said the 800 farmers who attended recent IFA Dairy Income Meetings focused most of their questions on the sustainability of the market recovery, how soon co-ops would pass back enough from improving markets for them to return to positive margins, and what government would do with EU, state aids and taxation to support cash flow in volatile markets.

Sean O’Leary was speaking this week following the final of the four regional meetings in Mitchelstown. Each of the four meetings was addressed by the Chairman of the main local co-op, government or opposition politicians, and IFA representatives.

Mr O’Leary stressed that the outcome of this week’s Budget shows IFA lobbying has delivered, and he reminded all co-ops that market return improvements fully justify at least a 2c/l price increase on September milk.

“When we organised this autumn’s IFA Dairy Farm Income meetings, our priority was to ensure that no complacency would set in among industry stakeholders and government, as, despite the early stages of a recovery in milk prices, farmers continued to face possibly months of cash flow shortages until their income recovered enough to deliver positive margins,” Mr O’Leary said.

“The market recovery has now firmed up, and there is scope for at least 2 c/l in September milk, possibly more to year end. The message from farmers at our meetings was clear: co-ops must not stint on passing back every cent that market price improvements make possible.”

Low cost loans and income averaging measure

“In Budget 2017, government has listened to IFA, introducing a €150m low cost loan fund with an interest rate of 2.95% to help farmers cope with short term cash flow challenges due to accumulating merchant credit, superlevy, utility, tax and other bills. This ought to give farmers from all sectors some badly needed cash flow relief.

“Among other measures, Minister for Finance Michael Noonan announced the immediate availability of an ‘opt-out’ from five-year averaging in years of low incomes, matching IFA’s proposal, which has the potential to help farmers better cope with low incomes in 2016.”

Sean O’Leary said, “It was made very clear by all industry speakers at our four regional meetings that the outlook for global dairy markets and demand remain very positive, and Irish dairy farming well placed to benefit from the opportunities it presents. However, mitigating income volatility and smoothing out cash flow will be essential conditions if Irish dairy farmers are to thrive and deliver to their full potential.

“To optimise milk price, we must ensure our co-ops are as efficient as they can be, and that they fully leverage the quality and sustainability credentials of Irish dairy farmers on global markets. To allow farmers better manage their incomes and cash flow, we need the Budget 2017 measures to be utilised for the long term, and greater risk management options such as fixed milk price contracts and other forms of hedging to be developed,” Sean O’Leary concluded.