Speaking today at the Virginia Show, IFA Deputy President Tim O’Leary said that it was time the industry focused on putting an immediate end to 16 months of continuous milk price cuts which have robbed farmers of almost all their margin and landed the majority of them into loss-making situations. He said co-ops, which were farmer owned, now needed to focus in earnest on internal efficiencies, including greater co-operation, rationalisation and consolidation, as their farmer members could take no more cuts.
“The current spate of milk price cuts started 16 months ago in May 2014. At the time, co-ops were paying around 39c/l incl VAT for milk at 3.3% protein and 3.6% butterfat. Practically every month since then, farmers have suffered price cuts which are now totalling up to 13c/l, or over 33%,” Mr O’Leary said.
“Based on the 25.5c/l average production costs determined by the Teagasc’s 2014 National Farm Survey (reduced to 25c/l for 2015 in the 2015 Teagasc Outlook), this 33% milk price cut amounts to a 92% cut in the farmer’s margin. As the Teagasc production costs do not include the farmer’s own labour nor investment repayments, it is clear that the majority of farmers are now producing milk at a significant loss. This is unsustainable, and milk price cuts must stop,” he said.
“In advance of the 7th September EU Agriculture Council meeting, IFA is working hard with fellow-farm organisations in Brussels to lobby for increased intervention supports and for superlevy funds to be utilised to support the sector and farmers, and it is good to see that some co-ops are expressing their support for this,” he said.
“However, it would be much more helpful to their members if they also put an immediate stop to any further milk price cuts now that volumes are dwindling, and looked to internal efficiencies and joint projects, including mergers, to reduce their costs and optimise their ability to pay the strongest possible milk price,” he concluded.