25 Oct 2012
LIQUID MILK FARMERS NOT PAID ENOUGH TO SUSTAIN SUPPLIES SHORT AND LONG TERM – CASHMANUncategorized
IFA National Liquid Milk Committee Chairman Teddy Cashman today (Thurs) said specialist liquid milk producers were not paid enough to deal with the current massive feed cost inflation. For the longer term, their remuneration is out of kilter with current retail market trends, where more and more milk is sold at lower margins under retailer’s own Private Labels.
Mr Cashman, who is currently meeting with the main retailers, urged them to enter into immediate negotiations with dairies to redistribute margins, and secure a sustainable farm-gate price level covering production costs and remunerating own labour for the longer term. “It costs farmers as much to produce a litre of branded milk as a litre of Private Label milk!” he said.
“At the Teagasc Liquid Milk Conference last week, we heard from Dr Joe Patton that the cost of feeding cows on specialist liquid milk farms in 2012 had increased by a massive 65%, or just over 4c for every litre of milk produced. This is due to the combination of weather impact on the quantity and quality of grazed and ensiled grass, a 50% increase in compound feed prices since 2010, and the need to feed significantly more of the latter to make up for the former,” he said.
“These massive cost hikes will cause most liquid milk producers to make serious losses, unless dairies increase very substantially the winter premiums they will pay farmers over the coming months, to lift the annual average price to the 40c/l needed to cover costs and pay the farmer’s own labour. If this does not happen, farmers will produce at a loss, not to mind pay themselves a wage,” he added.
“I believe dairies and retailers have a responsibility to ensure that the liquid milk retail chain remains sustainable, in the best interest of consumers, who clearly value the availability of good value, high quality, locally produced fresh milk. This means dairies and retailers need to renegotiate urgently their respective margins, to ensure that pricing all along the retail chain covers costs and farmers’ labour, and supports continued local supplies,” he concluded.