Speaking today, IFA’s Dairy Chairman Tom Phelan said the decision by Glanbia and Lakeland to cut their respective milk price was a big blow for farmers.
IFA had lobbied co-ops intensively over the past two weeks, outlining in detail the 10 reasons why they should hold their price.
The IFA Dairy Chairman said, “Today’s decision by both co-ops is unwarranted. Cash flow on dairy farms is critical at this time of the year, with farmers facing increased costs of production across the board.”
“When you consider that Ornua will be paying a €19m year-end operating bonus to member co-ops, up 27% on last year, you’d have to say the decision by Glanbia, in particular, is completely unjustified,” said Tom Phelan.
03 04 2019
As the GDT records its 9th consecutive uplift (+0.8%), IFA National Dairy Committee Chairman Tom Phelan said the Committee would in the coming days be lobbying co-op board members to show them that they must hold the March milk price. Markets justify it and farmers need it. “There are at least 10 good reasons why they should do so.”
IFA National Dairy Chairman Tom Phelan said farmers were very disappointed that their first big milk cheque of the year had been reduced by price cuts when markets would have justified stability. The prices cut by co-ops have fallen below the Ornua PPI equivalent, at a time when eight consecutive GDT auctions, including this week’s, show global dairy price improvements.
IFA National Dairy Chairman Tom Phelan today (Tuesday) said the decision by Lakeland to maintain their milk price at 30.6c/l + VAT was justified by current market returns and was to be welcomed. On the other hand, the Glanbia cut in the co-op contribution to their payout by 0.5c/l, unmatched by a corresponding increase in the base, reduces the payout to farmers to 29.88c/l + VAT.
While farmers appreciate co-op support, current market returns would justify a higher payout than Glanbia is currently returning, and GII should be able to pay a competitive base price without the need for co-op support. Mr Phelan urged all other co-ops to reflect the firmer European and global market returns, especially for powders, and to bear in mind in their decisions the improved trend in global market prices clearly indicated by seven successive GDT auctions.
“Though EU butter prices have continued to ease, powder returns have been firming for a few months. IFA has shown that returns from a number of EU and global indicators at the end of February would return milk prices equivalent to between 30c/l and 32.5c/l + VAT. Indeed, even the Ornua PPI for February is equivalent to 30.55c/l + VAT,” Mr Phelan said.
“The decision by the board to cut the top up without at least an equivalent increase in the GII base is a let down for Glanbia suppliers.
I urge all co-op boards who have yet to meet to decide on milk prices to duly recognise and reflect current firmer market returns by at least holding their February milk prices,” he concluded.
IFA National Dairy Chairman Tom Phelan today (Monday) said lower global milk production and the quasi emptying of SMP intervention stocks had led to generally firmer global dairy markets, further reinforced last week by a 6.7% increase – the 5th consecutive lift – in the GDT price index.
This justifies, at the very least, Irish co-ops maintaining the base milk price for last month’s milk.
He added that those processors who cut milk prices in recent months should to reverse those cuts and ensure that the pay-out fully reflects market returns.
“EU milk output has fallen slightly in both November and December, and global milk output has slowed down dramatically. Together with SMP stocks now down to less than 1% of what they were at peak, the supply side has come a long way to meeting an admittedly quieter global demand growth,” he said.
“After a difficult year which squeezed dairy farmers’ margins spectacularly, and with expected continued increases in fertiliser and feed costs into 2019, it is essential that co-ops sustain the highest possible milk price that markets allow. For the short term, we believe this must mean at the very minimum holding their February price, with scope for more positive moves in the months ahead, should current trends continue,” he concluded.