ORNUA PPI WILL HELP CO-OPS HOLD AUGUST MILK PRICE – O’LEARY

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ORNUA PPI WILL HELP CO-OPS HOLD AUGUST MILK PRICE – O’LEARY
10 Sep 2015

ORNUA PPI WILL HELP CO-OPS HOLD AUGUST MILK PRICE – O’LEARY

Dairy, Dairy Markets

IFA National Dairy Chairman Sean O’Leary this week said the August Ornua PPI had barely moved from its July level, from 91.8 to 91.5 points, which was equivalent to a net farm milk price of 26.96c/l incl VAT for 3.3% protein and 3.6% fat milk. This, he said, would help co-ops hold their August milk price, and would play a strong part in the current series of farmer-to-farmer discussion meetings with co-op boards being run this week by the IFA National Dairy Committee as part of its autumn milk price campaign.

“GDT and US, NZ and EU futures markets trends in the last two to three weeks have shown that global markets are definitely starting on the road to recovery, though this could take some time. Meanwhile, EU average commodity prices continue weak. It is clear from the PPI that the Irish product mix handled through Ornua, thanks to branding and added value, performs at a higher level. This must give co-ops a very strong reason to hold the August milk price,” Mr O’Leary said.

“There is still a lot of detail to be decided on the €500m package of measures brought forward earlier this week by the EU Commission to support various sectors of EU agriculture. The dairy market support measures (APS) in particular need to be implemented swiftly to help speed up the end of the prolonged market downturn,” he said.

“In the meantime, the National Dairy Committee members and their County Chairmen have this week called meetings with the processing dairy co-op board members to hold farmer-to-farmer discussions on the impact the serious and prolonged market slump is having on farmers’ incomes and cash flow, as per the IFA’s autumn milk price campaign.”

“According to Teagasc, farmers stand to see an average 78% fall in their margins for 2015, and up to one-third may end up losing money. This is an understatement of the severity of the situation, as the Teagasc cost accounting method does not include the farmer’s own labour remuneration, nor bank repayments other than interest costs,” he said.

“We are asking co-op boards to stop cutting milk prices, take careful stock of all their business processes to identify potential savings, and devise a plan to deliver on those, up to and including consolidation through mergers where that is in the best interest of dairy farmers. We have also asked them to report on their root and branch review to their shareholders by year end,” The Dairy Chairman concluded.

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