Farm Ireland

Wednesday 23 August 2017

Farmers and processors in stand-off over milk prices

Declan O'Brien

Declan O'Brien

A stand-off between dairy processors and the farm organisations over milk price was developing this week, with dairies rejecting calls for a lift in September prices.

Both the ICMSA and IFA claimed an increase in returns for September supplies was justified given the continuing strength of world dairy markets.

However, processors disputed this assertion, insisting that demand for dairy produce remained fragile.

While expressing disappointment that the Irish Dairy Board (IDB) did not increase its September pay-out, the ICMSA expressed confidence that an improved market situation "comfortably justified" an increase in September milk price.

ICMSA dairy committee chairman Pat McCormack stated that the co-op milk price being paid to farmers at this time was "noticeably lagging" behind returns from the marketplace and he noted that, since the start of September, the Northern Ireland milk auction price had increased by 1.9c/l, while the Fonterra auction price increased by 16.9pc on September 1, recovering the losses of both July and August.

Mr McCormack observed that reported prices on the world and EU markets during September have all increased, while prices on the British market have either increased or stayed steady.

He added that the Dutch dairy quotations for September 29 show that butter, whole milk powder (WMP) and skim milk powder (SMP) are €30/t, €100/t and €60/t higher respectively than they were on September 1.

"The latest EU Commission dairy market report states that the average EU price for butter, SMP and WMP is €3,577/t, €2,302/t and €2,919/t respectively. These are equivalent to 33.5c/l for butter/SMP and 35c/l for WMP at farm level. These are published figures and they demonstrate that farmers are not getting their fair share at present," Mr McCormack said.

"As far as ICMSA is concerned, and since last June, milk price paid to farmers has noticeably lagged behind improved market conditions. Those farmers elected to act as [co-op] board members are duty bound to ensure that dairy farmers receive their fair share of the improved returns -- and that must mean an increased milk price for September," he said.

Meanwhile, IFA national dairy committee chairman Kevin Kiersey said a price increase of at least 1c/l was fully justified for Irish dairy farmers, who, unlike other European dairy farmers, have received no price increase in the past few months.

"Spot returns for most commodities or commodity combinations on EU markets are now at or above 35c/l before processing costs," Mr Kiersey claimed.

"Cheddar cheese alone returns slightly less than SMP and butter, but when the relatively low added value of whey powder is included in the calculation, returns vary from 37 to 39c/l [based on spot quotes], mainly due to fluctuations in the sterling exchange rate," Mr Kiersey added.

"All milk purchasers operate on the same market, and if European co-ops and private dairies have been able to increase their milk prices in recent months, there is no reason why, with markets as firm as they continue to be, Irish co-ops cannot do the very same.

"Not only are Irish dairy farmers still dealing with last year's unpaid bills, they are now having to face significantly increased winter feeding costs, as dairy ration prices have risen by over €50/t,"he pointed out.

Irish Independent