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Independent.ie

Friday 9 December 2016

Glanbia under fire on milk price cut

Published 21/10/2015 | 02:30

Pat McCormack of the ICMSA
Pat McCormack of the ICMSA

Glanbia's decision to cut it's milk price by another 4pc to 24c/l provoked angry reactions from suppliers and farming representatives.

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While the co-op continues to dip into shareholder funds to top up the milk price by 1c/l, the price leaves the country's largest processor trailing its competitors by as much as 4c/l or 17pc.

"Unjustified and unacceptable" leading to "anger and resentment amongst their farmer-suppliers," was how the ICMSA's Pat McCormack described the move.

He said that some processors claimed that they were subsidising milk price, but he insisted that the opposite was the case - that farmers were subsidising the processors.

The farm body claims that the Ornua Purchase Price Index (PPI) of 90.6 equates to a milk price of at least 26.5c/l.

The IFA president Eddie Downey said he was meeting Glanbia this week to discuss their decisions on the price paid to suppliers of milk and grain.

He said the decision to cut the base milk price was bitterly disappointing for suppliers and raised questions on the pricing model.

Average EU milk prices moved up again in the last week to 29.7c/l, while sentiments continue to improve on Fonterra's Global Dairy Trade auction.

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Bloomberg reported that Fonterra milk collections were down 9pc in September compared to the same period last year.

Joint venture

"The reality is that processors simply paid in early 2015 what they kept back during 2014," stated Mr McCormack.

"Glanbia suppliers signed up to the GIIL joint venture model on the basis that it would pay a competitive milk price which, very clearly, is not the case at this stage." He said relying on Glanbia Co-op to support milk price was not sustainable.

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