Friday 28 November 2014

ICMSA accuses Glanbia and Kerry Group of profiteering

Prices being paid by pair 'hopelessly adrift' of market returns, says association

Published 15/05/2013 | 05:00

ICMSA has accused Kerry Group and Glanbia of profiteering off buoyant dairy markets while their suppliers struggle to cope with mounting farm debts and atrocious weather conditions.

ICMSA deputy president Pat McCormack said the milk prices being paid by Kerry and Glanbia were "hopelessly adrift" of market returns.

He said there was growing anger and despair among dairy farmers who were battling through one of the worst fodder and weather crises in living memory.

"The level of anger amongst farmers is building rapidly, as we see the IDB Index reach 120.6 from a January level of 111.0 at the same time as Kerry decide not to pay any increase at all for April milk, and Glanbia throws 1c/l the way of its suppliers and describes it as some kind of 'hardship payment'," said Mr McCormack.

Glanbia has given 1c/l of a hardship bonus for April supplies only, but the company's base price is unchanged at 35c/l including VAT. Kerry has also held on 35c/l.

In contrast, Town of Monaghan increased its milk price by 2c/l to 37c/l including VAT for April. Centenary Thurles has also increased its April milk price, with a 1c/l lift bringing it to 36c/l including VAT.

It remains to be seen whether the remaining creameries will join Town of Monaghan on 37c/l, as a raft of co-op board meetings are due to take place this week.

The boards of Connacht Gold, Lakeland and Wexford are due to meet on Thursday, while the West Cork co-ops and Dairygold are also expected to meet this week.

Market indicators in Europe and worldwide point to a continued improvement in processors' returns.

Fonterra's Global Dairy Trade Auction average weighted price on all products rose by 40pc between January and May, while Dutch dairy quotations for the same period revealed a €740/t (22pc) increase in butter, a €790/t (27pc) rise in whole milk powder and a €480/t (19pc) increase in the price of animal feed quality skim milk powder.

Mr McCormack said even allowing for forward contracting by processors, there was still an inexplicable double-digit gap between the returns the processors were receiving and the increases that they have paid to their suppliers.

IFA dairy chairman Kevin Kiersey described Glanbia's failure to increase its base milk price as "a missed opportunity" at a time when markets justified at least a 2c/l base price increase. He called on the co-op to consolidate the April 'hardship payment' into the May base price and to increase the May price by at least 2c/l.

He described Kerry's refusal to move on milk price as "bitterly disappointing" to milk suppliers who had been promised a leading milk price by the company.

Mr Kiersey estimated that gross returns for skim milk powder/butter were 44.3c/l, whole milk powder 45c/l and cheddar and whey powder just under 41c/l.

A spokesman for Kerry pointed out that the company had been the first to increase milk price in January and was also the first to go to 35c/l.

CONTINUED ON PAGE 2

Irish Independent

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