Kerry's price hold is welcomed
Published 18/06/2014 | 02:30
THERE were mixed messages for dairy farmers after Kerry Group's board opted to hold the company's milk price for May at 39c/l but Carbery cut returns by 2c/l to close to 37c/l.
Kerry's decision to hold the milk price breaks the general trend set over the past week by Lakeland Dairies, Glanbia, and now Carbery, who all dropped their base price by 2c/l to 37c/l.
However, the move by Carbery may not be immediately reflected in a milk price cut to farmers as its constituent co-ops – Bandon, Barryroe, Drinagh and Lisavaird – set their milk prices separately and may decide to hold their quotes.
Town of Monaghan also pulled its price last week, cutting their base by 1c/l to 38c/l.
Kerry's move will put pressure on Dairygold, Arrabawn and Aurivo, who are due to meet this week.
To-date processors have attributed the drop in milk prices to weaker world dairy markets.
This was reflected last week by the Irish Dairy Board's (IDB) decision to cut its butter price by €75/t and skim milk powder (SMP) by €100/t.
The IDB price for butter has fallen from €4,100/t to €3,250/t since January, while its quoted price for SMP dropped from €3,150/t to €2,750/t.
However, the farm organisations have argued that world markets have settled over the last week and this meant an immediate cut in milk price was unjustified.
Reacting to the Kerry decision, ICMSA deputy president Pat McCormack said it was a demonstration of the kind of leadership and commitment that other processors should learn from.
"The Kerry decision is a plain and simple recognition that markets are in a better state than has been claimed by other processors.
"This decision represents the kind of commitment to suppliers that farmers need going forward into the post-quota era," Mr McCormack said.
"Kerry does not make decisions like this on the basis of sentiment. They obviously agree with our own analysis that shows that the market has levelled off with some indicators actually improving," he added.
IFA national dairy committee chairman Sean O'Leary described Kerry's move as important for supplier confidence as it comes at the peak production point in the year.
"This will be essential not only for farmers to fund their business, whether in expansion mode or not, but also to maintain crucial goodwill towards the co-op in changing times," Mr O'Leary said.