Farm Ireland

Sunday 23 October 2016

Winter milk producers to stage 'show of unity' over premium issue

Farmers 'very worried' about long-term viability of the sector

Published 25/11/2015 | 02:30

ICMSA's Pat McCormack
ICMSA's Pat McCormack

Many of the country's winter milk producers are fearful over the longterm viability of the sector, as negotiations on the premium enter a critical stage.

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Farmers from throughout the Leinster, Munster and Midlands region are due to gather at a massive meeting in the Killeshin Hotel, Portlaoise, in a 'show of unity' on price.

Teddy Cashman, the IFA liquid milk chairman, said they are in the full throes of discussions on the bonus premium.

"We felt it was time to have a public meeting on it," he said, with figures from the ICBF showing a decline in the number of autumn born calves in the dairy herd. A lot of farmers are getting very worried," said Mr Cashman.

The critical time in the negotiations comes with the October milk price set, and the majority of co-ops holding on price, except for west Cork's Carbury group dropping 1c/l.

Glanbia, which caused farmer uproar when it dropped to 24c/l, with 1c/l co-op top, has held at that rate. Kerry is holding at 26c/l, while Lakelands remains at 26.25c/l.

With liquid milk payments based on the manufacturing price, plus a bonus, there are rising concerns for this year's price.

Mr Cashman said producers were being disproportionately impacted by the low base prices.

"This show of united strength is also about reminding dairies and other stakeholders that the liquid milk market is valuable, at €530m per annum, and that it makes a significant cash flow contribution to the coffers of the dairy processors involved," he said.

Mr Cashman pointed out that in 2009 the price was settled at 36.5c/l plus VAT for the winter.

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The ICMSA's Pat McCormack said there is a need for stronger direction and policy at national and Commission level on milk prices.

Glanbia said the average price paid for liquid milk in October was 38.42c/l including VAT, constituents, co-op supports and all the elements outlined in the agreement with FMP.


Agriculture consultant Mike Brady said the real "bonus advantage" that winter milk once had over spring milk is now gone.

"Around 20 years ago it was far more profitable than spring milk," he said.

However, Mr Brady said the profits per hectare have still proven better in winter milk compared with spring milk according to Teagasc profit monitors for '09 through to '14.

He said everyone recognises that it takes more work and extra capital expenditure.

"If they don't take care of the liquid milk suppliers they may be looking for them down the road," said Mr Brady.

"It is easy to convert from winter to spring but not easy to convert from spring to winter production."

Mr Brady said he has "never seen" such a variation in milk price on farms, with factors including the fixed price scheme percentage, winter milk bonus schemes, milk contract signing bonuses and constituents.

"It is a real challenge to project what the milk price will be for farm business plans," he said.

"Some guys are geting carried away boasting about butter fat and protein percentages in their milk, but the volume of milk sold at that percentage is equally, if not more, important. Boast about your profit per cow or per hectare - nothing else matters."

Uptake is expected to be strong on the fixed price agreements with Glanbia offering a base price of 30.25c/l, including VAT, for milk at 3.6pc fat and 3.3pc protein, for 18-months, and Carbery offering 30.1c/l for 20m litres.

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