THE price being paid by co-ops to milk suppliers is well behind market developments and needs to move up immediately to reflect the reality of the marketplace, according to Deputy President and Chairperson of ICMSA's Dairy Committee Pat McCormack.
He said dairy farmers are under massive pressures after a disastrous year in 2012, particularly due to the very wet summer which resulted in fodder shortages, on top of reduced milk prices and escalating input costs.
Mr McCormack said it is unacceptable in these circumstances that milk prices are being kept below the real market value and it is absolutely essential that all co-op boards immediately redress this and send a positive signal to farmers that 2013 will be a stronger year in terms of milk price.
He said the markets for dairy produce is very positive, which underlines the case for paying farmers more for the milk they produce. The first Global Dairy Trade auction of the year up 2% and the SMP index up 4.7%. In relation to the Dutch Quotations, the first quotes of the year are now returning nearly 39 cents per litre at processor level for both the butter/SMP combination and WMP. Market indicators from the UK, EU and global markets suggest an improving or stable market situation with the butter/SMP combination returning 40 cents per litre on the EU market and 42.5 cents per litre on the UK market at processor level. The Northern Ireland milk auction is returning an equivalent of 36 cent per litre at farm level.
In Ireland, the improvement in the Irish Dairy Board index for November was significant and this should improve further for December. Mr. McCormack stated that when the index was at its current level in 2011, dairy farmers were receiving 34 cents per litre in most co-ops.
"Quite clearly, there is considerable room for improvement in milk prices and given the financial pressures on farmers which coops should be well aware of through higher input trading bills being carried forward, farmers need a clear signal from co-ops on milk price and this can best be delivered by an immediate increase in milk price to reflect where market returns are and to provide a level of optimism to farmers who are under severe pressure at this time," he said.
Mr. McCormack said he was optimistic that farmers can look forward to a strong price in 2013 but cautioned that it was required simply to deal with ever escalating input costs.