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'Brutal' 2015 will break many dairy farmers

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Kevin Lane, head of Ornua, formerly the Irish Dairy Board.

Kevin Lane, head of Ornua, formerly the Irish Dairy Board.

Kevin Lane, head of Ornua, formerly the Irish Dairy Board.

A "brutal" milk price season in 2015 will see thousands of dairy farmers go broke across the EU and threaten the survival of many Irish and European milk processors.

The dire prediction was made by well-known Cork-based dairy farmer Michael Murphy ahead of next week's Positive Farmers Conference.

Mr Murphy, who has dairy interests in Ireland, New Zealand, Chile and the US, maintained that low milk prices this year will threaten the survival of those working in high cost systems.

"I think that more farmers will go bust in the EU this year than has ever happened before. It will be the most brutal year for dairy farmers since we joined the EU," Mr Murphy predicted.

"Mostly situations of over-supply are resolved by markets, but this one will be solved by more producers going broke," he added.

Milk prices have fallen from a high of 38c/l to 30c/l since last summer but are forecast to fall to 27-28c/l and possibly further in the first half of this year.

"2015 is a year that I would be urging everybody to put away the cheque book as much as they can and really be very careful. If you don't have to spend it, don't spend it. This is going to be a very tough year on European dairy farmers," Mr Murphy said.

He urged farmers developing green field production units to "put back their plans for a year" because of the collapse in dairy margins.

"This will be an awful year to be very highly-borrowed and inexperienced," he said.

"Go and work on a good dairy farm for the year, get experience, and I think that 2016 will be a much better year to get started in production," Mr Murphy advised.

He also forecast an unpredictable year for dairy processors.

"I think there is going to be more change at processor level than we have ever seen, because some of the processors are unlikely to be able to survive independently," he said.

"I doubt very much if some of the independent processors will be independent at the end of 2015 - I think their chances of surviving are almost nil," Mr Murphy maintained.

Despite the dire warnings however, he said he was not the "slightest bit pessimistic about the medium and long-term future" of dairying generally. But he said 2015 could seriously test the financial viability of farmers who have moved away from grass-based systems.

However, Mr Murphy was more optimistic for dairy incomes in 2016, with supply and demand set to swing back in farmers' favour.

Mr Murphy was speaking ahead of the 16th Annual Positive Farmers Conference which takes place in Clonmel next Wednesday and Thursday (January 14 and 15). This year's theme is 'Grass to Cash at Low Cost - The Proven Pathway to Expansion at Low Risk'.

Speakers for the two-day conference include: Colin Glass from New Zealand; Kevin Lane, CEO, Irish Dairy Board; Rhiona Sayers of Teagasc; Claire and Andrew Brewer from Cornwall; Robert Craig from Cumbria; Pat O'Brien, west Cork; Jamie Costin, Co Waterford; and Linda O'Neill, LIC.

Indo Farming