Farm Ireland

Monday 18 December 2017

Dairy Ireland calling on co-ops to set milk prices each quarter

Caitriona Murphy

Caitriona Murphy

Dairy Ireland has called on co-ops to switch from paying farmers a monthly milk price to setting milk prices just four times a year.

The move would help dairy farmers by enabling better cash-flow planning and free up time at monthly co-op board meetings to allow members to focus on strategy discussions, according to Kevin Twomey of Dairy Ireland.

The association, which represents dairy discussion groups, has also urged all co-ops to move to an A + B – C pricing system before the end of 2013 and implement more uniform milk quality penalty and bonus standards.

Mr Twomey said the changes would create a more transparent milk pricing structure for dairy farmers.

He added that farmers needed to focus less on the cents per litre milk price and more on the price they were being paid for kilograms of fat and protein.

"The most recent milk price league showed a 7pc difference between the top and bottom prices paid by individual co-ops.

"But when you look at the breakdown, there was a difference of more than 15pc between the top and bottom protein prices and more than 30pc between top and bottom fat prices," he pointed out.

Dairy Ireland is also keen to discourage milk pricing based on reactive spot market auctions and quotations, such as Fonterra's Global Dairy Trade auction.

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"In reality most dairy products are not sold on the spot market. Trying to follow the spot market will result in greater volatility for Irish dairy farmers and less investment in research and development and value added within the industry," maintained Mr Twomey.


Farmers at the Dairy Ireland annual meeting in Mitchelstown on Thursday heard how the 20,000 farmers supplying Dutch dairy giant FrieslandCampina are paid a guaranteed milk price every month, with an annual top-up based on the profit the company made during the previous year.

The guaranteed price is calculated based on the average milk prices in Germany, the Netherlands, Denmark and Belgium, a total pool of 46bn kilograms of raw milk.

Farmers can also receive supplementary payments such as a 'meadow milk premium' for milk produced from grass-based farms.

The meadow milk premium is paid to farmers whose cows graze grass for 120 days per year, for at least six hours per day and last year it was worth the equivalent of 0.32c/l.

Speaking at the meeting, Frans Keurentjes, co-op board member of FrieslandCampina, said the pricing structure was designed to be transparent and allow co-ops to focus on the dairy market.

Barry Henry, head of Rabobank's Loan Products Group in Ireland, told the conference that the bank saw Ireland as one of the winners in the post-quota era.

"Our analysts see the potential for Ireland to increase milk production by 40pc, twice that of other European countries like Germany and France," he told the conference.

He added that the bank was heavily invested in the Irish dairy industry, with €500m invested in projects like Dairygold's expansion plans and Glanbia Ingredients Ireland.

Meanwhile, Glanbia was first out of the traps in setting milk price for July, deciding to hold its price of 37.5c/l including VAT.

"We have a lot of money at stake and we wouldn't do that without confidence that the industry would be successful," he told farmers.

Irish Independent