A two-tier pricing structure for milk is emerging in Ireland - ICMSA

Stock photo
Stock photo
ICMSA's Gerald Quain
Declan O'Brien

Declan O'Brien

A two-tier pricing structure for milk is emerging in Ireland, the ICMSA has claimed.

With a 3.5c/L milk-price gap having opened up between the top paying co-ops and some of the country's largest processors, the ICMSA said milk suppliers deserve an explanation for the growing differential in returns.

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Last week both Glanbia and Kerry dropped their July milk price by 1c/L to 29.5c/L (including VAT). In addition, Aurivo and Lakeland cut prices by 0.5c/L to 30c/L and 30.78c/L (including VAT) respectively. In contrast, however, the West Cork co-op, Lisavaird, held its milk price at 32.9c/L (including VAT). This is almost 3.5c/L above the price paid by Glanbia and Kerry.

Given that an 80-cow herd supplies around 50,000 litres in July, this 3.5c/L price differential equates to €1,750 in milk returns for the month.

ICMSA's dairy committee chairperson, Ger Quain, claimed that there is now a two-tier milk price structure at play in the Irish market.

4c/l difference

"If we take that line and examine the 2018 milk price figures as published by KPMG, the difference between top and bottom stands at 4c/L and amounts to a truly astonishing €16,000 over the course of 2018 for a supply of 400,000 litres," Mr Quain said.

"If we look at 2019, this discrepancy is already at over €8,000 for the first seven months of the year for the same supply curve. Farmers are asking the same question: How is this possible?" he said. "Farmer suppliers are well aware of the uncertainty around international dairy markets at the moment, but ICMSA still feels entitled to ask why there are such shocking [price] differences," said Mr Quain.

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Tom Phelan of IFA also expressed disappointment at the decision of some processors to cut milk prices.

"Apart from the West Cork co-ops, all milk purchasing co-ops have undershot the Ornua PPI in the milk price they have returned to farmers for most of the last eight months," Mr Phelan said.

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