Farmers demand answers on March milk price cuts

ICMSA's Gerald Quain
Declan O'Brien

Declan O'Brien

FARMING organisations have reacted angrily to the cut in March milk prices by both Glanbia and Lakeland Dairies last Friday.

Glanbia said it was paying 30.5c/L (VAT inc), down 1c/L, while Lakeland Dairies announced a price of 31.56c/L (VAT and lactose bonus included) for March supplies.

ICMSA's dairy committee chairperson, Ger Quain, said that farmers were entitled to be cynical about milk price given the decision of two of the country's biggest milk processors to cut their milk price.

"It is an extraordinary situation where the Ornua PPI can rise month after month with either no corresponding rise in farmer milk price or price rises that are wholly insufficient or proportionate to the rise in the index. We then see a marginal fall in the index that is largely explicable by factors outside dairy markets - Brexit, for instance - and literally that week farmers see their milk price cut," said Mr Quain.

"The plain fact is that Irish co-ops have been lagging near the bottom of the European price per litre table for a very considerable time; that are already underpaying on any kind of 'like-for-like' comparison with their European counterparts."

The move by two of the country's largest processors comes as milk production is on target to top 8bn litres this year, with deliveries to some producers up 12-13pc in the first quarter compared to the first quarter of 2018.

Glanbia said its March price is "in line with current market returns".

Glanbia chairman Martin Keane said: "Glanbia Ireland has maintained its base price of 30c/L to reflect current market returns.

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"While global milk supply growth is lower than previous years and oil prices have increased, market demand in some regions is being adversely affected by challenges that include lower economic growth, Brexit and trade wars.

IFA's dairy chairman Tom Phelan said the decision by the two to cut their respective milk price was a big blow for farmers. IFA had lobbied co-ops intensively over the past two weeks, outlining in detail the 10 reasons why they should hold their price. "The decision by both co-ops is unwarranted. Cashflow on dairy farms is critical at this time of the year.

"When you consider that Ornua will be paying a €19m year-end operating bonus to member co-ops, up 27pc on last year, you'd have to say the decision by Glanbia, in particular, is completely unjustified," said Mr Phelan.

Kerry Group's March milk is unchanged at 31c/L (vat inclusive). It said based on average March milk solids, the price return inclusive of vat and bonuses is 33.34c/L.

A spokesperson for Kerry said the base price and bonus levels are unchanged but, as always at this time of each year, the level of solids reduces with the significant increase in milk volumes as cows approach peak production.

Dairygold confirmed yesterday that its base price for March milk supplies is unchanged at 31.19c/L, based on standard constituents of 3.3pc protein and 3.6pc butterfat, inclusive of VAT and bonuses.

This equates to a farm gate milk price of 33.78c/L based on average March milk solids for all Dairygold milk suppliers, said a Dairygold spokesperson.

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