Base milk price gap stretches to €12,000

Milking parlour.
Milking parlour.
ICMSA's Gerald Quain
Louise Hogan

Louise Hogan

The divergence in prices being paid by co-ops to milk suppliers has reached "unsustainable proportions", the ICMSA has warned.

It estimates that at current prices, there would be a €12,000 annual difference in base prices between the top and bottom paying co-ops for a 350,000l supplier.

The ICMSA's Gerald Quain said all co-ops should base their milk price on paying at the minimum Ornua PPI, but some lag behind it by up to 1.5c/l, while others are ahead by 2c/l. The current PPI level is the equivalent of 32.2c/l.

Mr Quain acknowledged that the base prices did not include the various bonuses and co-op payments paid by various buyers.

Lakeland Dairies has held its milk price at 32.06c/l, inclusive of VAT and lactose bonus.

A Lakeland spokesman said: "The European Market has weakened both for skim milk powder and butter in recent weeks. This is compounded by Brexit uncertainty which is having a negative effect on European prices".

Glanbia yesterday set its February milk price at 31.5c/l, including VAT. Glanbia Ireland will pay a base price of 30c/l and an interim market payment of 1c/l, including VAT, on all February milk supplies.

Glanbia Chairman Martin Keane said Brexit uncertainty has led to short term changes in purchasing patterns.

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"Protein prices have improved, but market returns have not recovered from the reduction in butter prices over recent months. While the recent series of GDT auction results is positive, it is from a lower base and remains below the current Glanbia Ireland price. With the market based milk price currently at approximately 30 cpl, the Board will continue to monitor developments on a monthly basis”.

However, IFA National Dairy Chairman Tom Phelan today said while farmers appreciate co-op support, current market returns would justify a higher payout than Glanbia is currently returning, and GII should be able to pay a competitive base price without the need for co-op support.

Mr Phelan urged all other co-ops to reflect the firmer European and global market returns, especially for powders, and to bear in mind in their decisions the improved trend in global market prices clearly indicated by seven successive GDT auctions.

“Though EU butter prices have continued to ease, powder returns have been firming for a few months.  IFA has shown that returns from a number of EU and global indicators at the end of February would return milk prices equivalent to between 30c/l and 32.5c/l + VAT.  Indeed, even the Ornua PPI for February is equivalent to 30.55c/l + VAT,” Mr Phelan said.

“The decision by the board to cut the top up without at least an equivalent increase in the GII base is a let down for Glanbia suppliers."

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