Farm Ireland
Independent.ie

Wednesday 24 April 2019

'Completely unjustified' - Milk price cut a 'big blow' to farmers

  • Kerry Group: unchanged at 31c/L
  • Glanbia: 30.5c/L down 1c/L on its February price
  • Lakeland Dairies: 31.56c/L cut of 0.5c/L on February price
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Ciaran Moran

Ciaran Moran

Farmers have reacted with anger over the decision of Glanbia and Lakeland to cut their respective milk price.

IFA’s Dairy Chairman Tom Phelan said the decision was a big blow for farmers.

He said “the decision by both co-ops was unwarranted. Cash flow on dairy farms is critical at this time of the year, with farmers facing increased costs of production across the board.”

“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 Tom Phelan.

Glanbia announced that it will pay 30.5c/L for March milk supplies - down 1c/L on its February price.

Glanbia will pay its Member milk suppliers 30.5c/L including VAT for March manufacturing milk supplies and it won't include the 1c/L interim market payment it paid on January and February supplies.

The move 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.

In a statement it said that "in line with current market returns, Glanbia Ireland (GI) will pay a base milk price for March of 30c/L including VAT, for manufacturing milk at 3.6pc fat and 3.3pc protein.

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"The interim market payment of 1c/L that was paid by Glanbia Ireland on January and February milk supplies will not be paid for March."

However, the Board of Glanbia Co-op has decided to make a support payment to members of 0.5c/L including VAT.

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

"Butter prices have weakened and the market is currently working through the large volume of intervention powder stocks that were purchased late last year. The Board will continue to monitor developments on a monthly basis."

Lakeland Dairies announced it would pay 31.56c/L (including VAT and the Lactose bonus) March milk.

This represents a cut of 0.5c/L on the February price. Commenting on the price, the Co-op said: “There continues to be weakness in the European markets, especially for butters and powders, driven by the considerable uncertainty around Brexit. There are persistently high volumes of dairy products in storage across Europe while the fluctuations in the euro – sterling exchange rates are a significant contributing factor at present.

Kerry Group has set his base price for March milk supplies is unchanged at 31c/L vat inclusive. It says 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 today that its base price for March milk supplies, based on standard constituents of 3.3pc protein and 3.6pc butterfat, inclusive of VAT and bonuses is 31.19c/L, unchanged on the February milk price.

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

Online Editors