Glanbia cuts milk price by 3c/L amid warnings of 'market oversupply'
Glanbia Ireland was first out of the blocks to cut the milk price for February, amid warnings of an oversupply in the marketplace.
The Kilkenny-based processor moved to cut its price by 3c/l from January levels. It will pay milk suppliers 32c/l including VAT for February at 3.6pc butterfat and 3.3pc protein.
However, it will also include a ‘special support payment’ of 1c/l to reflect “the tough Spring” and “challenging” conditions on farms.
It also follows the Global Dairy Trade prices slipped for the second time in a row.
Ahead of the board meeting, Glanbia Ireland’s Jim Bergin warned at the launch of the revamped Wexford cheese plant that there was an “oversupply situation”.
“Today, markets are trading considerably below the milk price, so therefore we will have to address that,” he added.
“Farmers should stress test their budgets at 28c/l. There has been a little bit of an improvement at the lower end but the last two GDPs have gone backwards.”
Glanbia Ireland chair Henry Corbally said they had signalled to farmers that returns were below farm gate prices and this move reflected “that reality”. He said the support payment would be made and it would continue to monitor developments on a monthly basis.
Farmers supplying fixed milk price schemes will also get the support payment, while it will pay the 20c/l on milk volumes lost to Storm Emma where they are not covered by insurance.
Mr Corbally said a significant number would qualify for the seasonality bonus of 4.25c/l including VAT on February supplies where they must supply a minimum of 3pc of their annual supply in February and less than 15pc in June.
The Chairperson of ICMSA’s Dairy Committee, Gerald Quain, said that he was very disappointed that Glanbia had decided to cut it February milk price by 3c/L and stated that their decision to cut by such a significant amount stood in sharp contrast to their ‘low and slow’ policy of price rises when the dairy markets were strengthening and surging.
Mr Quain also said that the 1c/L adverse weather bonus should be part of the milk price and not classed as a bonus, he said that the February payment was the first decent milk cheque of the year for most farmers and the Glanbia decision represented a significant blow to farmer confidence as they headed in Q2 and peak production months.
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