Glanbia under fire as it cuts base price to 29c/l
Glanbia's move to cut its milk price to under 30c/l has been described as 'unwarranted' and a 'knee-jerk' decision.
Glanbia will pay its member milk suppliers 29.5c/l (including VAT) for July manufacturing milk supplies.
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Glanbia Ireland (GI) will pay a base milk price for July of 29c/l including VAT for manufacturing milk at 3.6pc fat and 3.3pc protein. This is a reduction of 1c/l from the June base price.
The board of Glanbia Co-op has decided to continue to make a support payment to members of 0.5c/l including VAT for July milk supplies.
Glanbia chairman Martin Keane said the milk price for July has been adjusted due to weaker dairy market returns, particularly for butter.
"While milk production in key regions such as the US and the EU is at lower levels than last year, demand for some dairy products is subdued in a number of markets," he said.
"The board will continue to monitor developments on a monthly basis. Suppliers should note that current milk prices do not fully reflect the weaker dairy market," Mr Keane cautioned.
The chairperson of ICMSA's dairy committee, Ger Quain, said that the Glanbia decision was unwarranted and represented "the usual default response of our co-ops and processors: when in doubt; cut farmer milk price".
Mr Quain said that by Glanbia's own admission, production in several key regions was down on corresponding levels last year and that while there may be some questions about market confidence and current levels of uncertainty, the decisive supply-demand data was still fundamentally sound.
Mr Quain said ICMSA could not accept the rationale advanced to justify a cut of one cent per litre.
"We think this is just a kneejerk and unwarranted price cut and we do not - and never will - follow the logic of cutting base milk price and then artificially restoring some of that cut by some discretionary 'support' payment. Glanbia suppliers will be infuriated - and they've every right to be," said Mr Quain.
IFA dairy chairman Tom Phelan said he was disappointed that Glanbia has cut its milk price.
"Global supplies for the first half of the year are down and we expected Glanbia to hold its price, at the very least. Despite the Ornua PPI dropping 0.6c/l, the gap between the Ornua PPI and the Glanbia base price has now widened."
Global dairy prices fell at the most recent Global Dairy Trade (GDT) auction, dragged down by rising supply.
The GDT Price Index dipped 2.6pc, having risen 2.7pc at the previous sale.
The volume of product sold soared on the back of an increased supply from the world's largest dairy exporter, New Zealand.
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