Farm Ireland

Tuesday 20 February 2018

Dairygold follow Glanbia and Kerry with milk price cut

Nervousness has crept into the dairy sector.
Nervousness has crept into the dairy sector.
Declan O'Brien

Declan O'Brien

Dairygold has cut its milk price by 2c/l to 35c/l for July supplies. The move means that Aurivo is paying the leading manufacturing milk price following its decision last week to hold at 37c/l for the month.

Glanbia and Kerry moved to 35c/l for July supplies early last week, while Lakeland Dairies are quoting a price of 36c/l.

Although Dairygold's decision to drop to 35c/l had been well flagged, it will have still come as a disappointment to the co-op's 3,000 milk suppliers.

The ICMSA has estimated that the milk price reductions will cost dairy farmers €140m for 2014 on the basis that there will be no further reductions in milk price for the rest of the year.

The association's deputy president, Pat McCormack, pointed out that the fall in milk price from 39cpl to 35cpl over the last quarter has cost the average milk producer of 300,000 litres close to €1,200 for the month of July alone. This followed a loss of €600 for the June and May milk cheques, Mr McCormack pointed out.

However, Mr McCormack insisted that there were positives in the market feedback at the moment.

"Given that we are in the August period, the last Global Dairy Trade auction is surprising in that it sold the second highest volume of product since January and also had the largest number of buyers, it strongly suggests that demand for dairy products remain strong," Mr McCormack said.

He pointed out that with EU and regions like China moving into their quiet production periods, it was essential that "hasty decisions" were not taken.

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"Dairy farmers expect that the Irish Dairy Board and processors with their strong profits in 2013 and in the first half of 2014, along with their considerable investments in value added, will be in a position to pay Irish farmers a strong price. Also, to demonstrate clearly that they have the financial and marketing capability to deal with volatility in advance of quota abolition and their drive to get their suppliers to produce more milk," Mr McCormack said. "Farmers expect that their marketing and processing arms can demonstrate their volatility plans over the coming months and not simply pass back the pain to farmers who have already seen €60m taken out of their pockets this year," Mr McCormack added.

Meanwhile, dairy farmers look set for a record superlevy fine next year after the the Department of Agriculture confirmed that Ireland was 6.79pc over quota to the end of July.

In July 2013 the country was just 1.44pc over quota. Estimated butterfat-adjusted deliveries in July were 683,305,079 litres compared to 653,221,857 litres in 2013.

Staying with the milk quota issue, Lakelands, Kerry and Glanbia have all confirmed that they have no specific plans in place with regard possible superlevy fines next spring.

Their position is in contrast to that of Dairygold, who are to introduce a phased payment scheme to help its suppliers with potential bills.

The scheme will see 15c/l of the 28.65c/l fine paid by April 2015, with the balance 
being made in 10 instalments between April 2015 and September 2016.

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