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ICMSA call for political action as milk prices cut again

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Processors said the reduction in prices was a reflection of the ongoing weakness of global dairy markets

Processors said the reduction in prices was a reflection of the ongoing weakness of global dairy markets

Processors said the reduction in prices was a reflection of the ongoing weakness of global dairy markets

Milk prices have taken another hit this month, with processors cutting their October quotes by between 1.5c/l and 2c/l.

Aurivo cut its milk price by 2c/l and is now on a base price of 30.5c/l. Meanwhile, Town of Monaghan Co-op and Lakeland Dairies both dropped their base price by 1.5c/l and are now on 31.5c/l for October.

Kerry is holding at 32c/l, while Dairygold's board is due to meet today to set the co-op's October price.

Processors said the reduction in prices was a reflection of the ongoing weakness of global dairy markets.

"Buyers are standing back at the moment because they know there is plenty of product coming on stream and prices will probably fall further," one industry source said.

The overall downturn in the trade was further highlighted by the Irish Dairy Board's (IDB) quotes for October.

The board's price for butter was back €50/t to €2,850/t, while skim milk powder (SMP) was down €200/t to €2,000/t. IDB quotes for both products have fallen €1,150/t since the start of 2014.

Commenting on the price reductions, ICMSA deputy president, Pat McCormack, said a "political intervention" was now more pressing requirement than ever.

Mr McCormack said that based on the falls experienced this year of anywhere between 8.5c/l and 9c/l, he estimated that an average 280,000l supplier would experience a drop in income on a full year basis of approximately €23,800.

He pointed out that this loss of almost a third of milk price will be accompanied by substantial superlevy fines next year. Mr McCormack said action by the EU commission, and the new commissioner Phil Hogan, was needed to prevent major difficulties in the sector next spring.

"We've arranged a meeting with Commissioner Hogan in the next few weeks and we'll be stressing that market volatility and price supports are going to have to be addressed as an absolute priority if we're going to avoid the kind of income shock that will rock the post-quota system to its foundations before it's even had the chance to get properly going."

IFA dairy committee chairman Sean O'Leary said that after record cuts of up to 3c/l on September milk supplies, the onus was on co-ops to hold prices at current levels.

"Irish milk purchasers have the unenviable record of paying the lowest price in the September European milk price league produced by Dutch farm organisation LTO," he said.

"The LTO league average is 37.47c/kg (38.6c/litre before VAT). Even allowing for the lower EU October average gross market returns of 35c/l to 36c/l and the fall in the IDB index to 102.8, an Irish price of around 32c/l including VAT is justified," Mr O'Leary said.

"Many processors expect farmers not only to produce consistently more milk to utilise the extra capacity from next spring, but also to make a significant financial contribution towards the financing of its building and commissioning," he said.

"This may prove more challenging than expected, at least over the short to medium term. It will be critical for co-ops to support dairy farmers through this process," Mr O'Leary insisted.

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