Kerry group is slammed for holding prices

Declan O'Brien

Declan O'Brien

The ICMSA has slammed the decision by Kerry Group not to raise its milk price for April.

Kerry paid 35c/l (including VAT) for March supplies but decided against an increase for April.

ICMSA deputy president Pat McCormack described the decision as "disappointing" and accused the company of taking the "scenic route" to paying a fair price for milk.

Last year, Kerry suppliers received an end-of-year bonus payment that the company claimed was in recognition of a commitment given by its chief executive Stan McCarthy to pay the country's leading milk price.

However, Mr McCormack said Kerry's 3,900 suppliers needed to be paid the market price for milk now.

"In the present circumstances, where their own suppliers are amongst the worst affected farmers in the country by the weather and fodder crisis, Kerry should be leading from the front and not be content to make up the ground, in some fashion, at some later date. Farmers need the market price now – they never needed it more," said Mr McCormack.

Despite a drop of 7pc in last week's Fonterra auction, Mr McCormack said current trends in the market justified a milk price of 38c/l (including VAT).

He said wholesale prices for certain products were above the previous peak levels of 2007 when Irish farmers received 40c/l.

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Increase

Mr McCormack pointed out that the Dutch quotation for butter, whole milk powder (WMP), skim milk powder (SMP) and whey have increased by 18pc, 15pc, 22pc and 9pc respectively since the start of April.

He said the Irish Dairy Board (IDB) price index increased from 111 to 114.5 for March and he maintained that another substantial increase was expected for April.

The fact that butter and SMP prices in Britain had increased by 18.6pc and 16.7pc during April also supported the case for a milk price increase, Mr McCormack claimed.

"It's very clear at this stage that any recovery in milk supplies will be in the autumn period, which should mean strong prices for the remainder of 2013," Mr McCormack claimed.

This view was shared by Kevin Kiersey of the IFA. He said that a price increase of 2c/l to around 36c/l + VAT for April milk remained fully justified by market returns, and was badly needed by cash-strapped dairy farmers.

REBALANCING

"The Fonterra results earlier this week were more a rebalancing of prices than sign of a fundamental change in global market trends," he said.

"Buyers have filled their needs for the second quarter of the year, and are hoping for lower prices in the back end by gambling on greater milk supplies from New Zealand from the autumn.

"However, in coming months, with solid demand from China and Asia in particular and continued restricted supplies, it is hard to see dairy commodity prices falling significantly," Mr Kiersey maintained.

Meanwhile, ICMSA president, John Comer, has called for the €2million hardship fund announced by the IDB this week to be paid out as soon as possible.

Mr Comer also stressed that the IDB 'top-up' payment be made to farmers in a distinct fashion and not subsumed in a milk price increase already justified by developments in the marketplace.

Welcoming the IDB initiative, Mr Comer said it was "badly needed" by dairy farmers. The €2m fund is to be channelled through the co-ops to farmers.

Irish Independent


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