THE Irish Farmers Association (IFA) chairman has said the recent price cuts announced by milk processors have “effectively eliminated” the liquid milk premium paid to producers.
eith O’Boyle’s comments have after Dairygold, the Kerry Group and Lakeland Dairies slashed their milk respective prices for January.
Dairygold last week cut its milk price by 6c to 52cpl based on standard constituents of 3.3% protein and 3.6% butterfat, inclusive of sustainability and quality bonuses and VAT.
The company said the January milk price equates to an average January farm gate milk price of 64.2 cpl, based on average January milk solids.
In addition, Dairygold said in a statement, that the January early calving bonus of 3.15cpl including VAT will be paid on milk supplied in January in accordance with milk quality criteria.
“Therefore, milk supplied in January that qualifies for the early calving bonus will have a quoted milk price of 55.1cpl,” read the statement.
Dairygold warned weakened dairy market conditions will continue to impact milk price over the coming months.
“Dairy market prices have weakened considerably in recent months, caused by an increase in global milk supplies and reduced demand driven by higher inflation,” read the statement.
“The Dairygold Board will continue to monitor markets closely and review milk price on a month by month basis”.
The Dairygold cut came after both the Kerry Group and Lakeland Dairies cut the price for January milk supplies.
Kerry Group announced that its base price for January milk supplies is 50cpl, inclusive of VAT, at 3.30% protein and 3.60% fat – a cut of 6c.
Lakeland Dairies will pay 52.85cpl for January milk – a cut of 6c.
This price includes an Input Support Payment of 1.5cpl, inclusive of VAT, for all suppliers.
Lakeland Dairies had previously warned its suppliers there would be what they described as a “significant milk price correction in the coming months.”
“Dairy markets started turning towards the end of 2022 and have weakened very significantly in recent months with growth in global milk supplies continuing,” said the company.
They said high rates of inflation were affecting overall market sentiment.
“Demand has reduced, buyers have held back, exports have slowed and prices have eased considerably,” read a statement.
“This will have a continuing impact for all processors during 2023 and will continue to affect milk price, in line with weaker market conditions, over the coming months.”
Mr O’Boyle said that with autumn calvers at peak production in January, “milk price cuts of this magnitude have a profound impact on our profitability and effectively wipe out our premium.”
He said input costs for dairy farmers producing fresh milk through the winter months “remain at an all-time high” given the greater dependence on the use of concentrate feed - which is currently costing in excess of €500 per tonne.
“We simply cannot afford to take these kinds of hits to our profit margins. Without a liquid milk premium, the supply of daily fresh milk for supermarket shelves will become unsustainable,” warned Mr O’Boyle.
He said that while milk processors continue to encourage spring milk producers to produce more milk early in the year by offering ‘seasonal’ or ‘early lactation’ bonuses, these are not available to liquid milk producers.
“These bonuses must be paid to liquid milk producers with immediate effect for all the milk we produce in January, February and March. Liquid milk processors cannot expect us to take cuts of six cent per litre,” said Mr O’Boyle.
