Dairy farmers face big losses as co-ops cut milk prices

DAIRY farmers are facing massive income losses this year as co-ops slash milk prices as a result of reduced market returns.

Glanbia, the country’s biggest milk processor, is the latest to cut the price it pays suppliers for manufacturing milk in March.

Farm leaders have criticised the price decisions by Glanbia and other co-ops on the basis that world markets are starting to turn around. But the processors insist there are no signs of a market upturn in the coming months and they have no option but to make the cuts.

Glanbia is to pay a VAT inclusive price of 21.04c/l VAT for March milk, which farmers equate to a price of 20c/l excluding VAT.

The Irish Farmers’ Association and the Irish Creamery Milk Suppliers’ Association have both called for an end to the price cuts.

Glanbia chairman Liam Herlihy said it had held the February milk price, but dairy markets remain extremely difficult.

While EU intervention had helped to stabilise the market, it had been at low levels with poor demand and high stocks creating further pressure on prices.

Mr Herlihy said Glanbia recognises that the milk price will be below the cost of production at this level. It is aware of the difficulties this price presents for its producers and their families.

Mr Herlihy said the latest milk price, while extremely difficult for producers, also leaves Glanbia’s Irish milk processing business in a potentially loss making situation. This follows a poor trading performance in Glanbia Ingredients Ireland in 2008.

“Across the group, we continue to focus on maximising production efficiencies and reducing our cost base. Unfortunately, these initiatives alone cannot deal with the sheer scale of the dairy market downturn,” he said.

IFA Dairy Committee chairman Richard Kennedy said some co-ops, most notably Glanbia and Dairygold, have hammered their suppliers by slashing prices to 20c/l, which was last paid in 1983.

He said this is totally unsustainable, as 2009 costs require a minimum price of 27c/l for farmers to break even. Dairy farmers are at the end of their tether, and are looking at massive income losses in 2009.

“Co-ops must recognise that markets have bottomed out and that milk prices to farmers must do likewise.

“This means they must make it quite clear right now that they will hold milk prices until such time as improved returns in the coming months will enable them to increase them again,” he said.


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