Milk prices must reflect input costs

DAIRY co-ops have been warned that they simply can’t ignore the fact that farm input costs, particularly for fertiliser, feed and energy, have increased substantially this year when fixing the price they pay farmers for milk supplies.

Irish Creamery Milk Suppliers Association deputy president, John O’Leary, called on the co-ops to at least maintain April prices as suppliers will not absorb a further cut in returns.

He said the ICMSA estimates that additional variable and fixed costs in 2008 at over 4 cent per litre of milk is equivalent to over €9,000 for a full year’s milk production, for a 50,000 gallon milk producer.

It should be noted that this figure does not include depreciation or the huge nitrate-related investment costs taking place on farms at the present time, he said.

Mr O’Leary said that taking account of the increased costs and the drop in milk price for April, farmer margins have been cut by about 10 cent per litre for a full year’s milk production.

He said this represents an income loss of nearly €23,000 for a 50,000 gallon producer. It is a massive reduction in income and co-ops must recognise this when setting the May milk price, he said.

Mr O’Leary said dairy markets are improving, but farmer costs have increased massively.

He called on all co-op boards to hold milk prices for May, in light of the improved market situation.


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