IFA tells co-ops to cut costs, not prices

DAIRY co-ops were warned yesterday they will have no future if they insist on slashing the milk price they pay farmers.

Irish Farmers' Association (IFA) president John Dillon predicted that thousands of producers will be driven out of the sector and there will be no dairy industry if the price cuts are not halted.

His warning came as an estimated 1,500 dairy farmers protested outside Glanbia headquarters in Kilkenny against the group's decision to cut the milk price by 4 cent per gallon.

According to the IFA, the cut will cost a 60,000-gallon producer €2,400 per year, a 12% income drop, and is worth €13.2 million to Glanbia. It claimed that since a 2001 peak, Glanbia has cut milk prices by 18c/gal, slashing suppliers' incomes by 40%, before rising costs are taken into account.

However, Glanbia said the cuts are a result of reductions in EU supports of about 8c/gal, arising from implementing the Common Agricultural Policy (CAP) mid-term review.

"Glanbia is very conscious of the effect of the milk price cuts and continues to focus on maximising returns from the market place by adding value wherever possible while reducing costs through efficient plant utilisation," it said.

Stressing that cutting prices is no longer an option, Mr Dillon said the industry had to get rid of its price-cutting mentality. "If the co-ops think they can keep cutting prices and farmers will keep producing milk, they are wrong. If PLCs use lower milk prices to prop up their bottom line, they will end up short of milk."

Mr Dillon warned the co-ops that farmers cannot take the full hit of the CAP reform and said processors must share the pain.

"The co-ops still have plenty of inefficiencies and duplication. We are sending a strong message to Glanbia and all the co-ops stop cutting our prices and start cutting costs".