Co-ops urged to hold June’s milk price

Dairy farmers are retaining some hope of a profitable 2012 following this week’s decision by Glanbia to hold its June milk price at 28.5c per litre, including Vat.

Kevin Kiersey, the IFA national dairy committee chairman, urged all co-ops to follow the example set by Glanbia, a move which may yet rebuild confidence in what is seen as an important year in terms of on-farm investment in the build-up to the end of the EU’s milk quota restrictions in 2015.

Mr Kiersey said quotes for butter from the main European trading agencies for this week are also up.

“Whole milk powder prices have held, while whey powder prices have slipped slightly.

“However, coupled with stable cheddar prices, and allowing for a slight further weakening of the euro against sterling in recent days, returns from cheddar plus whey powder are stable to slightly up.

“By comparison with late May — the lowest price ebb in 2011/12 — butter/SMP gross returns have lifted by around 3c per litre during the month of June.

This continued trend has already narrowed considerably the gap between net market returns and producer milk prices, and co-ops should have no hesitation in declaring an end to milk price cuts for 2012.”

Mr Kiersey said that while Glanbia had rightly emphasised the impact of the bad weather on production costs as one of the reasons to hold milk prices, the fact that commodity prices were continuing to recover was an important factor which should give co-ops confidence to call a halt to milk price cuts.

In terms of its own expansion plans, Glanbia is discussing with its members a proposed supply agreement applicable from the end of EU quotas on Apr 1, 2015. One element of this involves a contribution of 2c per litre on forecasted growth milk volumes for five years from 2015.

Glanbia suppliers’ EU quota will be replaced by a contract between each supplier and Glanbia Dairy Ingredients Ireland. Each supplier will be allocated a volume of core milk, based on the higher of their EU quota or actual supply over a three-year reference period up to Apr 2011.

Glanbia’s board is also meeting with its members to discuss this proposal, and the related proposal of the co-op acting as majority member in driving post- 2015 expanded processing plans. Glanbia said it is in talks with its members in regards to these proposals.

Meanwhile, dairy farmers nationally are still waiting for the other creameries to issue their June milk price.

The four West Cork co-ops are currently at around 31c per litre, with Lakelands just behind on around 30c per litre.

ICMSA deputy president and dairy chairman Pat McCormack said that Glanbia’s decision to hold its milk price at 28.5c per litre for June was the least it could do, given that this price was already markedly lower than other co-ops.

He said: “Farmers are still very resentful over Glanbia’s severe price cut in May.

“They are already 2.5c per litre off the West Cork price for May. We are urging the other co-op boards to hold their current price, and we want them to take the weather into account.

“They are all farmers themselves and they understand the cost implications of this weather.”