Dairy co-ops urged to prevent ongoing milk-price slump

The country’s co-ops have been urged to arrest the fall in milk prices caused by the downturn in global dairy markets.

Glanbia, Lakeland, and Arranawn have all cut the prices they pay farmers for milk supplies. Kerry has held its price and the Dairygold board will decide today.

Lakeland has decided on a 0.75c/l cut, to bring its June price to 28c/l (including Vat), while Arrabawn set its price at 27.87c/l, a drop of 1.5c/l.

Kerry’s June price is 28c/l, while Glanbia, the country’s leading dairy processor, has announced it will pay 28c/l for June milk.

This price is inclusive of 1c/l from a 2013 Milk Price Stability Fund, which will be paid to all suppliers, and a 1c/l Glanbia Co-Operative Society support payment to its members.

Glanbia Ingredients Ireland (GII) said it had reduced the market milk price for June by 1.5 cpl, to 26 cpl.

The decisions came as the bi-monthly Global Dairy Trade auction prices fell by a massive 10.7%, for the ninth consecutive time.

Meanwhile, the world’s largest dairy producer, New Zealand’s Fonterra, yesterday announced plans to cut 523 jobs because of the tumbling dairy prices.

It said the measures would consolidate competitiveness in the global dairy market.

Irish Farmers’ Association dairy committee chairman Sean O’Leary said the logic of systematic milk-price cuts here needed to be challenged, as farmers’ margins had fallen by 78% in the last 13 months.

He said the June Ornua Price Purchasing Index (PPI) justified a milk price of 28c/l. However, co-ops needed to arrest the price slide, as the farmer could take no more, he said.

“Co-ops will have to start looking to their efficiencies, margins, and, where necessary, consolidation with other co-ops to offset the kind of market downturn which, from time to time, will be a feature of volatility,” said Mr O’Leary.

“Milk prices are down around 11 c/l since last April. That’s a 28% fall, top to bottom, but it is equivalent to a 78% cut in our margins.

This means most farmers are now in loss-making territory, with massive demands on their cash flow from superlevy and tax liabilities, repayments, and contributions to their co-ops’ development plans.”

Irish Creamery Milk Suppliers’ Association deputy president, Pat McCormack, said the Ornua PPI currently justifies a milk price to farmers in excess of 28c/l and must be recognised. Farmers are now losing money on every litre of milk that goes out the gate, said Mr O’Leary.