A lift in global dairy product returns has led to milk producers in Ireland calling on processors here to hold the price they will pay for August supplies.
Kerry Group has already decided to hold the August price at 26c/litre but Lakeland Dairies has cut its base price for the month by 0.75c/litre to 26.25c/litre.
The moves coincided with a 16.5% lift in the latest Global Dairy Trade index, the third consecutive increase since the middle of August.
Previously, there had been 10 successive drops in the auction price since March.
Now, dairy farmers who are coping with falling returns, are urging the other co-op board members who will be meeting over the coming days to maintain the milk price.
IFA Dairy Committee chairman Sean O’Leary said the positive trend now being seen in most EU and international market indicators, should give comfort to co-op boards that the global market sentiment is changing for the better, and with it the medium-term outlook for milk prices.
“I urge co-ops to continue supporting milk prices, at a time when farmers are more vulnerable than ever, having seen over 93% of their margin disappear in the last 18 months.
“With milk prices either at or below production costs, cash flow pressures from superlevy, tax and credit repayment liabilities are intense on all dairy farms,” he said.
Mr O’Leary said the IFA urged all co-op chairmen last month to do a root-and- branch review of all their business processes.
It had called on them to identify savings, and to plan on how to deliver those, through co-operation and consolidation including mergers.
“We also asked that every co-op chairman would report on the outcome of this exercise to their shareholders by year end. This exercise should have absolute priority, so farmers can be confident of the future competitiveness of their co-op and its ability to pay the strongest milk price possible now and for the longer term,” he said.
Irish Creamery Milk Suppliers Association deputy president Pat McCormack accused some co-ops of “overstepping the mark” in terms of milk-price reductions.
Dairy markets have shown some signs of improvements recently.
“Dairy farmers have seen their milk prices slashed over the last 12 months and, while they understand the weakness in the market, they are very clearly now asking whether their processor have imposed cuts beyond those justified by the marketplace and overstepped the mark,” he said.
Any co-ops boards that pays less than 26.9c/litre for August milk is going to have to explain to their suppliers exactly how they’re arriving at their milk price, he said.
Data from Europe’s Milk Market Observatory shows milk price declines in Ireland for July were among the worst in the EU.
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