ICMSA calls on milk processors to follow Kerry example and hold price
He said Kerry were providing the kind of leadership and commitment to suppliers that the entire sector could learn from.
“Kerry does not make decisions like this on the basis of sentiment, they obviously agree with our own analysis that shows that the market has levelled off with some indicators actually improving,” said Mr McCormack.
“There’s also the fact that there has been a demonstrable lag in both the scale and timing of price rises from processors to farmers that means that sufficient reserves were built up at co-op and processor level to enable them to hold prices in these circumstances.”
The ICMSA’s dairy chairman said the Kerry approach gave the kind of backing dairy farmers need as the sector prepares to expand. He said other co-ops were still wedded to the old model of “low and slow” rises on a strong market to be followed by instant and hefty cuts at the very first opportunity.
“The Kerry decision is a plain and simple recognition that markets are in a better state than has been stated by other processors,” said Mr McCormack.
“This decision represents the kind of commitment to suppliers that farmers need going forward into the post-quota era because it shows a major processor making a decision on the basis of stability and a rational view of the medium- to long-term prospects.”
Meanwhile, IFA national dairy committee chairman Seán O’Leary said the decision by Glanbia Ingredients Ireland (GIIL) to cut their May milk price by 2c per litre was disappointing.
While accepting that market prices had declined, Mr O’Leary reminded other co-ops that they had benefited from strong accumulated profits for 2013.
“They have also received €13m worth of dividends and bonuses from the IDB in respect of 2013 trading,” said Mr O’Leary. “EU average dairy returns throughout May exceeded 42c per litre, which would have allowed co-ops to cover processing costs while holding current milk prices.”
