Milk price setting co-ops ‘must make a commitment to farmers’
Dairy Committee chairman Sean O’Leary said Glanbia and other early milk price setters will decide on their September milk price in the coming days.
He said these co-ops have a major influence on price setting, and therefore farmer confidence. With that influence comes a heavy responsibility at a time when farmers are transitioning into the post-quota era.
Farmers will require milk prices north of 30c/l to allow them cover costs and remunerate their own labour, with more needed to allow for necessary growth investment.
“If the questions I got from dairy farmers at the National Ploughing Championships were anything to go by, the level of price for next spring is their top concern,” he said.
Mr O’Leary said with costs of around 27c/l for 2013, according to Teagasc, and international evidence confirming that milk is getting dearer to produce, prices will have to trend higher for production growth to be sustainable.
Long-term market trends remain positive, with even stronger demand growth of 3.6% per annum for the next decade being predicted.
“In the short term, while we appreciate that global market imbalance exacerbated by the knock-on effect of the Russian ban has put major pressure on spot and average commodity returns, it is vital that co-ops would demonstrate the value of the quality markets and contracts they have told us they have developed and made a strong commitment to in recent years.
“This commitment, which saw those customers benefit from lower prices when spots and averages were on the rise, must now come into play. It is crucial that co-ops would make every effort to pay the highest possible milk prices well into next spring, and ensure that farmers can at the very minimum break even for the duration of this temporary market turbulence.
“This is the single most important decision co-ops can take to protect farmer confidence, and ultimately secure the long-term future of the dairy sector,” he said.
