Glanbia price cut ‘brings milk price perilously close to production costs’
The Cork-based farmer said the co-op’s September cheque represented a sizeable amount of milk for Glanbia’s suppliers. He urged other co-ops to be more judicious in their September milk price decisions, noting that no co-op was offering fixed price contracts to farmers, and that few had the type of non-core resources Glanbia was proposing to use to mitigate price cuts.
“While the Glanbia Co-op commitment to pay 0.5c/l on all 2014 milk supplies, said to be equivalent to the value of the cut to year-end, will undoubtedly be of value to producers, it will still leave them starting the new spring season with a base milk price uncomfortably close to production costs — indeed, in excess of them for many farmers,” said Mr O’Leary.
The IFA dairy leader described Glanbia’s 30.5c/l, incl Vat, as an anticipation of where market returns may go in coming weeks rather than an actual reflection of September returns. He urged Agriculture Minister Simon Coveney to obtain additional market support measures to help turn around the current negative global sentiment.
“The IDB PPI index for September, at 110.2 points, is equivalent to a milk price of 33.9c/l incl Vat — 3.4c/l more than the new September Glanbia price,” said Mr O’Leary.
“Teagasc’s National Farm Survey showed that 2013 milk production costs were over 27 c/l, and 2014 costs would not be very different from those levels. A milk price only a few cents per litre above that would not remunerate the farmer’s own labour, never mind allowing him to make the kind of investment on farms or within the sector, which is being expected of him to deliver on the growth targeted under Food Harvest 2020, and needed to justify the processing investment made by Glanbia and other co-ops.”
The IFA is urging Mr Coveney to work with like-minded colleagues to urge the EU Commission to announce its intention to revalue the “safety net” level of dairy intervention price to reflect increased production costs.
