Farmers advised to ‘fix‘ milk prices

The Irish Dairy Board expects to return 24-26 cent per litre milk price equivalent to processors for the first half of 2015.
Farmers advised to ‘fix‘ milk prices

Yesterday, Teagasc predicted an average Irish milk price in 2015 of 27c, compared to 37.6c this year.

But the worst of the price slump may be over by the third quarter of 2015, and longer term prospects for the industry are very positive, said Irish Dairy Board Global Marketing and Innovation Director Fergal McGarry, at last weekend’s ICMSA AGM.

On top of a possible milk price decline of over 30%, compared to 2014, a super levy fine in excess of €100m threatens dairy farmers.

Agriculture Minister Simon Coveney told the ICMSA delegates that low milk price is likely to be an issue at least one in five years, and farmers should consider three to five-year price fixing to level their incomes.

He also urged them to negotiate with their bankers for repayments directly related to milk price, “paying more when milk prices are good, because there is no reason why you should not have it”.

While ruling out a ‘soft landing’ when milk quota end on March 31, he said some measure of phased payment should be considered for the potentially serious super levy.

He also said that the current EU dairy intervention prices are too low.

ICMSA President John Comer said, “Volatility is the nightmare word for farmers today, and 2015 already looks set to test us all, but it sets a particular test for our politicians at national and EU level.

“We have seen the damage that poor prices in 2009 and 2012 did to individual farm families. The EU has responsibilities on this matter that it cannot ignore.

“Minister, dairy farmers will play their role in addressing volatility, but you and your colleagues at national and EU level need to step up and address this issue. It will not go away”.

He said the intervention price of 20 cent per litre equivalent for butter and skim milk powder must be raised to a realistic level, and export refunds are required, along with strategic use of Aids to Private Storage when peak milk production begins from April.

He said the cost of farm inputs has become an issue for many farmers.

“In the five years between 2008 and 2012, farm inputs costs have increased by 41%, while farm overhead costs increased by 18%.

“In the year to September 2014, our output prices have fallen by 11.6% while our input prices have only fallen by 3.5%.

“This price cost squeeze is simply not sustainable, and must be addressed by policymakers. Across all inputs, we need to look at the regulations and barriers to competition and remove them where possible. There’s a job for the Competition Commission, whenever it’s finished holding Meat Industry Ireland’s hand. If farmers are going to be forced to operate on global markets, we need access to inputs at global prices.”

On the basic payment and greening, Mr Comer said, “Minister, I believe that the Department knows at this stage plus or minus 5% what each farmer is going to get, and farmers deserve to be informed by letter.”

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