IFA urges dairy co-ops to hold the line on spring milk prices
IFA national dairy chairman Seán O’Leary said that while current returns remained weak, they were now improving as the global dairy market recovery is under way. He said farmers need the industry to hold the line, despite the slight easing of the Irish Dairy Board index for January.
“There are two main reasons why co-ops can, and must, hold their prices for the next two months,” said Mr O’Leary. “First, international markets have started on what all agree is a real recovery. Second, farmers are set to live through a very difficult number of months in 2015, during which low prices, tax bills and superlevy fines will erode cashflow and challenge their ability to deliver on the expansion the industry needs to justify its significant investment.”
Milk output has slowed dramatically in New Zealand as a result of lower profitability and drought, and impacted volumes put through the GDT auctions, resulting in an average price increase of 17% in the last four events.
Some of the main product prices have increased much more significantly, with butter prices up 50% and WMP 29% since November and December last. In the EU, also, output growth has moderated due to low profitability and superlevy, and dairy commodity prices have also started to firm, the IFA dairy leader added.
Mr O’Leary noted that receiving the strongest milk price possible, along with efficiencies and value added, would persuade farmers to sign up to Milk Supply Agreements and remain with their co-op.
AIB’s submission to the Oireachtas signalled its intention to offer investment funding to all efficient, profitable farmers expanding in the dairy sector. The bank noted, despite the short-term challenges facing the sector, the long-term predictions look far stronger.
“AIB maintains a strong positive long-term outlook for the dairy sector and we are very comfortable to support investment in the sector,” the bank stated. “Furthermore, our experience of this sector has been positive with dairying experiencing substantially lower levels of credit difficulties than other SME sectors.”
Meanwhile, UK Farming Minister George Eustice has promised dairy farmers in Britain a new industry-led group will look at what more could be done to strengthen the dairy code of practice, and consider a futures market in dairy products.
Mr Eustice added: “We want a competitive and resilient dairy industry that can take advantage of the growing demand for British produce. We clarified the range of support available for dairy farmers.
“Representatives from UK banks outlined the help they are providing, and we have asked HMRC to take a sympathetic stance. We have also asked the Rural Payments Agency to prioritise dairy farmers when administering farm payments.”
