IFA warns against more milk cuts

Farmers simply cannot take any further milk price cuts, the IFA said yesterday.

Dairy committee chairman Sean O’Leary said farmers remain positive for the long term, but are concerned about the need for sustained profitability.

“Milk prices have fallen 11c/l in the last 13 months. From peak to today, that’s a 28% cut in prices, but over 78% cut in margin,” he said.

Mr O’Leary said Teagasc predicts production costs for 2015 at 25c/l, which does not include the remuneration of farmers’ own labour. With May Vat-inclusive milk prices of around 28c/l, the average producer margin over costs would amount to just €9,000 over a whole year’s production.

“There is no way this can remunerate the farmer’s labour and allow for the cash flow challenges of superlevy, tax liabilities and financial or share contributions to their co-op’s investment plans,” he said.

Mr O’Leary said after a few years of major investment, it is legitimate for farmers to expect that their processing co-ops would be more efficient and would, in difficult times refocus on cost-cutting and consolidation.

“Farmers will meet the challenges of the post quota era, but will legitimately expect co-op board members to live up to the co-op ethos in which the farmer does not shoulder alone the burden of poor market returns,” he said.

Calling on co-ops to hold the June milk price, IFA president Eddie Downey said dairy farmers have had enough. Further milk price cuts would leave producers in a serious loss-making situation, he said.

He added the message from the IFA’s national dairy committee was very clear: co-ops cannot bank on farmers producing milk without a margin.

Agriculture Minister Simon Coveney, replying to a Dáil question from Martin Ferris, TD, said markets have taken an unwelcome downward turn in recent times.

However, he said he was confident about the medium- to longer-term prospects for the sector, with growing global demand expected to support prices in the years ahead.

Mr Coveney said that his focus now is ensuring that the correct balance of policies and supports are in place so that the dairy sector can overcome the effects of volatility over the next while.