Milk price cuts at Ornua and at co-ops
With silage stores dwindling, and bad weather damaging spring grazing, the first significant milk price cuts in several months have added to the challenges facing dairy farmers.
As usual, Glanbia, Kerry, and Lakeland Dairies have been first to announce milk prices for February, and they have cut back by one to three cents per litre.
Significantly, they coincide with a 5.6% fall in the Ornua Purchase Price Index (PPI) monthly indicator of market returns on dairy products purchased by Ornua.
The PPI is cut from 111.3 in January to 105 for February, returning to the level of April 2017, after which it rose to 116.4 last October.
But it still remains ahead of 2015 and 2016 levels.
Condemning the price cuts, IFA National Dairy Chairman Tom Phelan said, “Farmers have just lived through a horrendous long, wet and cold winter, a very late spring, topped by the most severe snow storm since 1947”.
ICMSA dairy chairman Ger Quain said milk price cuts were “a major blow to farmer confidence as we head into the peak milk production months, and shows scant regard to the challenges facing farmers like the still adverse weather conditions, fodder shortages, and increased input costs.”
The 32c February milk price (including VAT) at Glanbia Ireland, the country’s biggest milk purchaser, represents a reduction of 3c from the January price, but with a payment of 1c to reflect challenging weather conditions on Glanbia farms.
Glanbia Ireland Chairman Henry Corbally said: “As we have clearly signalled to our farmers in recent months, current market returns are significantly below our farm gate milk price.”
The board of Kerry Group has reduced its February milk price by 2c/l to 34c.
A 1c cut brings the Lakeland base milk price for February to 34.56c, which the company said is in line with overall difficult market conditions while including support to acknowledge difficult farm conditions.
IFA’s Tom Phelan acknowledged that market returns are more challenging, but said Glanbia’s bad weather bonus does not sufficiently offset the 3c cut at a time of challenging farm conditions, which he said will reduce February milk volumes.
ICMSA’s Ger Quain said the dairy farmer is consistently taking the hammering while still waiting for long-promised transparency in the food supply chain to clearly identify who benefits and gains from milk price volatility.
Meanwhile, signs of slowing global milk production growth hold out hope that Irish milk price cuts need not be too severe.
EU milk production is reported to have grown only 4% in December, down from 4.9% in the previous three months. And New Zealand milk solids are confirmed down 7.2% year-on-year in January, and down 2.7% over three months, before recent recovery due to wetter weather. Australian production is on the up, but livelier demand from China after the country’s New Year celebrations finish could boost the global dairy market.
