Fixed-price aid not my remit, minister says

Agriculture Minister Charlie McConalogue said that his department continues to monitor the market situation closely for dairy and other agri-food commodities.

Agriculture Minister Charlie McConalogue has ruled out the possibility of Government aid for dairy farmers tied into below-market value fixed-price schemes.

When asked by Sinn Féin's Matt Carthy about his proposals to support dairy farmers in fixed milk-price contracts bearing the financial burden of increased input costs, Mr McConalogue said it was “not within the remit” of his role to intervene in commercial arrangements between suppliers and purchasers.

He said his department continued to closely monitor the market situation for dairy and other agri-food commodities.

In response to the parliamentary question, Mr McConalogue said: “I am aware that the unprecedented increase in input costs is creating particular difficulties for dairy farmers who have a significant share of their milk supply locked into fixed-price contracts.

“I am pleased to see the recent move from some of the dairy co-ops, who have responded by increasing the price paid to farmers on existing fixed milk-price contracts with an additional supplementary payment in response to increasing production costs.

“I must emphasise that it is not within the remit of my role to intervene in commercial arrangements between supplier and purchasers.

“I am also aware that contractual arrangements will exist at other points of the supply chain.”

With base prices of over 50c/L being paid out for June milk supplies, there is a considerable gap for many farmers with milk tied into fixed contracts receiving prices as low as 30c/L.

This week, Lakeland Dairies said it had increased its milk price by 3c/L to pay 55.1c/L for June milk.

Kerry Group was the first processor to announce its June milk price this week, at a base price of 53.5c/L.

Revenues are strong, but bills are stronger

This comes as the Irish Creamery Milk Suppliers Association (ICMSA) recently called for 55c/L to be the “minimum” paid out by processors for June milk.

ICMSA dairy committee chairman Noel Murphy said while markets continue in a very strong position, the returns achieved at milk-processor level were still not being fully reflected in the price being paid to farmers.

“While we acknowledge that milk prices are at record levels, we also point to record high input costs, so while revenues are strong, the bills to be paid are unfortunately stronger,” Mr Murphy said.

“The co-ops must know that and that’s why it’s so important that every cent that can be returned to their suppliers is passed back.

“In our opinion this means that for milk supplied in June farmers should be paid as a minimum 55c/L.”

Mr Murphy said farmers were being “ravaged” by rocketing input costs that have been building up since the start of this year.

“Farmers have to get every cent that their milk is fetching in these continually climbing markets,” he said.

Ornua, which has offered a support scheme to its eight-member co-ops to help struggling farmers in fixed-milk-price contracts, recently appeared before the Oireachtas joint committee on agriculture, food, and the marine, where chief executive John Jordan confirmed that at the time only two co-ops had accepted the offer of support.