Milk price drops up to 20c in months
The ICMSA has this week criticised co-ops citing "downward price pressure" on dairy products as the reason for cutting farmer milk price.
Farmers have experienced further cuts to milk prices this month with warnings of more to come.
Diarmaid Mac Colgáin, founder of farmer price-locking app Concept Dairy and former head of trading with dairy exporter Ornua said in terms of reduction in milk price this year, "I think there’s a little bit more to go in it", he said, but there should be "some strength in the back half of the year".
"The problem is that most Irish processors paid such high prices in November, December, January to farmers and that has created an exposure but also an expectation as well," he explained.
"When in reality, they were probably paying 10c, 15c a litre above the actual market at those points in time, they probably had profits booked from the high prices already so they were able to keep those high prices up."
The prices announced so far for April supplies are "probably still on the high side", and prices will drop by a few cents to creep closer to 30c per litre in the coming months, but should "come up again in the back half of the year".
Meanwhile, Mr Mac Colgáin added that for farmers, the problem lies with input prices "having come down internationally, but haven't been passed on to farm level yet". After historic highs in 2022, milk prices began to decline with January supplies, as processors announced cuts of up to 6c, with prices falling each month since then.
Lakeland Dairies was the first processor to announce its price for April milk supplies. With a cut of 4c per litre to the price, suppliers are receiving 38.85c per litre inclusive of Vat, for milk at 3.6% fat and 3.3% protein. The April price does include an input support payment of 1.5c per litre.
In comparison, the December milk was 58.85c, 20c higher than April, following consecutive cuts over the months. For April supplies in 2022, the Lakeland price was 50.1c, which was a 3c increase on the month before, for example.
Dairygold this week also confirmed its milk price for April supplies — 40c per litre — a 2c drop from the previous month, following larger cuts the months before. Kerry has also announced a base price for April milk supplies of 38c per litre, down 2c from March, which also follows a series of consecutive cuts.
Meanwhile, the Irish Creamery Milk Suppliers Association has criticised co-ops citing "downward price pressure" on dairy products as the reason for cutting farmer milk price, saying that they "must ensure that their own actions are not contributing to that downward pressure".
ICMSA dairy chairman Noel Murphy has also said he is "sceptical of the specification of support payments or top-ups". "We have always maintained that it is much more practical and transparent for the co-op to simply pay the highest base price it can," he said.
"Farmers want to be paid by way of maximum base milk price and they distrust the idea that co-ops can start twiddling around with that and start adding or taking away discretionary payments."
