With Ireland 7.15% over quota at the start of November, and no milk processor under quota, leaving very little flexi-milk, ICOS has warned that a certain superlevy bill of up to €100 million, and the cash-flow hit of falling prices, will put enormous strain on many farmers.
“Many over-quota farmers will receive no milk cheque until next summer, and those cheques will be well behind those received this year,” said an ICOS spokeserson.
One of the worst affected co-ops, Lakeland Dairies, was 9.5% over quota entering November, facing a bill of about €10.3m. But farmers also face a possible cash flow hit of €600m across the coming milk production season, according to ICOS. That would be the impact of a feared 10c milk price cut, compared to 2014.
ICOS has two priorities — to work with Minister Coveney to win political support in Brussels for measures to alleviate current dairy market difficulties, and to prepare and help dairy farmers through “an impending cash flow crisis of enormous proportions”.
According to ICOS, many farmers have used the strong cash flow in the past year or so to fund expansion. “They’ll, therefore, have a large tax bill to pay next autumn. The picture isn’t a pretty one. Co-ops will, as always, carry a large part of the burden, but this is not the answer. They need cash to fund their operations. They need to be profitable to help farmers to benefit from premium markets. They mustn’t sacrifice their balance sheets, just when investment in marketing and innovation is most needed.”
“There is a responsibility on the banks to help farmers through this cash-flow problem. Remember, markets will recover, and milk prices will rise again, but price volatility will be a recurrent phenomenon and we must help suppliers to deal with it.”
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