IFA, Glanbia divided on commodity prices

The IFA has said Glanbia’s decision to cut its milk price by 1c per litre, to 24c/l including Vat, is a serious confidence blow to Glanbia suppliers facing into an expensive winter.

The IFA said its dairy producers were particularly surprised as Glanbia’s cut comes in the same week when Kerry Group held its milk price at 26c/l, while Lakeland Dairies held its price at 26.25c/’.

Kerry’s price has been the same for September and August, while Lakeland had cut its August milk price by 0.75c/l.

IFA president Eddie Downey said: “Farmers are under tremendous cashflow pressure, and needed their price at least maintained, and both Lakeland and Kerry must be commended on holding their September milk price. All other processors must follow their lead and maintain prices.

“Glanbia shareholder suppliers legitimately expect that GII, the largest milk processor in the country, would have the scale, efficiency and product mix to pay, without co-op contributions, the most competitive milk price.”

Mr Downey said the IFA’s Glanbia suppliers were bitterly disappointed, noting that the move raises questions on the pricing model that GII is pursuing. He called on the board of GII to review their approach on milk pricing.

“Glanbia farmers are now concerned that the pricing policy adopted by Glanbia is leaving them at a significant price disadvantage to other co-ops. How can this be?” Mr Downey asked.

The monthly Ornua Purchase Price Index fell 0.6 to 90.6 in September. It was at 100 points in March, down from a high of 111 points in September 2014. A Glanbia spokesperson said its 1c/l milk price cut reflects market returns at a challenging time for global dairy prices.

“Milk price is best judged on a full-year basis rather than for one month,” said the spokesperson.

“Glanbia was ranked fourth in the Irish Farmers Journal/ KPMG milk price review for 2014 and will be well placed for 2015 relative to peers.”

Glanbia also noted that its co-op members also receive considerable support from co-op resources and have also benefited from value creation in the plc.

Meanwhile, IFA grain chairman Liam Dunne said Glanbia must also review its grain price on green barley and wheat, as markets have firmed in the last few weeks.

Mr Dunne said: “The merchant trade must support growers through another difficult financial year. Otherwise, we will see a further reduction in the sown area for 2016. Firmer grain prices of late are capable of supporting a stronger green price and this should have been reflected in yesterday’s price offer by Glanbia.”

The IFA grain chairman said independent merchants and smaller co-ops are paying from €135/t to €140/t for green barley and from €142/t to €147/t for green wheat (prices quoted are exclusive of Vat).

Glanbia’s spokesperson said the grain prices the company set this week also reflect market returns.

“A large proportion of Glanbia grain suppliers now benefit from value added contracts for their grain,” he said. “Grain suppliers that are members of Glanbia Co-Op benefit from a €5 per tonne top-up.”


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