Ornua has boosted struggling dairy farmers with a €750,000-per-month windfall.
By suspending the milk levy it receives from Irish dairy farmers for marketing the Kerrygold brand, the former Irish Dairy Board will put €6m in the farmers’ pockets from May 1 to the end of the year.
Worth €350 per farmer, on average, in 2016, the levy-suspension recognises the challenge for dairy farmers, due to the global dairy market downturn.
The Ornua board will reconsider the suspension, when the Ornua Purchase Price Index returns to 103 (equivalent to 30.5c per litre for milk) for three consecutive months. The index is currently at 84.2 (equivalent to 23.7c/l).
It reflects market returns on dairy products sold by Ornua, and has fallen from a high of 135.1, in February, 2014.
IFA National Dairy Committee chairman, Sean O’Leary, welcomed the decision to suspend the 0.14c/l levy on dairy farmers, when their cash flow is pressured by low milk prices, bad weather, high feed bills, and superlevy repayments.
He urged co-ops to continue supporting milk prices.
Meanwhile, the EU milk market hit a new obstacle last week, as intervention-buying for skimmed milk powder was put on hold, having reached a pre-arranged ceiling.
The European Commission formally proposed doubling intervention volumes, at the EU Farm Council meeting on Monday, but it is now up to the Council of Agriculture Ministers to approve this proposal.
In the meantime, a tendering system applies, but Agriculture Commissioner, Phil Hogan, said the commission was committed to running any tender responsibly, and, in a way, that helps the market and doesn’t depress prices.
Also going through the EU legislative process is the new, voluntary supply-management provision, which allows dairy groups to reduce milk production for up to six months, to achieve a better market balance
It was revealed at the EU Farm Council meeting, on Monday, that Lithuanian dairy farmers were the hardest hit in the EU by global dairy markets, and were now paid only 22c per litre, or only 9c for small-scale milk producers.
At the other side of the world, New Zealand’s Fonterra Co-op has reduced the forecast milk price to its lowest level since 2006.
Despite the slump, Fonterra proposes building two, new, coal-fired milk dryers at its Studholme site, in south Canterbury: one in the next five years and another in the next decade.
It is part of a strategy to meet forecast milk production growth of 4%-5% per year.
Environmentalists are objecting to the plan, saying the local area would have to increase its dairy herd by nearly one million cows, with the same environmental impact as a city of 9.6m people.
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