Milk price cut despite Ornua stability

Dairy farmers have condemned co-ops for cutting June milk prices, despite stable pricing at Ornua, the major buyer of Irish dairy produce.

Most June prices were decided before co-ops could digest the implications of the EU’s new scheme to cut milk production, announced alongside the extension of the EU’s intervention programme until next March, which will help soak up skimmed milk powdeproduction surplus to market requirements.

Steady prices in Tuesday’s Global Dairy Trade auction help to substantiate farmers’ claims June milk price cuts were unwarranted.

However, some market analysts expressed concern at “flat-lining” in a recent series of “moribund” GlobalDairyTrade auctions, despite a slowdown in the EU’s booming milk output.

EU milk production was only 1% ahead in April, year-on-year, which is the lowest rate of increase since early 2015.

IFA national dairy chairman Sean O’Leary said suppliers to Glanbia and Lakeland will see a 1c/l price cut for their June milk, compared to May.

However, he noted the Kerry decision to hold the milk price unchanged.

“Farmers are now receiving unsustainable milk prices which fall well below production costs, and they are being starved of cash flow,” said Mr O’Leary.

“With the Ornua PPI now stabilised at 81 points for June, and EU market returns firming for the last nine weeks, I believe now is the time for co-ops, who have supported farmers, to have the confidence to make a solid milk price commitment,” he said.

“This must be, as a minimum, about taking a lead from Drinagh Co-op, and holding current pay-outs to year end, and exploring every opportunity over the coming months to achieve efficiencies and pass back improving market returns to farmers.”

“EU dairy prices for the last two months have increased very substantially, with butter not far off 20% up, WMP 13%, whey powder nearly 16% up.

“Even SMP, which has been under greatest pressure in the last 18 months, has seen prices recover by 5%, admittedly still just above intervention equivalent.”

“By our calculations, a representative gross return for an Irish product mix is, using the EU MMO figures for July 10, 28.6c/l before processing costs. This would be equivalent to a farmer milk price of 23.6c/l plus VAT, or 24.83c/l including VAT,” he said.

Gerald Quain, Chairperson of ICMSA’s Dairy Committee, said the Ornua PPI index is returning 22.5 cents per litre for June based on a processing cost of 6.5 cents per litre, and any co-op paying less than 23 cpl is demonstrably underpaying their farmers.

The Glanbia milk price for Glanbia Co-op members has fallen from 23 cpl for May milk to 22 cpl for June milk.

It continues to include 2cpl of support from Glanbia Co-op, but the 1 cpl once-off bonus from Glanbia Ingredients in May has now been dropped.

Glanbia Chairman Henry Corbally, said recent weeks have seen a tentative recovery — albeit from a very low level — in prices for some dairy products.

He reminded suppliers they have until July 29 to return the application forms for the Glanbia advance payment scheme of interest-free cash flow support in periods when milk prices are weak.

  • Meanwhile, the Irish Farmers Journal/KPMG milk price review for 2015 has shown that the four West Cork co-ops in the Carbery group paid the best net milk price paid, ranging from 30.27 cpl at Drinagh to 31.21c at Barryroe.

Next, at 29.74c, came Glanbia, the biggest milk buyer in the country.

Prices at other co-ops in the Milk Price Review ranged from 27.82c at Lakeland to 29.3c at Tipperary.


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