Irish farmers respond to co-ops’ milk price cuts

Over the last couple of weeks the Irish Farmers’ Association has been campaigning for co-ops to hold milk prices

The Irish Farmers’ Association (IFA) has criticised two dairy co-ops for cutting their milk prices.

Over the last couple of weeks IFA has been campaigning for co-ops to hold milk prices. But on 12 April Glanbia Ireland (GI) announced it would pay a base milk price for March of 30cpl including VAT, for manufacturing milk at 3.6% fat and 3.3% protein. The co-op confirmed the market payment of 1cpl that was paid by Glanbia Ireland on January and February milk supplies would not be paid for March.

And the board of Glanbia Co-op has decided to make a support payment to members of 0.5cpl including VAT.

All these Glanbia payments will be adjusted to reflect the actual constituents of milk delivered by suppliers.

Glanbia chair Martin Keane said: “Glanbia Ireland has maintained its base price of 30cpl to reflect current market returns. While global milk supply growth is lower than previous years and oil prices have increased, market demand in some regions is being adversely affected by challenges that include lower economic growth, Brexit and trade wars.

“Butter prices have weakened and the market is currently working through the large volume of intervention powder stocks that were purchased late last year. The board will continue to monitor developments on a monthly basis.”

Lakeland Dairies co-op also announced a price of 31.56cpl including VAT and the lactose bonus for milk supplied in March, a realignment of 0.5cpl on the February price. Northern Irish farmer suppliers will receive a price of 25.25cpl for milk supplied in March.

A spokesperson for the co-op said: “There continues to be weakness in the European markets, especially for butters and powders, driven by the considerable uncertainty around Brexit. There are persistently high volumes of dairy products in storage across Europe while the fluctuations in the euro – sterling exchange rates are a significant contributing factor at present.

“Separately, the Global Dairy Trade (GDT) in New Zealand has been a positive, albeit from a lower base, and the society will continue to monitor the markets closely in order to return the highest possible price to our farmers in line with market returns.”

In a statement on 12 April, IFA Dairy chair Tom Phelan said the decision of Glanbia and Lakeland to cut prices was a “big blog” for farmers.

“Today’s decision by both co-ops is unwarranted. Cash flow on dairy farms is critical at this time of the year, with farmers facing increased costs of production across the board.”

“When you consider that Ornua [co-operative] will be paying a €19m (£16.46m) year-end operating bonus to member co-ops, up 27% on last year, you’d have to say the decision by Glanbia, in particular, is completely unjustified,” said Mr Phelan.

Earlier in April he addressed the National Dairy Committee meeting where he said cash flow was critical for dairy farms at this time of year, and called on co-ops to maximise pay out to farmers.

He said dairy farmers were facing reduced revenue from cull cow and calf sales as well as significant feed and fodder cost increases and lower milk prices squeezing margins by over 6cpl.