Farmers can take no further milk price cuts, and co-ops must rethink their development strategy to ensure the price risk and the margins are more fairly shared, IFA National Dairy Committee Chairman Sean O’Leary has said.
O’Leary was speaking at today’s IFA AGM and he urged all dairy farmers to be sure to attend their co-ops’ own AGMs to challenge their management team, chairmen and board members to deliver a sustainable farm gate milk price for 2016.
“Our new President Joe Healy said it this morning in his inaugural speech, and I repeat it now: co-ops must stop cutting milk prices, and after five years of major investment in extra capacity, take stock and find cost savings in all areas of operation.
“We recognise absolutely that co-ops have supported milk prices since mid-2015, and our message now is that more will be required as farmers face unprecedented challenges.”
Milk prices have been falling steadily for the last two years, and with current milk prices of between 23 and 25.5 c/l, the majority of dairy farmers are now producing at a loss.
“This prolonged period of low returns is stressing cash flow to intolerable levels, and is simply not sustainable on farms.”
O’Leary said that co-ops must devise a long-term strategy that limits the exposure of farmers to what are now riskier and more volatile markets.
“This must include better pricing options, including fixed-price contracts and other forms of milk price hedging, but also more keenly priced inputs, lower cost and more flexible credit terms.
“All these topics must be discussed at co-ops’ AGMs.”