The IFA met with dairy co-ops on milk prices this week (Here’s what happened)

The IFA Dairy Committee is currently undertaking a series of meetings with all dairy co-ops on behalf of milk producers facing a tough cash flow situation this spring.

It has thus far met with Carbery, Bandon and Barryroe Co-ops in West Cork; Lakeland Dairies and LacPatrick Co-op in the North East, and Glanbia. Further meetings are scheduled for this and the coming weeks.

Welcoming this week’s announcements by Lakeland, Glanbia and Kerry that they would hold the December milk price, IFA Dairy Chairman Sean O’Leary said he was urging all co-ops to follow suit.

He also asked them to give a clear price commitment for spring 2016 in recognition of what will be a very challenging time for farmers.

“The announcement by Ornua that it will pay member co-ops an additional €15m cash bonus, following from the successful disposal of DPI Foods in the US, should help co-ops continue to support farmers over the coming months,” O’Leary said.

“Most of the co-ops we have met thus far confirm our view that global dairy prices have bottomed out. However, the time it will take for global, including European, supplies to come back into balance with demand, and do so sufficiently to start impacting farmers’ milk prices, remains unclear.

Sean O'Leary
Sean O’Leary

“If it happens before or during the Irish peak, it will obviously impact farmers’ pockets more positively than if it delays till later,” he said.

“We are therefore asking all co-ops to continue supporting dairy farmers by holding milk prices, but also by providing technical, financial and merchant credit backing and assistance in the face of a spring of low milk prices and cash flow issues,” he added.

Discussions with co-ops

O’Leary said in its discussions with co-ops, the-the IFA have urged them to regroup after the significant investments many made in the last three years, and go back to the drawing board on increasing co-operation with neighbouring processors.

“This is necessary to consolidate efficiencies and to improve all co-ops’ ability to pay the level of sustainable milk prices without which farmers will be unable to deliver the extra milk needed to optimally utilise our additional processing capacity,” he said.

According to O’Leary, the IFA also encouraged them to fully engage, both singly and jointly with other industry stakeholders, in providing farmers with the long-term instruments, they will need to manage their way through high levels of income volatility, including prolonged periods of low prices.

“In this regard, we are encouraged that many more co-ops are actively working on developing fixed milk price contracts in conjunction with Ornua and with their own customers.

“However, much more is needed to explore other ways of helping farmers hedge against extreme variations,” he concluded.

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