A milk price of 30c/L should not be a psychological barrier for the Irish dairy industry, according to Arrabawn Chief Executive Conor Ryan.
“The international market is the sole arbiter when it comes to determining the prices paid to milk producers,” he said.
“We held the March and April price, in order to give our farmers the best possible start to the year. The guiding principle followed by board members is that of delivering the best return back to our farmers. May is always the month of peak supply.
“A board meeting will take place next Tuesday, June 16, at which the May milk price will be set. And, as is always the case, it will be a balancing exercise. We have just had five successive weak GDT auctions in New Zealand. Apart from butter, the world’s dairy markets are extremely weak at the present time.
“Board members will also be mindful of the fact that the co-op’s processing arm must make an operating profit at this time of the year: otherwise the long-term viability of the business comes into question.”
Ryan pointed out that a decision by the EU to introduce intervention for skimmed milk powder would be an extremely positive signal for the dairy sector.
“This would indicate that the market had, at least, bottomed out. A reversal of Moscow’s decision to ban EU food imports would serve to boost milk returns significantly. Russia traditionally imports 250,000t of cheese from Europe,” he said.
Next Tuesday will also see Aurivo host its June board meeting. A co-op source said that no decision had, as yet, been made regarding the price that will be paid for May milk.
Aurivo previously confirmed that €2m had been retained from last year’s profits and placed in a dairy stability fund. The vast bulk of this money remains available to the co-op as a means of buffering members’ milk prices over the coming months.
Kerry Group confirmed that its management would decide its May milk price next week.
Meanwhile, the ICMSA has called on co-op boards to hold their May milk prices.
Deputy President Pat McCormack said that figures from the CSO show that milk prices fell from 39c/L to 30c/L, or 23%, from May 2014 to March 2015.
“To put this in context, a 250,000 litre dairy farmer will see his or her May milk cheque reduced by over €3,000 relative to May 2014 and, in a full year, the reduction is equivalent to a massive €22,500.
“That kind of reduction in income is clearly unsustainable, against a background of substantial on-farm investment and associated debt due to quota abolition in addition to a superlevy fine estimated at €68m and ongoing input cost inflation.
“The May milk payment is critical to all dairy farmers because it’s the traditional peak month.”