Co-ops moving 'way too fast' by cutting milk prices for August - ICMSA
Sharp cuts in the price paid to farmers for August milk supplies is "wholly disproportionate," according to the Irish Creamery Milk Suppliers' Association (ICMSA).
There have been a series of stark warnings this month from the likes of Tirlán, Dairygold, Arrabawn Tipperary, Kerry Dairy Ireland and Lakeland Dairies, that there has been a dramatic deterioration in global dairy prices.
Co-ops have also pointed to increased global milk supply in key markets as a major factor driving the decline in the price paid to Irish farmers for supplies.
The latest results on the Global Dairy Trade (GDT), which showed a slight fall in the index figure, marking three decreases in a row, underlines this trend.
After the latest auction event earlier this week (Tuesday, September 16), the index was down by 0.8%, representing an average price of €3,434 per metric tonne (mt) of product sold.
This latest drop followed on from a 4.3% tumble two weeks ago.
The index figure settled at 1,199 which was the lowest figure since October 2024.
However the swift move by co-ops such as Dairygold to reduce the August quoted milk price by 3c/L to 45.0c/L and Tirlán by 2c/L for August milk to 46.08c/L has attracted strong criticism.
Noel Murphy, chair of ICMSA’s Dairy Committee, believes that these co-ops have moved “way too fast”, by reducing the price paid to farmers for August supplies.
“There are two points that ICMSA would like to make on these really damaging and wholly disproportionate price cuts.
"Firstly, the downturn in the market has taken place in September, not August, to which these price cuts relate and are being applied.
"The second point we would like to draw attention to is the very obvious discrepancy that has the co-ops telling farmers that they’re locked-in to forward prices when farmers point to a rising market, while often the very same co-ops seem to be able to opt-out very easily of the forward price straitjacket in a falling market," Murphy said.
According to the Co. Kerry farmer there is a disparity in the approach by some co-ops because they can, on one hand, claim that they have "sold forward" at a lower prices and cannot pay suppliers in a rising market.
But Murphy added they also "can drop the price like a stone in a falling market and we don’t hear too much about higher forward prices then".
He said the organisation will be seeking answers from co-ops as to how exactly they had arrived at the kinds of cuts "that were going to be taking the order of €1,500 from the August cheque of an average supplier".
