Milk processors are being urged not to follow Glanbia in cutting prices paid to suppliers for August milk supplies.
Tom Phelan, the national dairy chairman of the Irish Farmers’ Association (IFA), labelled the processor’s decision yesterday, Thursday, September 13, to cut its price as a “major blow to the cash-flow and confidence of its suppliers”.
Phelan added that Lakeland’s decision to also reduce its price “is, while less severe, also disappointing”.
This will be seen by all dairy farmers as a threat to the milk price decisions in their own co-ops later this month.
He urged other co-ops to “not follow slavishly the Glanbia example in cutting below the August Ornua PPI”.
The Ornua Purchase Price Index (PPI) for August stands at 30.8c/L, including VAT. Glanbia’s offering yesterday was 28.5c/L, including VAT.
Glanbia Ireland (GI) will pay a base milk price for August of 28c/L including VAT.
Phelan called on Irish co-ops to “be more reflective of stable European trends”.
The EU Commission’s Milk Market Observatory tells us that EU average milk prices for July 2019 were up 6% compared to the same month last year, but Irish milk prices down 2% – only Denmark and Greece performed worse.
“The milk prices paid by the main EU milk purchasers have been stable…the market returns determining those price decisions are the very same markets our co-ops compete on, so why so poor a price performance from Irish co-ops?” asked Phelan.
He pointed out that the three Irish co-ops included in the monthly European milk price review, carried out by the LTO in the Netherlands – Glanbia, Kerry and Dairygold – have fallen “well below the average price of the review for the last couple of months”.
“This is simply unfair: The Ornua PPI return would allow Glanbia to pay over 2c/L more than they are, and European indicators are 2c/L to 3c/L above the Glanbia price,” argued Phelan.
“Board members must show independence of mind and objectivity in deciding their August milk prices. Use the facts of the market, don’t let Glanbia decide the price you will pay your suppliers,” he concluded.