Consumer-versus-commodity idea ‘does not explain’ lower Irish milk price – ICMSA

Comments on the idea that Irish milk prices would “probably” remain lower than prices in the rest of the EU because Ireland “does not have a large consumer market” and is more reliant on a commodity market which pays less have been rejected by the Irish Creamery Milk Suppliers’ Association (ICMSA)..

ICMSA president Pat McCormack responded in a statement in reaction to comments made by Glanbia group chairman Martin Keane to Dutch media outlet DairyGlobal earlier this month.

The problem with this explanation is that Denmark does not have a large consumer market behind it either but still managed to pay a farmer milk price several cents per litre better than the ‘big three’ Irish milk processors managed, McCormack said.

Continuing, he said: “Nor do we accept that Denmark’s proximity to the large German market and ease of access to that is the only explanation for their superior price.

We have relative proximity to the large British market – for now anyway – and we’re still four to 5c/L below what Danish milk suppliers are receiving.

“So we’d question whether access to a large consumer market is as decisive a price factor as is presented.

“We have milk processors in Ireland that are a fraction the size of Glanbia but manage to pay 3c/L more; they don’t have a ‘large consumer market behind them’ either – how are they managing it?” McCormack asked.

The president then turned to another argument, highlighting that Fonterra is almost completely commodity-focused, has a smaller domestic market and less access to nearby large urban consumer market than Irish processors but is paying a higher farmer milk price per litre than two Irish processors, going by the Dutch LTO milk price league.

This consumer-versus-commodity idea does not explain why the current Irish milk price is so far down the league.

“The suspicion – and it’s very well founded – is that some of our co-ops are underpaying because they want to and they think they can,” McCormack concluded.

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