The continued cuts to milk prices by a number of co-ops are not only disappointing but also unsustainable for dairy farmers, as input costs rise, the Irish Farmers’ Association (IFA) has said.
Chair of the IFA Dairy Committee Stephen Arthur was referring to a 6c/L cut in milk price which was announced by Lakeland Dairies and Kerry Group this week.
Yesterday (March 13), Lakeland announced that it has reduced the milk price in the Republic of Ireland by 6c/L to 46.85c/L including VAT for milk at 3.6% fat and 3.3% protein.
Kerry Group then became the second processor to cut its price by 6c/L, announcing that it will pay suppliers a base milk price of 44c/L, including VAT, for milk at 3.3% protein and 3.6% butterfat.
Speaking about these developments, Arthur said “the knee-jerk reaction of co-ops to a global correction in commodity prices is vastly different to the way they have managed fertiliser prices”.
He stated that international fertiliser prices have been trending downward of late, but co-ops have been more reluctant to pass this on to customers, continuing to charge previously elevated rates.
However, “they have no problem in cutting milk prices”, according to Arthur, who labelled the situation “total hypocrisy”.
“As we approach peak milk production, we need a sustainable milk price. Further cuts cannot be carried considering higher input costs.
“Global markets would indicate that markets have stabilised in the past month. When the global market was heating up, the rise in milk price was far more gradual, but now as things cool down, the price cuts are immediate and stark.
“A 6c/L cut represents a loss in excess of €40,000 for the average dairy farmer and this is the second cut this year,” he added.
The drop in milk prices comes as global milk prices are in the middle of “a large price correction” according to Rabobank, which it estimates will lead to tighter on-farm margins from quarter two onwards.
However, the dairy chair said that global trends would indicate “that markets have stabilised in the past month”.
“While we all expected a correction in the market, the cuts made by processors are record breaking for all the wrong reasons.
“Enough is enough,” he concluded.