Dairy farmers “are being asked to pay too much too soon” after three of the country’s largest processors cut milk prices, according to the Irish Farmers’ Association (IFA).
Tom Phelan, the chairperson of the association’s National Dairy Committee, said that: “Covid-19 has impacted on every aspect of the global economy. The dairy sector is no exception, and faces severe economic challenges.
“However, we believe dairy farmers are being asked to pay too much of the price too soon,” Phelan argued.
“Spot quotes then suggested a milk price equivalent of around 34c/L, and co-ops would have sold forward at least some of the spring milk into that market as normal,” Phelan pointed out.
He added: “Also, the Ornua PPI [Purchase Price Index] had been improving since September, and running above the average co-op payout by over 1c/L since October. Even despite the 2c/L cut in the Ornua PPI for March, at 31.8c/L, it is still up to 2.4c/L above the March milk price announced by some processors.”
The IFA national dairy chairperson said that March had been “a long and challenging month” in terms of weather and costs.
Maintaining the milk price would have helped farmers pay bills and better position themselves for the difficult months ahead. We are calling on those processors who have yet to decide on their March milk price to think harder on what their decision will mean for their suppliers.
“Cutting the milk price now to minimise what may be down the line is no benefit to farmers today,” Phelan added.
He also reiterated calls for the introduction of Aids to Private Storage (APS) for skimmed milk powder, butter and cheese.
Phelan argued that such a move would support markets in the medium term while avoiding the “price depressing and accumulation effect of intervention, and allow for the release of the product later this year into an improved dairy outlook”.
“Co-ops need to focus their attention on maximising the milk price, and plotting a sustainable way forward through the crisis for their suppliers,” he concluded.