Further falls in farmgate prices will start to put milk producers under significant economic pressure, according to Dairy Ireland Chairman David Murphy.
“Teagasc figures point to a breakeven point of around 25c/L,” he said.
“But for most farms in this country, the pressure will really start to tell at around 28c/L. This is partly because most family businesses do not have large enough volumes of milk to allow them spread their overheads across.”
Murphy believes that the co-ops and other processers must now carry out a root and branch review of their organisations with the aim of taking out costs.
“Where the co-ops are concerned, the onus is on board members to kick start this process. After all, they are farmers’ elected representatives.
Dairy Ireland has 200 members, located across the country. The organisation was established a decade ago to provide an independent voice for Irish milk producers.
Murphy believes that international milk markets may start to pick up again by the autumn of this year.
“There are indications that Chinese buyers will come back into the market at that stage,” he said.
“They, obviously, over bought last year and these additional products will have to come through the system before international supply and demand come more into line.
“At some stage over the coming months, milk prices will start to pick up. At that stage Irish dairy farmers will, for the first time, feel the benefits of milk quota abolition.
“But volatility will remain a long term feature of the market. As a consequence, milk producers must invest surplus monies in ways that will allow this funding to be readily accessed, when required.
“Cash flow is king and bills still need to be paid, even when markets take a nose dive.”