‘Farmers have been worst hit’ – milk price boost urged

National Farm Survey results showing a 17% drop in dairy farmers’ incomes in 2016 confirmed the fact that farmers have taken the brunt of the dairy downturn, IFA (Irish Farmers’ Association) National Dairy Chairman, Sean O’Leary, said this week.

O’Leary added that, while co-ops clearly supported milk prices last year – which reduced but did not eliminate profits – Irish dairy and ingredients exports increased 2% to €3.38 billion, and the dairy recovery is continuing strongly into 2017 – but farmers have not seen the full benefit of it.

O’Leary pressed co-op board members, who will be in discussions from this week on to determine milk prices for the month of May, to return a price increase of up to 2c/L.

“Farmers have been worst hit by the market downturn in 2016, when their income fell 17% despite a 4.4% increase in production,” O’Leary said.

Milk prices increased around 7.5c/L between July 2016 and February 2017, but have stagnated ever since.

“While co-ops may be tempted to further rebuild their balance sheets, we believe farmers must not be denied the full benefit from the recovery – which started 12 months ago, and has been strengthening further,” the dairy chairman stated.

Farmers recognise the effort made by co-ops to support milk prices in 2016 and, while this softened the blow, it did not protect farmers from significant income reductions and cash-flow stresses in 2016, as highlighted by the NFS results published last week.

“Both global and EU dairy prices have been rising strongly in recent weeks.

“EU butter prices as quoted by the EU Milk Market Observatory [EUMMO] for May 28, 2017, have increased by over 18% since this year’s trough in early March. SMP [Skimmed Milk Powder] prices have lifted over 7% since late April, while WMP [Whole Milk Powder] is up 6.5% over the same period. Cheddar prices are up 5.5% and whey powder prices over 7%,” he said.

An Irish product mix based on the quotes from the EUMMO would yield a current farm-gate equivalent price, after deduction of 5c/L processing costs, of 33.52c/L plus VAT (35.33c/L including VAT).

“We are very clear that, as co-ops have increased sales significantly in recent months and as dairy prices are recovering to – in the case of butterfat especially – historical levels, there is real scope for further milk price increases to be passed back to Irish dairy farmers,” O’Leary concluded.