The Irish Farmers’ Association (IFA) has claimed that there will likely be an exodus of suppliers from winter milk production due to escalating costs.
According to data from the Central Statistics Office (CSO), the price of agricultural inputs has increased by 34.8% in the 12-month period to March 2022.
Fertiliser prices rose by 149% compared to March 2021, energy prices were up by 54.9% and there was a 22.6% jump in feed prices.
The CSO noted that milk price has increased by over 32% in a year.
The IFA Liquid Milk Committee chair said that all indications suggest that input increases will continue in the medium-term.
Keith O’Boyle explained that this would be mainly driven by the war in Ukraine and the resulting impact on the supply chain and the availability of gas, oil, fertiliser and feed.
Winter milk
The IFA is calling for these input cost increases to be reflected in the price offered to farmers.
The association said that it will be using the CSO Agricultural Price Index in negotiations with processors as it must be considered an integral part of liquid milk pricing.
“Without a realistic return, many farmers will switch to a seasonal milk production system, leaving the market short on fresh milk during the winter period,” the IFA Liquid Milk Committee chair said.
“Maintaining a year-round supply of fresh milk incurs significant costs and adds further complexities to the milk production system. All of which leads to a higher cost of production for the farmer,” he continued.
“To ensure the market is not short of fresh milk, the price a supplier receives from a processor should be set on the basis of manufacturing base price, plus solids, plus a premium indexed to input costs,” O’Boyle concluded.