While a number of co-ops have recently moved on the price paid to their suppliers who are tied into fixed-price milk contracts, they are now being asked to go a bit further.
Minister for Agriculture, Food and the Marine, Charlie McConalogue has urged co-ops to further review their stance on what they are paying to farmers.
He also stated that the co-ops and industry need to work together to assist farmers who are experiencing milk-price challenges.
Kerry Fine Gael TD, Brendan Griffin raised the fixed-price contract debacle with the minister during question time in the Dáil today (Thursday, May 26).
He specifically referred to farmers in the north Kerry region who, he said, were under “serious difficulty” with “huge production costs”.
Calling out Ornua
Deputy Griffin said he wanted to “call out” Ornua, who he said are not engaging in relation to this issue [with north Kerry farmers].
“I want to call out Ornua, who won’t engage in the process; these farmers are really suffering and they need help,” he said.
Supporting farmers
Minister McConalogue said that in relation to supporting farmers, generally, with rising inputs costs, the €1,000 payment to farmers – under the new silage-support scheme – would play a role.
“We didn’t apply that to the dairy sector because we are seeing record prices for milk at the moment and the milk price increase is exceeding cost increases so profits should be strong and activity at farm level, in terms of saving fodder, has been strong.
But for the dairy farmers who are on fixed-price contracts for their milk, times are challenging, he said.
Acknowledging that some co-ops have provided some support to farmers he added:
” I would encourage them to consider the issue further because there is undoubtedly a lot of pressure – despite the very strong prices in the general market – for those who are tied into fixed-price contracts.”
Deputy Griffin said that these recent milk-price interventions are welcome but for those locked in [to fixed-price contacts] it is “really, really worrying”.
“I want to acknoweledge those who have moved and who have done the right thing in these circumstances but they all need to do that,” Deputy Griffin said.
Minister McConalogue said it is his view that fixed-price contracts have an important role to play in the dairy sector.
“I think, in general, they provide great support in terms of the fluctuations of the market. But I think that it is important that safeguards put in place for farmers around that and I think that there needs to be lessons learned from the experiences of the last few months.
“It is a matter for the processors and the co-ops, and, indeed, working with Ornua, to assess. I know that a number of co-ops have looked at this and have increased prices for farmers.
“It is a really difficult and unprecedented situation to be in. Nobody could have predicted the increase in costs, or the increase in milk prices, but of course those on fixed milk contracts are unable to avail of the higher milk prices but are certainly subject to the higher costs and that is a very difficult situation to be in.”
It is important that the processors and industry work together to help them over the time ahead.