Milk processors should consider giving dairy farmers an end-of-year bonus for 2021 supplies, according to the Irish Creamery Milk Suppliers’ Association (ICMSA).
The newly-elected chair of the ICMSA Dairy Committee, Noel Murphy noted that there were significant returns from the market in 2021.
Murphy said a significant increase in the Ornua PPI (Purchase Price Index) of 24 basis points “demonstrated conclusively that milk processors had not always paid the base price in full”.
The Kerry-based dairy farmer added that this was before any added value payment was considered.
“Milk processor boards must now look at paying an end-of-year bonus to milk suppliers to reward dairy farmers for their huge contribution and to fully reflect the improved market returns from 2021.”
With the final milk cheques for last year due in the coming weeks, the ICSMA dairy chair said that a bonus paid to suppliers by processors would bring the final 2021 milk price up to actual market returns.
Murphy estimated that the payment would be worth almost €5,000 to every dairy farmer in the country, if paid out on a flat division.
“The Global Dairy Trade (GDT) rose by over 30% and Dutch dairy quotes rose by over 20c/L on both butter/skim milk powder (SMP) and whole milk powder (WMP). We are confident that Q1 of this year will see this trend consolidate.
“The increase in the farm gate price paid to farmers between December 2020 and November 2021 was approximately 7c/L, which was very a modest increase given the buoyancy of the market.
“2022 will be a challenging year in terms of inputs cost and that increases the importance of milk price. The record shows that 2021 market returns were notably better than the actual milk price received by suppliers and that difference should now be returned as an end-of-year bonus to co-op milk suppliers”, Murphy concluded.