Pat McCormack, deputy president and chairperson of ICMSA’s dairy committee, has said that analysis of milk prices and patterns throughout the year demonstrate conclusively that a lag was allowed develop in terms of price to farmers from Spring onwards, which, he maintains, still exists and which can only be resolved by an end-of-year bonus to be paid by all co-ops and processors across the board.
“The half-yearly returns of our two PLC-linked processors provide clear and direct evidence of the improved profit levels being enjoyed by Irish milk processors in 2013.
“Both companies experienced increased revenues and profits which are indicative of the market for first half of 2013 and second half returns should enhance year-end figures.
“The ICMSA was certain from spring onwards that a lag was being allowed develop and the most current figures show that there is room for a substantial – and well deserved – bonus to be paid based on those delayed price increases throughout the year and returns received to date for processors.
“The ICMSA considers 1.3 c/L to be very realistic in terms of a bonus that would meet the shortfall caused directly by that price and time lag”, said McCormack
The ICMSA deputy president also stressed that the evidence and data in support of an end-of-year bonus is overwhelming.
“Dairy markets showed constant upward trends all year and clear evidence of this can be seen from the Irish Dairy Board (IDB) returns, Dutch dairy quotations and other dairy market indicators.
“The IDB index reached record highs (133.7) this year, 20 per cent higher than the start of the year and the outlook remains positive. Dutch dairy quotations have remained strong and have consolidated the last month. The Dutch index quotations increased 24 per cent for butter, 42 per cent for SMP from January to November.
“Overall, EU markets indicators have seen steady price increases for products with butter, SMP, WMP and cheddar increasing by 21 per cent, 18 per cent, 24 per cent and 20 per cent respectively during the 11 months to date in 2013.
He continued: “If we look at the Southern hemisphere, the Global Trade Index increased by 43 per cent for a weighted product basket over that same time period. All market indicators are positive or stable and end of year returns point to a buoyant milk product market.”
“Looking at farm level shows it has also been a positive second half to 2013 for the milk prices returned from their processors. Official figures from the Central Statistics Office show that milk price increased by 13 per cent from December to September at 3.6 per cent solids.
“Given that all market indicators have increased substantially higher than 13 per cent, it absolutely certain that there is a differential to pass back to the producer. We calculate the figure at 1.3 cent per litre and in addition to being justified it will allow farmers to clear debts incurred in the first half of 2013,” he concluded.