The Irish Creamery Milk Suppliers’ Association (ICMSA) has claimed that farmers who are “locked into” fixed milk-price (FMP) contracts are suffering “crushing losses”.
The farming organisation’s dairy committee chair has repeated his plea to milk processors to change the terms of the contracts in a way that is “proportionate to the scale of the issue”.
“It’s only fair to recognise that some co-ops have moved to add to pay more to the farmers or ‘top-up’ their FMP contracts, but the differentials we are looking at are still very significant and disastrous for farmers, who effectively are being penalised for wanting to be safe and cautious,” Noel Murphy said.
“The terms of these contracts should and must be amended to reflect current market prices and rocketing input costs,” he added.
The ICMSA Dairy Committee chair pointed to the Central Statistics Office (CSO) Agricultural Input Price Index which increased by 34.8% in the year to March 2022.
Murphy noted that the CSO Agricultural Output Price Index was up by 21.8% in the same period, however he said that farmers on FMP contracts would not have been able to avail of this.
He said that the “contracted old prices” are now “hopelessly inadequate against that 35% jump in input costs”.
“Realistically, the whole concept of fixed milk-price contracts is at stake here. If these farmers are just abandoned and allowed to take these kinds of catastrophic losses, then the outlook for future rounds of FMP contracts starts to look much bleaker,” Murphy said.
“The main beneficiaries from FMP schemes are the co-ops and the manufacturers who are all given the kind of financial predictability that’s so valuable to them.
“But that can’t be at the expense of the farmers producing the milk and contracted to get a price that might now be nearly 15c/L lower than current prices while input costs have risen by 35%,” he added.
“Some of these manufacturers are very vocal about talking up their sustainability credentials; well, here’s a chance for them to show that this is not just media bluster and has some substance.
“They must announce immediately their intentions to amend these FMP contracts to incorporate current realities on inputs costs and unilaterally raise the price they pay to the farmers supplying them with their raw material: Milk,” Murphy concluded.