Following the increase in the Irish Dairy Board (IDB) Price Index to 130.3 – which it says is a record high – Pat McCormack, Deputy President and Chairperson of ICMSA’s Dairy Committee, said that based on the further improvement in the marketplace for Irish dairy products, an increase in milk price to at least 40 cents per litre is easily justified and co-ops will simply have to stop dragging their feet in relation to milk price increases.

Quite apart from the fact that this price is fully justified, McCormack reemphasised that farmers need every cent possible at this time to meet the bills and financial pressures that have built up over the past 12 months.

“It is quite obvious that co-op management believe that at 37.5 to 38 cents per litre dairy farmers should be happy, but the co-ops need to look at the input side of their business and the massive outstanding bills farmers have with the co-ops and other input suppliers and also the increased prices of feed, fertiliser and fuel.

“Since 2010, fertilizer and feedstuff prices have increased by 27 and 38 per cent respectively and milk price simply has not kept pace thus increasing the price-cost squeeze on dairy farmers”, said Mr McCormack

“Against a background of these ongoing pressures, co-op boards will have to insist that the full benefits of the buoyant marketplace are immediately passed back to their suppliers and this means that a price of at least 40 cents per litre should be paid for July milk. Any co-op that does not come up to that level is categorically not returning the benefits of the marketplace to their suppliers and to-date we regret to note that Co-ops and processors have been inexcusably slow to pass on the increased returns. This just cannot continue. A difference of 2c/L for an average supplier of 300,000 litres of quota would see him/her lose approximately €800 for just July milk. Farmers are at a loss as to how Co-ops can be so short-sighted and stubborn about keeping their prices low when they have direct knowledge of the financial pressures on farms,” he continued

“Leaving aside the sustained increases in World and European milk product prices, Ireland has its own reliable guide to where milk prices should be set and it’s the IDB Purchasing Index. Given the IDB Index has shown consistent increases month on month it would be sensible to expect milk price to follow a similar path. It must be remembered, also, that the Index is not a notional guide but is actually based on actual sales of Irish dairy products. In 2010, which was the base year for the IDB Index, the average milk price returned that year was 30.2 c/L given the index of 130.3 for July, milk prices from Co-ops should be at least 40 c/L,” he noted.

The Irish Dairy Board index is a direct factual indicator of returns to Irish dairy processors.

“A minimum of 40 cents per litre must be the benchmark for July and those Co-ops who have already set their milk price below this level – including GIIL, the largest milk processor in the country – should immediately review their decision and increase milk price to a level that reflects market returns and stop holding back on supplier-shareholders need every cent possible.  Co-ops have reviewed milk prices in the past – Glanbia did it in 2009 – and it most assuredly needs to be done again,” concluded McCormack.