A base milk price of 50c/L for March milk supplies is needed and justified, according to the Irish Creamery Milk Suppliers Association (ICMSA).
Speaking in advance of co-ops’ announcements of March milk prices, ICMSA dairy chair, Noel Murphy, has called on all co-ops and milk purchasers to bring base milk price up to 50c/L for March supplies.
He said that the price is fully justified by market returns, and is also required to deal with surging input costs.
He said that 2022 had, so far, seen unprecedented rises in all commodities, and milk products on wholesale markets were no different.
“The most recent Dutch dairy quotes showed the industry standard butter/skim milk powder (SMP) mix increased by 2.5c/L in just one week, while whole milk powder (WMP) stayed steady at almost 63c/L using an 8c/L processing cost,” he said.
The butter/SMP combination returned over 65c/L using the same metrics, he continued.
“The unparalleled rises are having knock-on effects for both dairy farmers in terms of costs of production, and the co-ops in terms of processing costs, so it is no surprise that dairy farmers fully expect to see significant price rises for the milk they supplied in March.
“On average, 60% of direct costs on a dairy farm are attributed to feed and fertiliser and the official statistics from the Central Statistics Office (CSO) released recently show that energy costs increased 32%, straight fertiliser is up 170%, and feedstuffs are up 18%.”
Murphy said that the disturbing part of these statistics is that they are the annual increase from January 2021 to January 2022 with the increases in Feb and March yet to be included.
“The increase in fertiliser prices alone could add an extra 5c/L to the cost of production and much of that fertiliser is used in the present months, with payment being requested earlier this year than other years resulting in additional financial pressures for dairy farmers.
He said farmers cannot be fobbed off with a token 1c/L increase for March milk.
“The markets are returning prices well past 50c/L and farmers are absolutely entitled to see their milk price hit that figure for March milk,” he said.