Irish milk processors are “dragging their heels” on milk prices paid to farmers, despite the recent increases announced this month, according to the Irish Creamery Milk Suppliers’ Association (ICMSA).
Noel Murphy, the chair of the association’s dairy committee ,said today (Tuesday, January 25) that New Zealand dairy business Fonterra has announced that its price range will increase for 2022 which, he added, is a “clear indication” of the direction milk prices should be moving in.
Murphy highlighted that the ICMSA is expecting prices in the region of 43c/L in Ireland during the coming peak milk supply season.
Despite that, he added, any gains in price would be offset and “eaten through” by unprecedented input costs.
“The onus is now squarely on co-op boards to ensure that milk price going forward is, at a minimum, in excess of the monthly Ornua PPI [Purchase Price Index],” Murphy argued.
“While farmer milk price did move forward for December milk, it still demonstrably lagged, based on the Ornua PPI. This is the case without even including the value added component,” he added.
The ICMSA dairy chairperson highlighted the potential burden on farmers by the cost of fertiliser in the year ahead, and that the cost of inputs in general will be a “massive challenge” and a “drain on farm incomes”.
“The only answer is for milk processors to ensure that the milk price paid to farmer-suppliers is maximised. As far as ICMSA is concerned that’s going to mean that the baseline must be the Ornua PPI, which currently is equivalent to 41.5c/L excluding the value added component.”
Murphy added: “No milk processor achieved this [base] price and as co-ops prepare to set milk price for January, their boards will have to insist that the Ornua PPI on that date is the minimum milk price paid to farmers.”