‘Liquid milk producers need winter payments of 55c/L to break-even’

In order to achieve the break-even annualised milk price for liquid milk producers in 2016/17 of 40c/L, farmers would need winter payments of up to 55c/l, according to IFA calculations.

The figures, backed by work by Teagasc and FDC Accountants for IFA and Fresh Milk Producers, show that without changes to either last year’s payments and premiums or the base creamery milk price, farmers could end up falling 12c/l below the 40c/l break even.

This would leave a farmer with a 200,000L contract a whopping €24,000 in the red, IFA National Liquid Milk Chairman, John Finn has said.

Finn was responding to a recent study by Mintel which found that some 50% of Republic of Ireland consumers and over three in five consumers in Northern Ireland do not think farmers currently receive a fair price for the milk they produce.

He said that the study should encourage retailers and dairies to do what it takes to deliver the 40c/l annualised milk price liquid milk producers need to cover costs and pay themselves a modest wage.

Mintel found that Irish consumers may think that farmers are not paid a fair price for their milk, but it also asked them how much extra would they be willing to pay for milk.

Three in 10 consumers south of the border said they are willing to pay an extra 20c per 2L of milk with an additional one in five willing to pay 25c or more per 2L of milk.

Meanwhile, it found that most consumers in the North are willing to pay an extra 10-20p per 2L of milk if it ensures Irish farmers would receive a fair price for their milk.

Earlier this year, the ICMSA said that €800m could be wiped off Irish dairy farmers’ incomes in the two years from 2014.

Based on 18,000 dairy farmers in the country, the ICMSA estimates a profit per farmers of €9,500 for 2016 (excluding labour costs), down from €23,500 last year, and €39,000 for 2014. This has been estimated on an average price of 38.4 c/L for 2014, 30.1 c/L for 2015 and 26.0 c/L for 2016 – solids included.

ICMSA President John Comer said that dairy farmer incomes fell €530m in 2015 and that it is now estimating a further fall in 2016 of €280m from 2014 prices.