‘Now is not the time to look for Fixed Milk Price Schemes’
It is too late for farmers to look into Fixed Milk Price Schemes now, according to Teagasc Senior Research Officer Laurence Shalloo.
Responding to a question at the Greenfield Dairy farm open day on Wednesday, Shalloo said that some farmers missed an opportunity to fix milk price when prices were stronger.
“We can’t just stand back and blame processors for the milk price when farmers didn’t go into the schemes when they were available,” he said.
Shalloo also said that farmers looking to enter milk price schemes now will see a limited benefit, as the prices are low and everyone is trying to fix the milk price at the one time.
A number of processors have offered Fixed Milk Price Schemes, he said and so far this year 70% of farmers who can apply for these schemes have tried to set a fixed price.
However, despite it being too late for farmers to fix the milk price they receive now, Shalloo said that the scheme had a positive impact on the returns on the Teagasc Greenfield Dairy Farm.
The Teagasc Representative said that the Fixed Milk Price Scheme was key to managing risk on the Greenfield farmer and it added 1c/L to the milk price.
Teagasc Greenfield farm finances
Shalloo also discussed the financial performance of the Greenfield farm.
He said that during the first five years of the programme the farm generated a return on investment of 9% to its stakeholders.
An initial investment of €351,000 and €850,000 borrowings were needed to get the farm up and running.
The Teagasc representative added that the average cost of producing one litre of milk in 2015 was 37c, with land, labour and bank charges making up over 40% of this cost.
But despite the 1c/L increase in milk price due to fixed price schemes, Shalloo expects the farm to post a net cash deficit of €10,000 this year on the back of lower milk price.
Over the past six years, the farm has generated a net cash surplus, he said. It posted a profit of €69,122 in 2015 along with a cash surplus of almost €49,000.