Dairy processors are being called on to pay “a meaningful price” for May milk supplies in order to guarantee supplies later in the year.

The Irish Farmers’ Association (IFA) said this morning (Wednesday, June 8) that there was a danger of supply falling in the second half of the year due to the very high cost of production for farmers.

The association cited data from the Central Statistics Office (CSO) which shows that milk supply for the first four months of the year was lower than the same period for 2021, despite a significantly higher milk price.

“This reflects the massively higher cost of production on dairy farms,” said IFA dairy chairperson Stephen Arthur.

Arthur noted that “all milk indices” – including the Global Dairy Trade (GDT) index and the Ornua Purchase Price Index (PPI) – are trending higher.

This, he argued, is “indicating price increases into the medium term, mainly due to sluggish supply worldwide”.

“Now is the time for Irish processors to give confidence to dairy farmers at a time of ever-increasing costs, by setting a milk price for May that reflects the market,” Arthur commented.

“When processor board members meet, they must consider the ongoing issues with farmers who are tied to fixed milk price contracts which are currently at a level substantially below the cost of production.”

The IFA dairy chair acknowledged that processors have taken steps to address this, but argued that more should be done, particularly as some of those initiatives require farmers to commit milk for further years “at what appears to be low prices when compared with current market returns”.

“These affected farmers need to have confidence that if they sign up to such schemes, then the price set for future years will realistically be in line with the likely market price,” Arthur concluded.