The Irish Creamery Milk Suppliers’ Association (ICMSA) has issued a warning on milk prices for winter supplies in light of the spike in input prices.
The agricultural input price index from the Central Statistics Office (CSO) shows an increase of 40.2% between June 2021 and June 2022.
Noting this overall increase, and particularly the increase in production costs of liquid milk, the chairperson of the ICMSA’s Dairy Committee Noel Murphy stressed that the price paid to producers this winter “will have to increase substantially to reflect the costs”.
According to Murphy, failure to pay these farmers sufficiently in the winter months will impact their viability and their ability to supply adequate volumes through this upcoming winter.
“The need to produce milk through the full 12-month cycle means especially inflated costs for this group over and above the unprecedented rise in costs borne by all dairy farmers,” Murphy argued.
He added: “This will simply have to be acknowledged in the pricing structure.”
He highlighted that liquid milk producers have the option of reducing production or moving to a spring calving system enterprise “relatively quickly”.
“The marketplace – if it is to have sufficient supplies this winter – is going to deliver a stronger price to the primary producer that recognises that the farmers’ costs have risen to a point that only allows two options.”
These two options, Murphy argued, are either an increase in the price paid by consumers, or reduced margins being taken by retailers and processors.
“Farmers cannot have their incomes wiped out through this input inflation and that means either higher prices at the checkouts or lower margins for the retailers and processors,” the ICSMA dairy chair remarked.
“Farmers are not carrying everyone else anymore. We did it for long enough,” Murphy concluded.