The Irish Creamery Milk Suppliers’ Association (ICMSA) has said that co-ops citing “downward price pressure” on dairy products as a reason for reducing milk price to farmers could itself contribute to the current downward market trends.
Speaking this morning (Wednesday, May 17), Noel Murphy, the chairperson of the ICMSA’s Dairy Committee, said that there is a “clear onus on individual co-ops not to compound those downward pressures by moving towards aggressive pricing or selling that leads the overall market down”.
“There is a point when legitimate competition tips into undercutting and that drags a whole market down.
“We are not there just yet, but it’s something we have seen for many years in the liquid milk market and let’s just be polite and say that it doesn’t work very well. Certainly not for the farmers, anyway,” Murphy remarked.
He also said that the ICMSA is “sceptical” of the various support payments or top-up payments provided by processors.
“[We] have never liked these discretionary…bonuses or one-off supports. We have always maintained that it is much more practical and transparent for the co-op to simply pay the highest base price it can,” he said.
“We do not usually accept the principle of discretionary payments or supports.
“This [situation] is different because there is a notable and inexplicable lag on Irish input costs [decreasing] that the state agencies do not seem that bothered about, and most co-ops recognise that.”
However, the ICMSA dairy chair expressed the view that, in general, these types of payments are not appropriate.
“As a rule, farmers want to be paid by way of maximum base milk price and they legitimately distrust the ideas that co-ops can start twiddling around with that and start adding or taking away discretionary payments,” Murphy said.
His comments come as processors announce their milk prices for April supplies.
Yesterday (Tuesday, May 16), Dairygold confirmed a drop in its offering to suppliers, reducing its April quoted milk price by 2c/L to 40c/L, based on standard constituents of 3.3% protein and 3.6% butterfat, inclusive of sustainability and quality bonuses, and VAT.
And last week, the board of Lakeland decided to reduce its price in the Republic of Ireland by 4c/L, bringing the figure to 38.85c/L including VAT, for milk at 3.6% fat and 3.3% protein.
Lakeland’s April price includes an input support payment of 1.5c/L, inclusive of VAT, for all suppliers.
