Agriland spoke with ICMSA president, Dennis Drennan who talked about supply and demand of dairy products and how milk price “needs to drive on in 2025”.

Drennan reflected on 2024 as he said “it was a year of three quarters and a quarter” and a “very unusual year”, as where he is, in south-east of the country, were experiencing droughts in the summer, while the north-west were getting bogged doing second cuts.

“No matter where you were, everyone suffered as grass growth was well back and the peak for milk production never came leaving you behind for the rest of the year,” Drennan said.

Drennan added that milk price and weather only started to come right at the back end, but believes the damage was already done and said “it wasn’t a bumper year, but we were saved by the last two months”.

“Fodder was scarce and the back end really took pressure off silage pits and slurry tanks. To be honest, it was an absolute lifeline,” according to Drennan.

He said that costs were astronomical, as he described machinery and contracting costs “bananas money” and said that the whole base price norm has to move on.

Milk price

Drennan believes that we are looking at a new cost base of milk and that the days of a 30-32c/L base price are well gone, as cost have gone up to 38-40c/L.

The ICMSA president said that “we need a 50c/L to justify a decent income and we need to start looking at what the average industrial wage is, or what the wage is for someone in management”.

“Us farmers are managers, we look after HR, the electrics, the plumbing, the animals, the mechanics and all the paper work, as well and are not getting paid accordingly,” Drennan added.

The average farmer in the country is milking 92 cows and sending out about 500,000L, according to Drennan, and he said “you need a 15c/L margin at least to pay that man”.

Drennan believes that the National Farm Survey didn’t do the farmer any favours as he said “the little detail at the bottom in small writing said income based on 1.4 labour units”.

The average farm income is at nothing for the hours that farmers put in according to Drennan and said “it is wrong to be taxed the same as a worker working a 35-hour week when we could be doing 70-hour weeks”.

Drennan has called for people to be more realistic, as a dairy farmer needs to be paid for the work and effort that goes into the job.

Drennan believes that for milking cows to be sustainable, farmers need a margin of 20c/L as he said “who else is working 60-70 hours/week for less than €100,000”.

For milking to be viable, Drennan said that “base price needs to be over 50c/L and hopefully your solids will get you to 55c/L, and if you can keep costs down, it is viable”.

Supply and demand

Drennan added that there is “no surge of milk coming from anywhere as we were out in America a couple of months ago and there are no heifers coming through”.

He said that “Europe is in a dodgy enough position as well and succession is a huge issue, as there is no next generation coming through in a lot of cases”.

“Generation renewal is a huge problem and you have to ask yourself, who is going to produce the food in the future,” Drennan added.

Drennan said that there is no threat on the supply side from an Irish point of view and the demand is there as the likes of cream, butter and cheese are in huge demand, so “that price needs to drive on”, he mentioned.

“Trump is the only threat to demand. Is he going to put tariffs on cheese and butter going into the states?,” Drennan queried.

The Kilkenny man said that “the golden goose that is Ornua and Kerrygold can turn into a skinny chicken very fast if you put a 20-40% tariff on it”.

The consumer has to get used to the new norm and realise that if they are paying more for electricity, heating, gas and fuel, it is also transferred to farms and that “cost of doing anything has risen”.

“The reality is that food is going to have to get dearer and there is a big deal if food goes up 5-10% but if Spotify and Netflix goes up 20-30%, they are deemed as a necessity,” he said.

Drennan’s point was that the priority is going to have to change and that “if you want your food produced more environmentally sustainable, that comes at a cost and the farmer can’t carry all that cost”.

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