The current situation on dairy markets justifies an immediate increase in milk price and it is high time that Co-op boards stood up for their milk suppliers and insisted that the improved returns from the marketplace were reflected in a better milk price, according to Mr. Pat McCormack, the Chairperson of ICMSA's Dairy Committee. Mr McCormack said there is growing concern amongst farmers that Co-ops boards appear happy to set milk price at about 33 cents per litre with no intention of paying more irrespective of the strength of international markets. "Two questions arise: why are the Co-ops 'holding back' on the price paid to their milk suppliers and also, what are they doing with all the additional profits?"
"In 2010 and across all Co-ops, profits were up substantially on 2009 which was a very bad year for all dairy farmers – but yet all the Co-ops made a profit. On that basis, Co-ops profits will swell further in 2011 if they continue to pay the current milk price, because the markets are well ahead of milk price at this time last year", continued Mr McCormack
"Based on current analysis, markets are strong and have shown improvements since March when the market did weaken slightly compared to February. But there has been a noticeable improvement in the last two weeks and, despite the increase in global milk supplies, the demand for dairy products has been strong ensuring that dairy product prices remain at a high level. Based on current quotations and returns from the marketplace as reported from a number of sources, ICMSA believe that Co-ops should be paying a price well in excess of 35 cents per litre (VAT inclusive) which is at least 2 cents per litre higher than the price they are currently paying", stated the Dairy Committee Chairman.
To put in context, Mr McCormack pointed out that for a 230,000 litre dairy farmer (50,000 gallons approx) and based on the normal supply, this 2 cents per would represent an additional €650 in income for May milk alone or €4,600 on a full years milk production. "In the context of the increased costs in 2011 and with many farmers still dealing with the fallout of 2009, the market improvements must be passed back to farmers. We can't have the Co-ops sitting on the increased prices they're receiving and not passing them on to their own milk suppliers", concluded Mr McCormack.