ICMSA point to ‘stark contrast’ between speed of price cuts and the slowness of price increases
The Deputy President of ICMSA and Chairman of their Dairy Committee, Pat McCormack, said he was very disappointed to note the stark contrast between the speed with which Arrabawn cut their price and the very much slower rate that they employed over the last 18 months when market returns justified immediate and repeated increases in price. Mr McCormack noted that other Co-ops and processors had held their price for March milk and he said that there was no doubt but that Arrabawn could have – and should have – done the same.
“We’re disappointed that Arrabawn didn’t hold their price for March in the way that other Co-ops and processors have. Our concern is that this decision will be used as a signal by other Co-ops and processors to cut their own prices and we call now on the farmer-directors to ensure that this doesn’t happen and that the modest margins enjoyed by the milk suppliers are protected. It’s worth noting that over the last year, processors and Co-ops were able to completely replenish their cash reserves and most have now built up very sizable cash funds; it is ICMSA’s firm view that those reserves must be called upon first to off-set any downturn in market price and we’d very much like to see the same slow and gradual rate of price adjustment being employed during any downturn as was the case when the market price was moving up and Co-ops and processors were noticeably slow indeed to adjust upwards the prices paid to their suppliers”, said Mr McCormack.
Ends. 16 April 2012.