Speaking following a meeting with Ornua (formerly the Irish Dairy Board), Pat McCormack, Deputy President and Chairperson of ICMSA’s Dairy Committee, said that Ornua confirmed that their May PPI index of 98.5 returned a milk price equivalent to in excess of 29 cents per litre at farm level and that this, moreover, was based on a processing cost believed to be relatively high given the significant efficiencies that all processors have made and highlighted over the last number of years.
The Ornua figures, Mr. McCormack said, call into fundamental question the repeated assurances that milk processors are returning the maximum possible milk price to farmers and they certainly seem to indicate that the suggestion that Co-ops are supporting or cross-subsidising milk price at levels below 29 cents per litre is simply not correct. “The market returned a price in excess of 29 cpl for May – that is simply a fact”, said Mr McCormack.
“While everyone will accept that dairy markets have weakened, the crucial point to grasp is that dairy farmer returns have already fallen by over 30% since their peak of 2014. Dairy farmers have taken enough of a hit and it is about time that the links further along began absorbing their share of the market downturn and stopped mind their margins while asking the primary producers to take the whole hit. ICMSA asks again: what has happened the differential that the ‘value-added’ strategy adopted by Ornua and various processors over the last few years was meant to deliver? We were told that this would mean higher returns as we moved away from a simple commodity basis? When is this going to start delivering for the farmers who, effectively, funded that strategy? Spot markets at EU level are delivering in excess of 25 cents per litre and given our customer base and value-added capacity, we can – and should – be delivering a milk price well in excess of this and the Ornua figures certainly seem to confirm that this was achieved in May”, said Mr McCormack.
Mr. McCormack noted that every one cent reduction in milk price cost the average dairy farmer between €3000- €6,000 per annum and the loss on an annual basis comparing 2015 with 2014 is upwards of €30,000. “These are losses that simply cannot be sustained and every cent at this stage is absolutely critical from a farmers’ perspective”, he commented.
“Co-ops boards setting June milk price need to take account of the fact that most dairy farmers are now facing the real prospect of producing milk below the cost of production and serious questions will asked about the prices suppliers are receiving when we have Ornua informing us that their May index returned a price in excess of 29cpl. The index, remember, is not any kind of forecast, it is based on actual returns paid to Irish processors for product they supply to Ornua on a monthly basis and is a hard factual assessment of the returns our milk processors receive. We’re satisfied that the information provided by Ornua on their May PPI is correct and ICMSA will judge the Co-op prices announced in the coming days in that light”, concluded Mr McCormack.
Ends 6 July 2015.
Pat McCormack, 087-7608958
Deputy President, ICMSAS.
Cathal MacCarthy, 087 -6168758
ICMSA Press Office