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Milk Price Movements Need To Reflect Marketplace – ICMSA.

The rally evident in the latest spot prices have been cited by ICMSA Dairy Committee Chairperson, Mr. Gerald Quain as further evidence of what he called the price “sleight-of-hand” that was employed by the processors and Co-ops in setting their price for August milk.   Mr. Quain said that it was obvious that markets were both rallying in the short-term and are also beginning to move upwards as the latest global supply data is absorbed into long-term forecasting.

Despite both of these positive movements, most of the Co-ops followed what the Dairy Committee Chairperson described as “the usual suspects” in cutting the milk price paid to their farmer-suppliers for last month’s milk and put simply, this is no longer acceptable and is not justified by market developments.   Mr. Quain said that in meeting with farmers at last week’s National Ploughing Championships, it was very clear the growing level of anger amongst farmers and how many had shared his own suspicion that certain milk processors had availed of the confusion and disruption in the beef sector to implement milk price cuts and also the air of uncertainty that many of the same milk processors were trying to build around the dairy markets despite the hard facts that were there for anyone who wanted to see.   The Ornua PPI is above most milk processors price at this stage while the Butter and SMP mix price has rebounded to over 30.5cpl in the latest Dutch dairy quotations while WMP is above 33cpl.  

In the setting of the price for August, it is clear that medium and long-term data was wilfully ignored while an obviously temporary market ‘blip’ was seized upon and a completely unjustified price cut was pushed through on the basis of that.   What this amounts to is milk processors disregarding the weight of evidence and data that’s all pointing to the market moving up and instead jumping on even the most temporary ‘stall’ in that movement and then citing that as market weakness to cut the price.    Co-ops boards are going to have to put a stop to this strategy, the facts of the matter are that a 300,00 litre supplier had over €500 taken from them for August milk for absolutely no good reason and it adds insult to injury when just days after those price cuts are announced, we can see further market data that shows what we have suspected all along – there’s no market justification for these cuts”, said Mr. Quain.        

Farmers like all businesses have bills and debts to meet and the level of milk price is absolutely critical to their viability.  Farmer anger is growing at unjustified milk price reductions and Mr. Quain concluded by calling on Co-op boards to stand up for their suppliers and ensure that the milk price paid reflects the market and nothing less.

Ends    26 September 2019

Gerald Quain (086) 3623041

Chairperson ICMSA Dairy Committee