Dairy processors are being accused of paying below market returns for milk, as they warn markets are under pressure.
Commenting on developments in milk price, Gerald Quain, Chairperson of ICMSA Dairy Committee said the milk price being paid to Irish dairy farmers remains behind market returns and co-ops need to increase milk price to at least reflect the Ornua PPI.
“Every 1c below market returns represents a loss of €80m in a full year and this is €80m taken out of the rural economy and put simply, dairy farmers must get what the market is returning,” he said.
He also said that with the Ornua PPI for June at 31.6c/L, it is clear that milk price has lagged behind market returns during our peak production period and farmers are rightly asking why there is such a disparity.
“June milk prices are still behind the PPI and it has become a pattern that is simply unacceptable. We can’t have a situation where market returns are being withheld from dairy farmers during the peak production months.”
Irish processors, he said, are €1.5 /100kg below the rolling twelve-month average milk price which amounts to €120m if this difference was eliminated.
It comes as Kerry Group announced its base price for June milk supplies remains unchanged at 30.5c/L (VAT inclusive). A spokesperson said based on average June milk solids, the price return inclusive of vat and bonuses is 33.114c/L.
Glanbia announced last week it will pay its member milk suppliers 30.5c/L (VAT inclusive) for June manufacturing milk supplies. This is unchanged from the May price.
It also said Glanbia Ireland (GI) will pay a base milk price for June of 30c/L (VAT inclusive, while the Board of Glanbia Co-op will make a support payment to members of 0.5c/L including VAT for June milk supplies.
Glanbia Chairman Martin Keane warned milk suppliers that returns from the market are below the current farm gate price.
The Board of Lakeland Dairies also warned of market pressures, saying butter prices are at a four-year low and “while supply in many of the large milk production regions remains subdued, there continues to be weakness in the global dairy markets. In particular, butter prices are under increasingly downward pressure.”
It announced it will pay 31.28c/L (including VAT) to suppliers in the Republic of Ireland, and in Northern Ireland it will pay 25.25p/L for June supplies.