Two-tier dairy industry emerging as co-ops’ milk price gap widens – eDairyNews
Ireland |20 mayo, 2020

Dairy industry | Two-tier dairy industry emerging as co-ops’ milk price gap widens

Recent milk price cuts have seen the price dairy farmers are paid by processors vary by as much as €6,500 for a 400,000-litre supplier, according to figures from the ICMSA.

ICMSA dairy chair Gerard Quain said the price announcements for April had again highlighted an «astonishing difference» between the West Cork co-ops and their larger counterparts both in Munster and elsewhere.

He said that taking the four-month peak period to June inclusive, a 400,000 litre supplier to, for example, Lisavaird is receiving «probably €6,500 more for their milk than their counterpart supplying to other processors up the country».

«By July of last year, we estimated that the Lisavaird supplier had received €7,000 more than their counterpart supplying into the much bigger co-ops,» he said.

«We asked then how it was possible for such a difference to emerge for homogeneous products on a homogeneous market? We’re asking it again.»

Milk suppliers have already accepted that this year’s peak production period, during which they would typically make 50pc of their annual income in the four months from March to June, has already taken a severe hit from Covid-19.

Processors have said that dairy markets continue to be impacted by Covid-19.

Food service demand

Glanbia said such returns require an adjustment in milk price as restrictions brought in to help contain Covid-19 have decimated food service demand in multiple countries and severely challenged the dairy supply chain.

Lakeland Dairies stated that global dairy markets continue to feel the effects of the Covid-19 fallout.

It said the ongoing shutdown of the food service sector across Europe continues to cast a shadow on the global dairy markets.

«With milk destined for food service flooding into butters and powders, returns for all dairy products are back significantly with a weak European sentiment as a result of Covid-19 hampering any recovery. Butter and skimmed milk powder (SMP) prices are now at their lowest since 2016,» stated Lakeland.

However, Mr Quain pointed out that both Arla and Friesland-Campina will pay 31.8-32.4c/kg for May milk and those European giants are processors with very similar product profiles and even larger volumes than our biggest dairies.

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