Dairy co-ops urged to follow Glanbia’s lead

IFA National Dairy Committee Chairman Kevin Kiersey has urged all co-op boards, who meet this week to decide on their milk price for March, to follow the example set by Glanbia.

IFA National Dairy Committee Chairman Kevin Kiersey has urged all co-op boards, who meet this week to decide on their milk price for March, to follow the example set by Glanbia.

Glanbia announced yesterday that they would hold their March milk price at the current level of 32.32c/l + VAT, including the 0.95c/l + VAT market premium which has been paid since July 2011.

“We fully understand that growing global milk supplies have been running ahead of demand, and this has created an imbalance which has weakened dairy market returns,” said Mr Kiersey.

“However, all analysts agree that demand does remain robust, and last week’s Fonterra auction price bounce has confirmed recent Rabobank forecasts that markets were most likely to rebalance in the second half of 2012. In this context, it is crucial that co-ops respond cautiously to current developments to avoid damaging farmers’ confidence when longer term trends remain very positive.”

Mr Kiersey said that dairy farmers were facing higher costs, as early Teagasc Profit Monitor results have shown an 11% increase in total costs in the period between 2009 and 2011.

“Farmers will also be expected to invest on farm to deliver on milk expansion after 2015, and we estimate this will require expenditure in the order of €1.5 billion,” he said.

“Finally, most in the industry also expect farmers to make a contribution to the funding required for the expansion of the processing industry, to say nothing of those farmers who will be facing massive superlevy bills in the coming weeks.

“All of the above depends on profitability and confidence on farms, and ill-judged, hastily decided milk price adjustments can damage both,” said Mr Kiersey.

“I urge all co-ops to take a lead from Glanbia this month, and hold their milk price for at least the month of March.”