August milk cut is 'a major blow to cash flow and confidence'

August milk cut is 'a major blow to cash flow and confidence'
Xx@leinsterexpress.ie

IFA National Dairy Committee Chairman Tom Phelan said the 1c/l cut by Glanbia for August milk to a total payout of 27.04c/l + VAT, the second in as many months, is a major blow to the cash flow and confidence of its suppliers.

He said this would be seen by all dairy farmers as a threat to the milk price decisions in their own co-ops later this month. The Lakeland 0.75c/l cut, to a price of 28.5c/l + VAT, which follows a 0.5c/l cut for July milk, while less severe, is also disappointing.

Tom Phelan called on the board members of all other co-ops meeting in coming days to decide on their August milk price to not follow slavishly the Glanbia example in cutting below the August Ornua PPI of 29.22c/l + VAT, and be more reflective of stable European trends.

“The EU Commission’s Milk Market Observatory tells us that EU average milk prices for July 2019 were up 6% compared to the same month last year, but Irish milk prices down 2% - only Denmark and Greece performed worse.

“ The milk prices paid by the main EU milk purchasers have been stable. Friesland Campina have held their €35/kg price for July, August and will continue into September – this is 30c/l + VAT at 3.3%/3.6%.

“Arla have held their price for the past 8 months, and will also hold their September price, with a UK milk price of 30.22 p/l (33.8c/l).

“ The market returns determining those price decisions are the very same markets our co-ops compete on, so why so poor a price performance from Irish co-ops?” he asked.

“Glanbia, Kerry and Dairygold are all included in the LTO monthly Milk Price Review of European milk purchasers, and have fallen well below the average price of the Review for the last number of months.

“ This has widened in July, to €3.6/100 kgs (just over 3c/l) and this further price cut by Glanbia would put them just under 5c/l below the average in the context of stable milk prices elsewhere in Europe,” he added.

“This is simply unfair: the Ornua PPI return would allow Glanbia to pay over 2c/l more than they are, and European indicators are 2 to 3 cents per litre above the Glanbia price.

“Board members must show independence of mind and objectivity in deciding their August milk prices – use the facts of the market, don’t let Glanbia decide the price you will pay your suppliers!” he concluded.