Exodus from Liquid Milk Likely as Costs Escalate

IFA Liquid Milk Chair Keith O’Boyle said the most up-to-date CSO agricultural input price index has to be an integral part of liquid milk pricing to ensure a supply of fresh milk this winter.

“Without a realistic return, many farmers will switch to a seasonal milk production system, leaving the market short on fresh milk during the winter period,” Keith O’Boyle said.

“Maintaining a year-round supply of fresh milk incurs significant costs and adds further complexities to the milk production system. All of which leads to a higher cost of production for the farmer.”

According to CSO data, the price of agricultural inputs has increased by 34.8% in the 12-month period to March 2022. All indications are that these increases are going to continue in the medium term, mainly driven by the conflict in Ukraine and the resulting problems with supply and availability of gas, oil, fertilisers, feed etc.

These increases must be reflected in the price offered to farmers. IFA will be using the CSO Agricultural Price Index in negotiations with processors.

“To ensure the market is not short of fresh milk, the price a supplier receives from a processor should be set on the basis of manufacturing base price, plus solids, plus a premium indexed to input costs,” he concluded.