Are Irish Co-Ops Short-changing Milk Suppliers on Price?

IFA National Dairy Committee Chairman Tom Phelan today (Tuesday) pointed out that, other than the 4 West Cork Co-ops, no other Irish milk purchasers had returned the August Ornua PPI equivalent price of 31.78c/l + VAT for 3.3% protein and 3.6% butterfat milk, never mind the September 32.70c/l + VAT average returns for dairy products, as reported by the EU Milk Market Observatory (see graph below left).  He added that, as European milk purchasers were continuing to raise milk prices for September, October, and in some cases to year end, farmers in Ireland were entitled to wonder whether they were being short-changed by their co-ops in one of the toughest years for cash flow and morale.  1c/l on September milk is fully justified, and should be paid on base prices by all co-ops.

“Comparing the August milk prices paid by Irish co-ops and reported by the Farmers’ Journal monthly Milk League with the Ornua PPI for the same month, we find that, other than the West Cork Co-ops, other milk purchasers fall short by between 0.48c/l and 1.42c/l.  As the Ornua PPI is based on Irish dairy commodity prices which are still in the process of catching up with higher European averages, chances are that the PPI will increase further for September trading.  Compared to EU average dairy returns for the month of September, the prices paid by co-ops for August (again, with the exception of the West Cork Co-ops) fall short by between 1.4c/l and 2.34c/l,” Mr Phelan said.

“Adding to this the fact that many of the big European milk purchasers have increased their milk prices for September, October, and in some cases right out to year-end (see table below right), Irish farmers are entitled to wonder whether their co-ops are leaving them short in one of the most financially and humanly challenging years,” he said.

“IFA will be lobbying co-op board members over the coming days, before they sit down to decide on the September milk price.  I urge board members to carefully consider how they can most effectively support farmers in the back end, and to start with, recognise that current market returns do justify a base price increase of at least 1c/l,” he concluded.