Creamery Milk Price Cuts Hit Liquid Milk Producers Hard

IFA National Liquid Milk Committee Chairman Teddy Cashman has said the manufacturing milk price was the base for Glanbia and most other liquid milk producers’ liquid milk prices all year round and the drastic 2.5c/l cut announced by Glanbia for September milk will hit suppliers particularly harshly as their winter season begins. He warned all other dairies and all retailers that this was unfair, unsustainable and unacceptable.

“The unwillingness of Glanbia until now, despite strong lobbying by Fresh Milk Producers, to apply flexibility in the band system they operate means their suppliers only benefited from half of the creamery milk price increases in the past 12 months, but are now taking the fullest brunt of the price falls. Even their recent concessions do not change this fact,” Mr Cashman said.

“At our Liquid Milk Forum last July, we showed that, in Ireland and around the world, specialised fresh milk producers have significantly higher costs and complex systems which can only be sustained by securing, through regulation if necessary, a fair and stable remuneration from retail markets,” he said.

“If the highly volatile global dairy commodity markets are to be the sole base for their remuneration, suppliers will be driven to reconsider their commitment to year-round production, which will endanger the security of locally produced fresh milk for Irish consumers,” he said.

“Based on work carried out with Teagasc over recent years, we have estimated that for the next 12 months producers will need an average price of no less than 40c/l to cover costs and remunerate their own labour with a modest wage,” he added.

“Retail prices for liquid milk have not varied by more than 5% in the last 12 months, but EU dairy commodity prices have fluctuated by around 30% over the same period. We cannot have a system which blindly applies the base price without appropriate correction to secure fresh milk supplies. A fair and sustainable pricing system must be developed urgently by dairies in negotiation with producers, recognised by retailers and supported by legislators if necessary,” Cashman concluded.