Review Shows Co-ops Need to Up Their Milk Price Ambitions

IFA National Dairy Committee Chairman Sean O’Leary has said that in participating voluntarily to the Farmers’ Journal/KPMG 2016 Milk Price Review, co-ops were contributing to providing unique milk price transparency which was the envy of our European colleague, and he commended them for staying committed to the Review year after year.

However, this year’s results have shown the gap between the top and bottom payers has reached a high of over 6c/l, and a historical examination of the last 13 years shows that gap has been widening massively over the period. Only some of this differential can be explained by constituent levels and access to alternative income streams to top up milk prices. Some co-ops need to up their milk price ambitions a great deal more than others, and this must start with a significant increase in their June 2017 milk price, Mr O’Leary said.

“Farmers value hugely the detailed information provided each year in the Farmers’Journal / KPMG Review of creamery milk prices, as well as the additional analysis presented by the Farmers’ Journal. We fully recognise that the information is provided voluntarily each year by all our milk purchasing co-ops, and commend them for their commitment,” Mr O’Leary said.

“However, as we have been reminded at the Teagasc Open Day in Moorepark earlier this week, we must quantify and measure, assess the information and use it to make the required decisions to improve performance, both on farms and within the processing business,” he said.

“It is clear that constituent levels do make quite a difference to milk prices, as does the ability of some milk purchasers to utilise alternative income streams to top up dairy market returns,” he added.

“However, these cannot possibly account for the totality of the differentials, and it is crucial that milk purchasing co-ops would look at their efficiencies, product mixes, marketing and milk pricing policies. It is simply unfair to milk producers who have made commitments through Milk Supply Agreements and have engaged wholeheartedly in the SDAS scheme, regardless of where they are located, to be left with such inequalities of opportunities,” he said.

“I would expect co-op boards to examine the 2016 FJ/KPMG Review at their next meeting to review their long term milk pricing plan, and for the shorter term to be sure to pass back a price increase of at least 1c/l which current market returns clearly justify,” Sean O’Leary concluded.