Irish Dairy Leaders Urge Immediate Milk Price Increase to Prevent Farmer Exodus
In anticipation of the July milk price announcements, Noel Murphy, Chairperson of the Irish Creamery Milk Suppliers Association (ICMSA) Dairy Committee, emphasized the necessity for milk purchasers and Co-ops to align with current market trends. "Milk purchasers and Co-ops are obliged to keep up with current market movements, and this should result in an increase across the board for July milk, with 45cpl very achievable," he stated.
Murphy highlighted that, fr om a 'spot price' perspective, the average return from both Butter/SMP and WMP had exceeded 45cpl after processing costs. He noted that since mid-May, the gross return of Butter/SMP in the Dutch Dairy quotes has been above 51cpl before processing costs were deducted.
The latest Dutch dairy auction on Wednesday, August 7, indicated a €250/t increase for butterfat, reaching €7,070/t, nearing a three-year peak. Whole milk powder saw a €100/t increase, bringing the price to €3,960/t, while skimmed milk remained at a low €2,330/t.
"There is an overwhelming justification for July’s milk price to increase across the board. Quite aside from the market justification, if ever a milk price increase was needed, then it’s now," Murphy asserted.
Murphy stressed the critical situation facing farmers, urging Co-op boards to meticulously review the financial data concerning their farmer-suppliers. "The boards have to understand that we are well past temporary difficulties now; we are deep into the space wh ere more and more dairy farmers are considering either drastic stock and volume reduction or even exit altogether," he warned.
He further elaborated on the severe cash flow issues that farmers are facing, which are expected to worsen if input usage remains high. "Cash flow has never been as tight, and that situation will get worse in the coming months if input usage remains high. Remember: it’s not only how expensive these inputs are, but the volume that will need to be purchased. The markets are telling the Co-ops that they should be paying 45cpl to their farmer-suppliers – and we farmer-suppliers are telling the Co-ops that it was never more badly needed," Murphy concluded.