9 April 2009

2 minute read

Europe

The IFA man, who also met the Chairman and Chief Executive of Lakeland Dairies on Monday in Kells, said that while 1983 production costs, at around 12c/l, allowed farmers to generate an income, 2009 costs of 20c/l before own-labour meant most dairy farmers would face zero incomes this year.

“We are starting to see the first signs of a turnaround in dairy markets, and co-ops must hold the highest possible milk price to help their suppliers. They must find savings in other parts of the business: every fraction of a cent counts in as difficult a year as this, when farmers are facing income losses none of them can weather,” Richard Kennedy said.

“There are positive developments on the market place, auguring a recovery in coming months: the Fonterra Whole Milk Powder April auction saw a 4 per cent price increase, following from the 16.6 per cent lift recorded at the March auction, clearly signalling an upward trend for powder prices. Closer to home, Dutch cheese prices rose by €400/t in the last week, also a sign of market recovery,” Richard Kennedy said.

“On the world market, there is evidence that butter prices are firming, with renewed, if limited, interest from buyers. US milk production fell by 0.8 per cent year-on-year for March, while EU milk supplies are down 0.5 per cent on the previous quota year, despite a 2 to 2.5 per cent quota increase,” he added.

Mr Kennedy stated that 27c/l was the break-even price dairy farmers needed in 2009 to cover costs and own-labour – the latter essential to generate the income required to service financial commitments and day-to-day family expenses. No co-op is currently paying that necessary break-even price, which is unsustainable.

“My message to the board members of Glanbia and Lakeland, and to the boards of all the other co-ops who will be deciding their March milk price in the coming days, is that dairy farmers simply cannot afford to return to 1983 milk prices with 2009 costs,” Richard Kennedy said.

“Co-ops must understand that the March milk cheque is normally the first sizeable cheque of the year for dairy farmers, which is heavily relied upon to clear bills. Even at current milk prices, the March milk cheque farmers will receive in the next 10 days will come as a massive shock to most producers: a combination of poor prices, seasonally low constituents, and expectations of a reasonable amount to pay bills,” he added.

“Any further price cuts are intolerable, and co-ops must look in every other aspect of the business for necessary savings to share the pain with farmers and help them ride out the most difficult year in decades,” he concluded.

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