Agriculture

Tipperary farming: massive reaction to Glanbia's decision to cut milk price

Co-op cuts August price by 1cpl

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Tipperary farming: massive reaction to Glanbia's decision to cut milk price

Tipperary farming: massive reaction to Glanbia's decision to cut milk price

Dairy farmers had reacted with "fury" to Glanbia's announcement last week of a price cut for August milk prices, according to ICMSA dairy chair Gerald Quain.

And the IFA said the cut was a "major blow to the cash flow and confidence of its suppliers".

Glanbia Ireland (GI) announced last week that it will pay a base milk price for August of 28cpl, including VAT, for manufacturing milk at 3.6% fat and 3.3% protein. This is a reduction of 1cpl from the July base price.

The board of Glanbia Co-op has decided to continue to make a support payment to members of 0.5cpl, including VAT, for August milk supplies.

The Glanbia Ireland base price and the Glanbia Co-op support payment will be adjusted to reflect the actual constituents of milk delivered by suppliers.

The actual average price paid by Glanbia for August manufacturing milk, based on delivered constituents, will be 32.94cpl, including co-op support payment.

“Glanbia Ireland’s milk price for August has been adjusted to reflect weaker market returns for some products, including  butter. The rate of growth in global milk production is restrained, but unfortunately the supply demand balance for certain products is weaker. The board will continue to monitor developments on a monthly basis," said Glanbia chairman Martin Keane.

Lakelands also cut its price.

However, the chairperson of ICMSA’s dairy committee Gerald Quian said that farmer reaction to the price cut was one of “fury”.

He said that the overwhelming suspicion among farmers was that certain co-ops had taken advantage of the focus on the chaos in the beef sector and the distraction that offered to “slip this outrageous price cut through” while farmers’ attention was elsewhere.

Mr Quain said that his phone had “lit up” with calls from outraged farmers as they contemplated this latest price cut at a time when markets prices are continuing to rally and when production figures are at their lowest since the abolition of EU quotas.

He said that that the most cursory glance at the market data revealed the fact that these cuts were completely out-of-sync with what’s happening on dairy markets and reinforced the suspicion that the move had much more to do with internal accounting than any true reflection of the strength of dairy markets.

"We estimate that the 1cpl price cut for a standard 400,000L supplier will have cost him or her €425 on their August milk cheque. That mightn’t seem like a lot of money to the executives involved but it’s a lot of money to the farmers whose milk is keeping the whole dairy sector going”, said the ICMSA Dairy Chairperson.

"All I’ll say to them is that the real lesson from the beef dispute is that the farmers have their breaking point and when it comes – it comes hard,” said Mr Quain.

IFA national dairy committee chairman Tom Phelan said the 1cpl cut to a total payout of 27.04cpl, plus VAT, the second in as many months, was a "major blow to the cash flow and confidence of its suppliers".

He said this would be seen by all dairy farmers as a threat to the milk price decisions in their own co-ops later this month. The Lakeland 0.75cpl cut, to a price of 28.5cpl, plus VAT, which follows a 0.5cpl cut for July milk, while less severe, was also disappointing.

Mr Phelan called on the board members of all other co-ops meeting in coming days to decide on their August milk price to not follow slavishly the Glanbia example in cutting below the August Ornua PPI of 29.22cpl, plus VAT, and be more reflective of stable European trends.

"Board members must show independence of mind and objectivity in deciding their August milk prices. Use the facts of the market. Don’t let Glanbia decide the price you will pay your suppliers,” he said.