IFA Dairy chairman Stephen Arthur says processors must step up with a meaningful price increase for May milk if they do not wish to see supply fall further in the second half of the year.
Statistics released by the Central Statistics Office show that milk supply for the first four months of 2022 was lower than 2021, despite an increase in milk price. “This reflects the massively higher cost of production on dairy farms,” said Arthur.
“All milk indices – the European EEX, the New Zealand SGX, and GDT as well as the Ornua PPI – are trending higher and indicating price increases into the medium term, mainly due to sluggish supply worldwide. Now is the time for Irish processors to give confidence to dairy farmers at a time of ever-increasing costs, by setting a milk price for May that reflects the market,” he said.
Farmers who are tied to Fixed Milk Price contracts, which are currently at a level substantially below the cost of production, must also be considered.
“Some processors have taken initial steps to address this, but more needs to be done, especially as some initiatives require farmers to commit milk for further years at what appears to be low prices when compared with current market returns,” said Arthur.
“These affected farmers need to have confidence that if they sign up to such schemes, then the price set for future years will realistically be in line with the likely market price.”