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Carbery Group praised for its stance on milk prices

July 30th, 2015 5:20 PM

By Siobhan Cronin

Dan McSweeney, CEO Carbery Group: praised for holding milk prices

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A WEST Cork milk processor has been singled out for high praise by the ICMSA for its decision to hold milk prices.

With the average milk supplier out of pocket by €8,000 in eight weeks, ICMSA deputy president Pat McCormack, dairy committee chairman, has singled out Carbery as providing an example to others firms.

‘More high profile processors could learn from this week’s announcement from the West Cork milk processing group Carbery that, not alone were they holding price for June, but also committing to hold it for the next three months,’ he said.

Mr McCormack added that the latest round of what he called ‘statistically unjustified price cuts’ in other processors across the state had now left us with a situation where an average milk supplier was more than €4,000 gross down on their June milk cheque relative to 2014, following on from the in-excess of €3,000 drop they had suffered on their May milk cheque, relative to 2014.

‘We’re talking about getting on for €8,000 in eight weeks,’ he maintained, adding: ‘Milk suppliers are now in the classic trap where income is falling drastically at the same time as ordinary input costs are steady or rising and extraordinary costs, such as superlevy or expansion financing, are also in play.’

The ICMSA has maintained that the PPI is paying a price in excess of 28c per litre and its arguments have been ‘vindicated by Carbery’.

‘To their great credit,’ he said of Cabery, ‘they have now announced that they will be paying a price that will deliver in excess of 28.5c per litre for June milk and, moreover, are fixing that price for the next three months.’

‘Our question now to the other processors and co-ops is simple: if Carbery are able to do this, then why can’t you? In a context where an average milk supplier is down probably €8,000 on just the last two months’ milk, relative to last year, where is the leadership and commitment? Where’s the drive and mutual interests that we heard so much of just three months ago when quotas ended?’

Mr McCormack said the Carbery decision shows real commitment to the sector and it provides the kind of positive and strong example that some of our more high profile processors would do very well to note and imitate.

‘We’re well into the ‘Red Zone’ now, and we need to see a lot more commitment to the primary producer,’ he said.

Meanwhile, Kerry TD Michael Healy Rae said this week that the dairy market has suffered one of the most severe crashes in modern times due to dramatic drops in demand in China and the continued sanctions on Russian imports significantly distorting market durability.

The Kilgarvan deputy said Irish dairy farmers have now been warned that the price of milk may yet fall further as market uncertainty continues to plague the global dairy industry.

Latest figures indicate that the price per litre paid to farmers is as low as 29.6c, with the cost of production to farmers averaging at nearly 25c per litre before labour costs.

‘Continued uncertainty in the market has sparked fears of a milk bubble, similar to the often quoted property bubble,’ he said. ‘On one hand, supply is beginning to rapidly outgrow demand causing prices to suffer. On the other hand, the lifting of the milk quota in April led to increased investment in the industry amid suggestions that Irish productivity would increase significantly.’

The lifting of the quota was initially considered as a key step in the invigoration of the Irish dairy industry, the deputy added. ‘With restrictions on production ended, farmers across the country had expected to be able to invest in jobs, increase herd sizes and broaden their global market.

‘However, farmers are now finding themselves in a position where the overwhelming positivity from government officials following the lifting of the quota served only to be a false dawn, with the eventual impact adversely affecting dairy transactions.’

The independent TD slammed the ‘hands off’ stance of EU commissioners and said the Minister for Agriculture Simon Coveney should reverse the anti-interventionist policy of the government.

The Kilgarvan man claimed the government had failed to prepare farmers for the potential consequences of lifting the quota, claiming that many farmers across the country who invested in the dairy industry are now struggling to make profit on their output.

Healy-Rae challenged the refusal to intervene in the market and that under the current conditions, more needed action was needed to protect farmers, particularly in rural Ireland.

‘Irish farmers are among the most efficient in the EU and possess one of the lowest average levels of indebtedness on the continent,’ he said.

‘Recent figures from the Irish Creamery Milk Suppliers Association indicate that farmers have suffered a decrease of nearly €220m in revenues generated compared to the same period last year. Minister Coveney has stated that a review of EU intervention on milk prices would be necessary and that policies must be put in place to protect Irish farmers,’ Deputy Healy Rae concluded.

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