• Farming

Weak dairy market cited by Carbery Group as reason to cut milk prices

Monday, 26th August, 2019 1:39pm

Story by Emma Connolly
Weak dairy market cited by Carbery Group as reason to cut milk prices

TJ Sullivan, chairman of the Carbery Group, defended the cut in milk prices to suppliers. (Photo: Anne Minihane)

THE chairman of Carbery has defended their milk price cut of 1c a litre for July saying it had to be made due to weaker dairy markets. 

Newly-appointed TJ Sullivan insisted he was a farmer ‘first and foremost,’ as are, he said, five members of the Carbery board: ‘Every decision like this is painful but we are a business as much as anything else and it would be unwise to be working at a loss.’

Carbery issued a statement breaking the news to their suppliers which read: ‘As a result of weaker dairy markets, the board of Carbery Group has decided to reduce its milk price by 1c per litre for July, which equates to a price of 29.8cpl, replicated across the four co-ops Bandon, Barryroe, Lisavaird and Drinagh.

‘However, the board has also decided to pay 1cpl in support of its farmer shareholders from its stability fund to, effectively, offset the reduction. Carbery Group will continue to monitor the market going forward.’

Mr Sullivan said the biggest issues currently impacting the dairy market are Brexit, the complete collapse of sterling and a very sluggish European market. 

‘But is this happening because of Brexit or could it be worse after Brexit? No one knows. After the drop in prices last May, it was felt that the market would hold for the rest of the year but it looks even weaker again. It’s impossible to predict what the market will do and decisions will be made on a month to month basis. We have to be prudent in what we do, and that’s what the stability fund is there for.’

While farmers are being compensated by the stability fund they are none the less unhappy about the decision, and the reason given for it. 

West Cork IFA Chairman Corney Buckley, acknowledged the support payment from the stability fund, butsaid the cut was especially disappointing at this time of year.

‘August has not been a great month and supplies are falling faster that we would have anticipated. All the time farmers costs are not coming down. I’d urge the Carbery board to hold their nerve and rethink this next month. Global demands will level out,’ he said. 

Carbery is the third processor to announce price cuts for July. Dairygold made cuts of 1c, bringing the base price for July supplies to 28.16cpl. Aurivo cut its price by 0.5c to 28.46c/l.

Meanwhile, ICMSA’s Dairy Committee Chairperson, Ger Quain, hit out at what he’s called ‘a two-tier milk price system at play in the Irish market.’

‘The prices announced for the month of July have made this very obvious as there is now a discrepancy of over 3cpl between the top and bottom prices being paid to farmers from around the country,’ he said.  

Farmer suppliers are well aware of the uncertainty around international dairy markets at the moment, he said. ‘But ICMSA still feels entitled to ask why there is such shocking differences on what is a homogenous market for homogenous products around the globe.’