Farmers’ biggest concern is impact of milk prices on incomes

Added on: 14 May, 2014

The biggest concern for farmers, especially at a time when dairy markets are softening, is the impact on their income of milk price and input cost volatility.

That’s what IFA national dairy committee chairman Sean O’Leary said during a visit to Mitchelstown.

Committee members visited Dairygold’s newly commissioned plant in the town and ran a workshop on risk management in the face of milk price and margin volatility.

Mr O’Leary said the visit was important in building their confidence in the future of the sector, and its ability to find products and markets for the growth in milk.

“In this regard, the committee was very clear that co-ops must manage very carefully their price decisions in 2014,” he said.

Mr O’Leary pointed to a number of factors which, he said, fully justify co-ops holding milk prices at least for the peak period. These were the April market returns, accumulated profits in 2013, a €13m injection from the Irish Dairy Board in dividends and bonuses, and the need to help farmers stay ahead of superlevy bills.

“For the longer term, I believe all stakeholders must now focus their energy on addressing the impact of volatility on farmers’ incomes and their ability to invest,” he said.

Mr O’Leary said the Government must provide tax-based solutions such as those proposed by the IFA in its recent Agri-Tax Review submission. The Government must also ensure implementation of the Common Agricultural Policy under Pillar I and II supports productive farming.

“The European Union authorities must improve, through the new Milk Market Observatory, its ability to react promptly with market management measures to anticipate crises,” he said.

Mr O’Leary said co-ops and the Irish Dairy Board must join forces to develop price-hedging instruments and fixed-price contract options which farmers can opt for on a voluntary basis to secure the medium/longer-term price and margin for a percentage of their milk. “In the context of the on-farm expansion investment required of dairy farmers, such tools would be invaluable,” he said.

Ray Ryan  Irish Examiner © 2014