Published: Wednesday, 1st September, 2010 5:00pm

Farmers demand co-ops take action on prices

At the IFA dairy meeting in Longford were (from left) IFA National Dairy chairman Kevin Kiersey, Connacht Gold director TJ Tuffy, Ulster/North Leinster IFA vice-president John Waters, Discussion Group spokesman Owen Brodie, Connacht Gold Co-op vice-chairman Pat Duffy and chairman Padraig Gibbons.

At a meeting to discuss the dairy industry in Longford last week, IFA National Dairy Committee chairman Kevin Kiersey said it was important that the consensus among co-ops on the need for further consolidation be rapidly followed by action.

The meeting, chaired by IFA North Leinster/Ulster vice-president John Waters, was also addressed by executive secretary Catherine Lascurettes, and Discussion Group spokesman Owen Brodie. Board members from co-ops in the north, west and north east had been invited in addition to IFA county executive and dairy committee chairmen, and there was a strong turnout of over 40 co-op directors from the Lakeland, Connacht Gold, Town of Monaghan and Donegal Creameries boards.

During open and frank discussions in which many board members freely expressed their views on the matter, all agreed that milk collection, processing, R&D and marketing needed to be restructured and consolidated around the Irish Dairy Board to adapt the industry to the new realities of a less supported market, but also to cater for potential production expansion, in the light of the 2020 Report recommendations.

The IFA-created forum is providing a unique opportunity for co-op board members to link with fellow directors from other co-ops to share their views and concerns on the topic. Mr. Kiersey said the IFA's aim was to ensure that the drive towards industry consolidation does not lose momentum as milk prices recover.

He encouraged board members to progress the discussions to action rapidly. "Just as with our meetings in Macroom and Nenagh earlier this summer, we have found that board members were keenly aware of the need for a major consolidation effort, and genuinely well disposed towards greater co-operation, particularly with neighbouring co-ops, to achieve greater rationalisation.

"However, we have also found that issues of trust needed to be surmounted in some instances, and that local considerations must not stand in the way of the best interest of shareholder suppliers," he said.

"It was also clear from the meetings and from recent correspondence with co-ops that a significant amount of co-operation is already taking place, which the association is attempting to quantify," he said.

"While appreciating that essential work is currently being carried out by KPMG for ICOS to establish the best way forward based on solid costings, farmers on the ground are becoming impatient with the apparent lack of progress. On the eve of quota abolition, and with government targeting a 50% expansion in milk production by 2020, co-ops now need to go beyond limited collection and co-processing arrangements. They must take consolidation to the next stage and act on the decisions which will optimise the use of scarce farmer resources for the benefit of the entire sector," he said

Representatives of dairy discussion groups, who have recently weighed into the debate, have been invited to address each meeting.

ICMSA and Glanbia

Commenting on the Glanbia results for the first six months of 2010, Pat McCormack, chairman of the ICMSA Dairy Committee, said that the €13.2m increase in profits derived from the milk processing business in Ireland is confirmation of the ICMSA view that milk processors and co-ops have been holding back on farmers and that milk price should be higher based on market returns.

"In June alone, we estimate that Irish co-ops underpaid farmers to the tune of 2.5 cents per litre, which is equivalent to €17m or about €850 per dairy farmer, and this at a time when many dairy farmers are still trying to clear the debts left behind from 2009 with banks and co-ops as well as other input suppliers," said Mr. McCormack.

"It would appear that milk processors do not realise that dairy farmers are still repaying bills for 2009 and that every additional cent per litre is critical to their recovery. In Glanbia's case, there are seven other milk processors in Ireland paying a higher milk price at this time.

"Given Glanbia's scale and their declared profits from their Irish milk processing business, it is absolutely essential that the board immediately close this gap and start moving up the league of milk payers in Ireland," he concluded.