Lakeland Dairies are expected to cut their milk May prices to farmers at a board meeting today.
It is feared that Lakeland Dairies may be forced to cut their price by between 1.5-2.5c/l. The Lakeland meeting comes against the background of oversupply of dairy products worldwide and Glanbia's announcement of a cut in their May milk price to farmers of 2.5c/l. In April both Glanbia and Lakeland Dairies had dropped their milk prices by 3c/l, with the latter's price falling to 31.5c/l.
Jim O'Rourke, IFA County Cavan chairman, and dairy farmer told the Celt that a further cut would "set us back to 2009 levels". He pointed out that it took until 2011 for many farmers to recover from that disastrous year and in 2009 banks were more receptive to farmers' loan applications.
Dairy farmer Lorcan McCabe from Lough-an-Lea, who is also the Bailieborough chairman for the ICMSA, agreed that the pressure on milk prices comes despite signs of buoyancy on the global market. He points to New Zealand's Fonterra Cooperative Group who are holding their meeting on Friday - too late for the Lakeland Dairies meeting - and they would be hopeful that milk prices will rise, hopefully setting a global trend. However New Zealand's farm gate milk price base is lower than those in Ireland.
"The market seems to have bottomed out," Lorcan told the Celt, "and we would be hopeful that Lakeland would stick at 30c/l and not let it go under that price - that that would be a threshhold."
Lorcan said that any price cut would have a severe impact on income.
"Every cent per litre is between €3,000-4,000 for the average dairy farmer. So a cut of two cent on a yearly basis is going to be an €8,000 cut in my income," said Lorcan.
Lorcan appreciates that Lakeland Dairies may be forced to consider a price cut "to keep their business going" and does not believe they are "scamming off extraordinary profits."
Cavan IFA Dairy committee chairman Anthony Leddy pointed to European markets for evidence of recovery in arguing that co-ops should hold their prices.
"There is more evidence every day that European dairy commodity prices have stopped falling, and are now staging a recovery, as proven by the most recent European quotes. Since the beginning of the month, Dutch butter prices have lifted by €80/t, SMP by €50/t; French quotes for the same products are up €130/t and €50/t, while latest German prices are up €60/t and €50/t respectively" he said.
ICMSA chairman Pat McCormack said that given the pressures on dairy farmers, co-op boards should be "taking a long-term view" and urged co-ops to hold their milk price at April levels."
He noted that the Glanbia cut "is in sharp contrast to the position adopted when dairy markets were improving in 2011 when all co-ops were slow to pass back market improvements. Farmers can legitimately ask the question why the sharp contrast in policy when milk price is rising and when milk price is falling?"
At time of going to print, a spokesman for Lakeland Dairies declined outright to comment on milk pricing issues as he said that it would be for the Board of the co-operative to decide at their next meeting which was due to take place on Wednesday.