REACTION: Lakelands' breaking the 40c/l barrier should create a trend - ICMSA

Lakeland Dairies' decision to increase its December base milk price to 40cpl was welcomed by the ICMSA, although they said it warrants being even higher.

Lakeland Dairies today announced that their board had settled on an of its milk price by 0.5 cent/litre citing "relatively strong" global dairy markets with strong demand in Asia. Their price of 40 cent/litre in the Republic is inclusive of lactose bonus and VAT, for milk at 3.6% fat and 3.3% protein. In the North, Lakeland Dairies has increased its milk price by 0.4 p/litre to 31.9p/litre.

This is the high point in a sustained good period for the dairy market. For comparison, the December 2020 base price achieved last year was 32.28c/litre (including VAT / Lactose); and there was a so-called 'special' bonus of 1c/l (plus VAT). Lakeland Dairies paid 32.06c/litre, (inclusive of VAT and lactose bonus) for December 2019 milk.

Chairperson of ICMSA’s Dairy Committee, Noel Murphy, has welcomed today's decision to pay 40c/l, but claimed "there is still more available from the current market".

Mr. Murphy said that ICMSA believes that all milk purchasers should be paying "in excess" of 40cpl for December milk. They claim that dairy market data suggests that a higher price is "fully justified".

“The breaking of the 40cpl ceiling is indicative of a trend that we expect to continue through at least the first half of 2022," said Mr Murphy. "ICMSA hopes and expects that the Lakeland announcement will be followed by other milk processors recognising market realities and increasing their price to farmer-suppliers for December milk. The other Co-ops are due to set their milk price in the coming week and the onus is now very firmly on them to follow the Lakelands’ announcement with matching announcements of their own. ICMSA also expects positive responses on our call for a bonus on all milk produced in 2021,” concluded Mr. Murphy.