Base milk price of 50c/l "needed and justified", insist ICMSA

All co-ops and milk purchasers are being urged to raise the base milk price up to an unprecedented 50cpl in response to the spike in costs.

The call was made by ICMSA Dairy Committee Chairperson, Noel Murphy, speaking ahead of announcements for the March milk price by the co-ops.

He claimed the price is "fully justified by market returns while also being required to deal with surging input costs".

After a sustained period of high payments and incremental price rises, Lakeland Dairies paid 43.5 cent/litre for February milk - a jump of 2.5c/l on the month before. Now the ICMSA is seeking Lakeland Dairies to add another 6.5c/l to that price for March milk supplies.

Mr Murphy said 2022 had so far seen unprecedented rises in all commodities, including milk products.

According to ICMSA analysis, the most recent Dutch Dairy quotes showed the industry standard Butter/SMP mix increased by 2.5cpl in just one week while WMP stayed steady at almost 63cpl using an 8cpl processing cost. The Butter/SMP combination returned over 65cpl using the same metrics.

“On average, 60% of direct costs on a dairy farm are attributed to feed and fertilizer and the official statistics from the CSO released recently show that energy costs increased 32%, straight fertilizer is up 170% and feed stuffs are up 18%. The disturbing part of these statistics is that they are the annual increase from January 2021 to January 2022 with the increases in February and March yet to be included. The increase in fertilizer prices alone could add an extra 5cpl to the cost of production and much of that fertilizer is used in the present months with payment being requested earlier this year than other years resulting in additional financial pressures for dairy farmers.

"Farmers cannot be fobbed-off with a token 1cpl increase for March milk; the markets are returning prices well past 50cpl and farmers are absolutely entitled to see their milk price hit that figure of 50cpl for March milk. Co-op boards need to recognise reality and realise that everyone else can see the real situation also,” concluded Mr. Murphy.