Dairy farmers ‘losing patience’ as market improvements still not reflected in price

The current bounce in milk markets across the globe is a welcome and ongoing development according to ICMSA Dairy Chairperson Noel Murphy, but he warned that Irish milk suppliers are losing patience as the bounce fails to materialise in their farm gate prices.

Mr Murphy noted that 2023 had seen significant falls in spot markets from the high of 2022, with resultant falls in farm gate prices of 20cpl or higher in the first half of the year. The falls in price some farmer experienced were in some cases higher than the total price received by some as recently as 2016.

The ICMSA chairperson said that when markets turned positive for the duration and to the degree we had seen recently, then farm gate prices simply had to follow. Mr Murphy said that this demonstrably had not happened for October prices, when some co-operatives decided that there was still time for deductions. The Ornua PPI is running at 36.1cpl for October, but there are many falling up to 3cpl short of that amount and that gap needs to be narrowed and eliminated in the coming months if farmers are to have confidence in their milk purchasers.

“Since the lowest ebb of Dutch dairy quotes in late August, the industry standard butter and skim milk powder mix are up almost 10.5cpl and the whole milk powder returns have increased almost 8cpl. This is a three-month-long sustained increase unprecedented in 2023 and shows conclusively that there is increased confidence in the market.

“That confidence and level of trade must be reflected in higher prices to farmers supplying those co-ops. It’s worth drawing attention to the fact that those farmer-suppliers have endured a miserable year where cost of production have not eased back to original level and are currently hovering around ‘breakeven’ with the prices being paid by their co-ops. That has to change and we know – I repeat, we know – that the co-ops are getting better prices than their payments to their farmer-suppliers would indicate”.