Thomas Lyons 
Lakeland Dairies, a major dairy co-operative in Ireland, has announced a cut in its milk price for supplies in April. The co-operative has reduced its price by 4c/L, bringing the figure to 38.85c/L including VAT, for milk at 3.6% fat and 3.3% protein. This is a drop from the 42.85c/L price for milk supplied in March. The April price includes an input support payment of 1.5c/L, inclusive of VAT, for all suppliers. In Northern Ireland, Lakeland has reduced the milk price by 3.5p/L to 31.5p/L, compared to 35p/L for last month’s price. The Northern Irish price also includes a supplementary input support payment of 1.5p/L.
Lakeland has attributed the price cut to “ongoing market conditions”. The co-operative said in a statement that “the balance of global supply and demand remains outweighed by a stronger level of supply with reduced market returns a continuing factor based on modest demand from buyers”. The statement also noted that the “overall inflationary climate continues to affect consumer sentiment and buying patterns”. Despite the current market conditions, Lakeland Dairies has pledged to pay the highest milk price feasible, as sustainably as possible. The co-operative is continuing to monitor market developments closely.
The announcement from Lakeland Dairies comes the day after Ornua, the Irish dairy exporter, announced its purchase price index (PPI) for March. The latest Ornua PPI has continued the downward trend seen in recent months, with the figure for March announced yesterday (Tuesday, May 9). The PPI for the month of April is 126.7, down from 136.8 for March. Estimated member co-operative processing costs of 7.7c/L (excluding any allowance for processor margins) for the Ornua product portfolio implies a return price of 37.6c/L including VAT. This is down from the 41.1c/L price reflected in last month’s index figure.
The energy cost element of co-op processing costs is variable month-on-month and changes depending on energy costs. Ornua also announced that the value payment to member co-ops for the month of April is €7.1 million, which equates to 5.1% of gross purchases in the month (2.9% year-to-date).
The Irish Farmers’ Association (IFA) has criticised the latest price cuts from Lakeland Dairies and Ornua. Tom Phelan, the chairman of the IFA National Dairy Committee, said that “the latest milk price cuts by Lakeland and Ornua are a huge blow to dairy farmers, who are already under severe income and cash flow pressure”. He called on the Irish government to provide support to farmers in the form of low-cost loans and tax deferrals.
Phelan also criticised the lack of transparency in the pricing mechanisms of co-operatives. He called on co-operatives to “open their books and explain to farmers how they arrive at their milk prices, and to make a commitment to pass back the maximum possible percentage of returns from the marketplace”.
The Irish Creamery Milk Suppliers Association (ICMSA) has also expressed concern about the price cuts. Gerald Quain, the chairman of the ICMSA Dairy Committee, said that “farmers are becoming increasingly frustrated and angry at the way the milk price is falling”. He called on co-operatives to “show leadership and solidarity with their members by holding the milk price at current levels”.
The ICMSA has also criticised the lack of transparency in the pricing mechanisms of co-operatives. Quain said that “farmers need to know how their milk price is arrived at and they need to know that they are getting the best possible return for their product”. He called on co-operatives to “provide full transparency on milk price, and to give a clear explanation of how they are calculating their prices”.
The Irish dairy industry has been facing significant challenges in recent months, including a drop in global dairy prices and uncertainty over Brexit. Despite these challenges, the industry remains a major contributor to the Irish economy, with dairy exports accounting for €4.4 billion in 2016. The Irish government has pledged to support the industry through Brexit and to promote its growth in international markets.
In conclusion, the latest price cuts from Lakeland Dairies and Ornua have been met with criticism from farming organisations. The lack of transparency in the pricing mechanisms of co-operatives has also been highlighted as a concern. Despite these challenges, the Irish dairy industry remains a major contributor to the Irish economy, and the government has pledged to support its growth in international markets.
