Calm approach called for as dairy markets fall

Commenting on the latest developments in international dairy markets just prior to meeting the CEO and Chairman of Glanbia PLC; John Comer, ICMSA President said that the situation required “a calm approach” and that no attempt should be made “to exaggerate or hype the present situation into some kind of market crisis”.

Commenting on the latest developments in international dairy markets just prior to meeting the CEO and Chairman of Glanbia PLC; John Comer, ICMSA President said that the situation required “a calm approach” and that no attempt should be made “to exaggerate or hype the present situation into some kind of market crisis”.

“ICMSA notes with disappointment the speed with which certain processors cut their milk price citing market returns,” he said, adding that the Organisation could see the stark contrast with the record over the last 18 odd months “where processors and co-ops were distinctly slow to increase their prices, even where those same market returns demonstrated a very serious gap”. “The lag between the price they were getting and the price they were paying their own suppliers was huge and farmers should bear in mind that a substantial number of co-ops and processors have long-term supply contracts signed and in place – as does the IDB – and these contracts are completely unaffected by the present market fluctuations.”

Mr Comer went on to say that over the past eighteen months, processors and co-ops had replenished their cash reserves “to a very high degree” and ICMSA felt that they had, therefore, been very well placed to absorb “any drop” in market returns, thus buffering their suppliers “from what every expert has estimated to be a very modest and temporary price adjustment”. “Put bluntly, they can well afford to absorb the recent market developments,” he said.  

A recent survey undertaken by Lakeland Dairies indicated that there was “considerable scope” for farmers to increase output.  “Lakeland farms currently tend to be understocked and there is potential to increase output off the available land bank,” Lakeland Dairies, Chairman Padraig Young said. “This increase in output could be of the order of 30-40 percent on some farms and up to 60-80 percent on others while staying within the nitrates directive. “Existing dairy housing could currently accommodate up to 20 percent more cows while beef housing conversions could add a further 50 percent extra dairy accommodation on some farms.”

Mr Young went on to say that dairying had become a major economic contributor in the northern region of the country where, he added there was “a thriving co-operative dairy industry which was essential to support our farmers and the wider community through the promotion of economic growth and rural development”.

“I’m very encouraged that the majority of our milk suppliers plan either to expand or to stay in dairying after 2015,” he concluded.