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22 May 2022

Longford Leader Farming: ICMSA want co-ops to consider 2021 end of year bonus

Aurivo decision to cut its October milk price by 1cpl ‘will disappoint suppliers'

ICMSA Dairy Committee, Noel Murphy has called on milks processor boards to look at paying an end-of-year bonus to milk suppliers

Reviewing market returns throughout the twelve months of 2021 and the milk price paid to farmers, the newly elected Chairperson of ICMSA’s Dairy Committee, Noel Murphy, said that significant returns from the market were achieved last year and milk processor boards must now look at paying an end-of-year bonus to milk suppliers to reward dairy farmers for their huge contribution and to fully reflect the improved market returns from 2021.

Mr Murphy said that close analytical tracking of the Ornua PPI through last year demonstrated conclusively that milk processors had not always paid the base price in full and that was before any consideration of added value payment.

He noted that the 2021 milk payment year will come to a close later this month and ICMSA is proposing a bonus that would bring the final 2021 milk price up to actual market returns.

To give some idea of the significance of the bonus ICMSA envisages, Mr Murphy estimated that the value added payment would be worth almost €5,000 to every dairy farmer in the country if paid out on a flat division.

“Dairy markets showed considerable improvements throughout 2021 and clear evidence of this can be seen in the Ornua Index which increased by a hugely significant 24 basis points.

The GDT rose by over 30% and the Dutch Dairy quotes rose by over 20cpl on both Butter/SMP and WMP. We are confident that Q1 of this year will see this trend consolidate.

The increase in the farm gate price paid to farmers between December 2020 and November 2021 was approximately 7cpl, which was very a modest increase given the buoyancy of the market. 2022 will be a challenging year in terms of inputs cost and that increases the importance of milk price.

The record shows that 2021 market returns were notably better than the actual milk price received by suppliers and that difference should now be returned as an end-of-year bonus to Co-op milk suppliers”, said Mr Murphy.

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