Glanbia cuts milk price by 3c/l

February price set at 32c/l and suppliers warned to ‘stress test’ budgets at 28c/l

GLANBIA Ireland was first out of the blocks to cut the milk price for February, amid warnings of an oversupply in the marketplace.

The Kilkenny-based processor moved yesterday to cut its price by 3c/l from January levels. It will pay milk suppliers 32c/l including VAT for February at 3.6pc butterfat and 3.3pc protein.

However, it will also include a ‘special support payment’ of 1c/l to reflect “the tough Spring” and “challenging” conditions on farms.

The Glanbia Ireland move comes as Global Dairy Trade prices slipped for the second time in a row. Glanbia Ireland’s Jim Bergin warned at the launch of the revamped Wexford cheese plant last week that there was an “oversupply situation”.

“Today, markets are trading considerably below the milk price, so therefore we will have to address that,” he added.

“Farmers should stress test their budgets at 28c/l. There has been a little bit of an improvement at the lower end but the last two GDTs have gone backwards.”

Glanbia Ireland chair Henry Corbally said they had signalled to farmers that returns were below farm gate prices and this move reflected “that reality”. He said the support payment would be made and it would continue to monitor developments on a monthly basis.

Farmers supplying fixed milk price schemes will also get the support payment, while Glanbia Ireland will pay the 20c/l on milk volumes lost to Storm Emma where they are not covered by insurance. Mr Corbally said a significant number would qualify for the seasonality bonus of 4.25c/l including VAT on February supplies where they must supply a minimum of 3pc of their annual supply in February and less than 15pc in June.

The ICMSA’s Gerald Quain said the cuts were disappointing and claimed it stood in sharp contrast to the “low and slow” policy of price rises when the dairy markets were strengthening. Mr Quain also said that the 1c/l adverse weather bonus should be part of the milk price and not classed as a bonus.

The IFA’s Tom Phelan said farmers would be all the more disappointed as February milk volumes will already be lower due to weather. “Even the bad weather bonus of 1c/l will not make up in farmers’ minds for the severity of the 3c/l cut in these difficult times,” he added, adding it would erode the “goodwill” for Glanbia’s quick action during the storm.