Co-ops must follow lead of dairy suppliers and revise predictions

THERE have been calls for co-ops to “look deep into their cost structures” to hold April milk prices.

IFA President Tim Cullinan was speaking following a meeting of the IFA’s National Dairy Management Committee, at which he called on co-ops to follow the lead of their farm suppliers and re-evaluate their profit margins and predictions on the back of the COVID-19 crisis.

“Co-ops rushed to slash the March milk price, even though up to 30 per cent of spring milk would have been sold forward at much higher than current prices,” Mr Cullinan said.

“It was clear that dairy farmers would not accept further cuts while co-ops had major scope to reduce their costs.

“Oil and gas prices have plummeted to historical lows, which will reduce the cost of milk assembly and processing for all co-ops.

“Also, in light of the exceptional circumstances, banks have engaged with all their customers, households and businesses alike. Co-ops must use this opportunity to also seek greater leeway on their commitments,” he added.

Mr Cullinan’s calls were backed up by National Dairy Chairman Tom Phelan, who said co-ops must take a look at their cost structures for the benefit of suppliers.

“Some co-ops, which have lagged behind on milk prices all through 2019 and into 2020, while others have consistently delivered the top prices, have more work to do to deliver for their suppliers,” Mr Phelan said.

“We are starting to see some green shoots on markets: most of Asia is out of lockdown and dairy imports are starting to flow again, with a 20-per-cent increase in EU exports to China for March alone.

“The introduction of the EU Private Storage scheme, as limited as it is, has helped improve market confidence and stabilise spot dairy commodity prices. Many European countries are coming out of lockdown and restarting food services in coming weeks and months, progressively restoring the outlet which was cut off abruptly some weeks ago.

“The message from the IFA National Dairy Committee and the dairy farmers they represent is clear: co-ops must now focus on digging deeper into their own cost structures to support their suppliers.”