IFA national dairy chairman, Tom Phelan, has questioned co-op processing costs and has called for a “root and branch” examination to be carried out to reveal the true cost of doing business.
Phelan said it is unacceptable that farmers are taking the “full brunt” of the COVID-19 impact.
“Energy costs are well down and will reduce the cost of collecting and processing milk for many months ahead,” Phelan explained.
“Co-ops cut the March milk price by too much, too soon despite the fact they had sold product forward. The worst-case scenario which co-ops used to justify up to 2c/l March milk price has simply not materialised, as dairy prices have remained above intervention,” he said.
The national dairy chairman reported that the global dairy trade is slowly restarting. As China comes out of lockdown, their March dairy imports have increased by 10% while EY sales rose by 20% in volume compared to March 2019, according to Phelan.
“As we write, EU average SMP prices are €242, and butter prices €703/t, and EU spot prices €220 and €410 above their respective intervention buying-in levels. The introduction of the EU APS scheme, after much lobbying by IFA and other industry interests, clearly reassured operators and helped prices to stabilise,” he added.
“Farmers will have to look at all of our costs to protect their businesses from COVID 19. Co-ops must do the same,” he concluded.