The IFA believes milk processors must increase their milk prices for December 2021 supplies.
Its dairy chairman, Stephen Arthur, stated that processors must pay a milk price “well in excess” of 40c/L this month.
The Ornua PPI for December has climbed to 135.5, an equivalent farm gate price of 41.6cpl (VAT incl).
When adjusted to include the Ornua Value Payment, worth €3.72m, the equivalent farm gate price is 45.6cpl.
Arthur pointed to rising input costs, adverse weather, and more “restrictive” environmental policies.
As a result, he said global milk supply from the main exporting countries has been constrained despite a “substantial” increase in dairy commodity prices.
He added that this tightened supply supports the “sustained” rise in milk price we have seen for the past six months.
This week’s New Zealand GDT auctions also reported milk price increases in butter, SMP and cheddar cheese.
However, he stated that to benefits to farmers of the increase in milk price have been “significantly offset” by the rise in input costs.
Teagasc estimates that the average cost of production will increase by 13% in 2022. This is on top of a 9% increase in 2021.
Combined, this will lead to a cost increase of circa 23% within two years. The state agency expects this to result in a decline in average incomes for dairy farmers in 2022.
“Given the buoyant year processors have had and the rising costs farmers will have to incur this year, every board member has to seriously consider a 13th payment for its suppliers,” he concluded.
Dairying in 2022
The Teagasc Outlook 2022 Economic Prospects for Agriculture predicts that fertiliser prices could be 120% above this year’s levels in 2022.
Therefore, with this “substantial” increase, it anticipates lower fertiliser use among farmers in 2022.
The report states that even with “normal” weather conditions in 2022, feed use per head on Irish dairy farms is expected to rise by about 7%. The state agency cited the high price of fertiliser and expected fall in usage as the main reasons for this.
Furthermore, it expects feed prices to increase by 6%. Also, it predicts a 16% hike in fuel prices due to an increased carbon tax.