The ICMSA believes co-ops must consider paying an end-of-year bonus to milk suppliers to “reward” dairy farmers.
That is the view of the newly elected chairperson of ICMSA’s dairy committee, Noel Murphy.
He spoke in light of reviewing market returns throughout the twelve months of 2021 and the milk price processors paid to farmers.
He said that “significant returns” from the market were achieved last year.
As a result, he believes milk processor boards must now look at an end-of-year bonus to milk suppliers as a way of rewarding dairy farmers for their “huge” contribution and to “fully reflect” the “improved” market returns from 2021.
Murphy claimed 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 would come to a close later this month.
The farm group proposes 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, Murphy, estimated that the value-added payment would be worth almost €5,000 to every dairy farmer in the country if processors paid out on a flat division.
He pointed out that dairy markets showed considerable improvements throughout 2021.
He said farmers could see evidence of this in the Ornua Index, which increased by a “hugely significant” 24 basis points.
“The GDT rose by over 30%. 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. He said this was a very modest increase given the market’s buoyancy.
He acknowledged that 2022 would be a challenging year in terms of inputs cost. Murphy said 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. That difference should now be returned as an end-of-year bonus to co-op milk suppliers”, Murphy concluded.