In this opinion piece, Noel Murphy, the chairperson of ICMSA’s dairy committee, warns co-ops on aggressive pricing that leads the market down.
Co-ops citing “downward price pressure” on dairy products as the reason for cutting farmer milk prices must ensure that their own actions are not contributing to that downward pressure.
There is a clear onus on individual co-ops not to compound those downward pressures by moving towards what I would describe as aggressive pricing or selling that leads the overall market down.
There is a point when legitimate competition tips into undercutting and that drags a whole market down.
We are not there just yet, but it is something we have seen this for many years in the liquid milk market, and let us just be polite and say that it does not work very well – certainly not for the farmers, anyway.
I am also sceptical of the specification of a ‘support payments or ‘top-ups’.
ICMSA has never liked these discretionary ‘add-ons’ and ‘special’ bonuses or one-off ‘supports’.
We have always maintained that it is much more practical and transparent for the co-op to simply pay the highest base price it can and avoid the kind of ‘camouflage’ that we have seen from other co-ops for years.
We do not usually accept the principle of discretionary payments or supports.
This is different because there is a notable and inexplicable lag on Irish input costs that the state agencies do not seem that bothered about, and most co-ops recognise that.
But, as a rule, farmers want to be paid by way of maximum base milk price, and they distrust – and very legitimately – the idea that co-ops can start twiddling around with that and start adding or taking away discretionary payments.
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