Co-ops have scope to cut costs beyond milk prices and cannot expect farmers to take all the pain, IFA dairy chair Tom Phelan has said ahead of co-ops meeting in the coming weeks to set April milk prices.

Phelan urged co-ops to optimise the April milk price after severe cuts in March to ensure that farmers are not being asked to take all the pain of challenged dairy markets.

He pointed out that, as the EU has announced an admittedly limited and insufficient APS scheme for butter, SMP and cheese, spot prices for SMP and butter have stabilised in the last two weeks.

Challenge

“While dairy markets are being seriously challenged by COVID-19 and the loss of demand from food services, it is clear that the doomsday predictions of some who said dairy prices would fall to intervention levels are not materialising.

“Furthermore, dairy markets cannot be the only consideration in deciding on milk prices. With crude oil prices down 75% since early January, fuel and energy costs have plummeted for processors.

"Co-ops have scope to cut costs beyond milk prices and cannot expect farmers to take all the pain,” he said.

Cashflow

To support farmers’ cashflow during the spring months, in which farmers normally pay merchant credit and other bills, many owed to their own co-ops, board members must not forget the steep price cuts they applied in March, and work to optimise the April milk price, he said.

Phelan said the IFA dairy committee would approach co-op board members from next week to discuss their co-ops’ milk prices.

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