Voluntary milk reduction scheme 'most efficient way' to stabilise market

The most effective way of stabilising the market in order for milk prices to increase, is by introducing a voluntary milk reduction scheme, ICMSA president Pat McCormack has said.

In 2016, such a scheme was introduced in which farmers got paid to produce less milk than they did the previous year.

This, McCormack said, was voluntary and not everyone was forced into it, but it ended up having a huge impact on market sentiment.

McCormack’s call comes as milk prices continue to drop.

“Our number one priority is to see milk price return to in excess of 40c/l, which is the only price that’s going to be sustainable into the future.

“And the most efficient way of stabilising the market has been proven to be the voluntary reduction scheme,” he said.

He said that there is a view out there that farmers can produce milk irrespective of the price they receive but this is forcing a substantial amount of farm families to exit the sector.

“Primary producers now find themselves in a loss making exercise. Farmers who may have made large investments in infrastructure, are under significant pressure.

“Equally there are a number of farmers who would have made imprudent decisions in financing their businesses last year whether it was buying a tractor or building a shed, and, they would have done it out of cash flow,” he said. It seems, McCormack maintained, to have been the policy of co-op board members around the country to make significant and continued cuts to milk price.

“They’re quite happy to bring it back in two and three cents per litre, month after month. Whereas it was going up in very small fractions of a cent or a cent and a half last year,” he said.