June milk league: Summer price cuts continue for Irish milk processors

The June milk league table reflects the third round of milk price cuts as a result of the global supply and demand imbalance.

In summary, most processors cut milk price by 1c/litre from May to June, with some anomalies. The small north Cork Co-op called Boherbue that supplies the Kerry-based Cadbury chocolate factory tops the league as it only made a 0.5c/litre cut from the May price. It is followed very closely by Centenary Thurles, which is paying a 1c/litre bonus for June and July to those suppliers (95%) that have signed a milk supply agreement (MSA). This is the second month in a row that Centenary Thurles is mixing it up at the top of the league.

The west Cork co-ops remain towards the top of Division two as they cut milk price by 1c/litre. Kerry held May price for June so it jumps up from the bottom of the table.

Kerry needed this June boost, but the news that it has cut its July price by 2c/litre will not go down well in the Kingdom. Kerry will have a good bit of ground to make up before the year end to stay with the rest.

There is very little (only decimal places) between Aurivo, Kerry, Glanbia and Arrabawn in this June league. They are all paying between €3.71 and €3.73 per kg milk solids.

Some farmers thought that Aurivo Co-op had topped up milk price from a stability fund, and hence effectively there was no cut in June price. However, the real story is the Aurivo May price was 30c/litre, made up of 28.5c/litre and 1.5c/litre from a so-called stability fund. June price is 28c/litre (a cut of 2c/litre) made up of 26.5c/litre and 1.5c/litre from the stability fund. As one farmer said to me, it all has to come out of the same pot – whether its profits, the balance sheet or stability funds, it doesn’t make much difference.

The June Glanbia price has a 1c/litre top-up from the co-op and 1c/litre top-up from the GII stability fund which started in 2013.

Dairygold Co-op falls into poor company in the bottom division for June with Lakeland, Monaghan and Tipperary Co-op.

Again, there is not much difference between these four processors and in reality not much difference to Division 2 players highlighting that all processors are coming closer together towards the bottom of the league.

Tipperary cut May price by 1c/litre to June. Some reported that the co-op cut by 2c/litre for June but this is incorrect.

Explanation

On top of the strong milk league price, the four co-ops in the Carbery group pay a bonus of 0.5c/litre for milk with an SCC of below 200,000 during the summer months – this is not included in the milk league ranking because it is not paid to everyone. Such conditional bonuses are not included in the monthly milk league but all co-ops would get the benefit of any money paid out on this to farmers in the KMPG/Irish Farmers Journal annual milk price review.

The monthly milk league ranks processors on the price paid for a kilogramme of milk solids, using the average milk fat and protein for last year (3.99% fat and 3.43% protein) in the calculations.

For a spring milk producer with a typical June supply pattern (13% of total supply), there is a €906 difference between the top player in the league, Boherbue, and the bottom player, Dairygold, for the standard litre of milk (at 3.99% fat and 3.43% protein).

July cuts

The additional cuts to July milk prices announced by processors over the last 10 days are summarised in the table below and most processors have cut prices again. These June and July cuts show the seriousness of the situation in terms of dropping milk output values for farmers.

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