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Barryroe Co-op in west Cork has regained top spot from near neighbour Lisavaird in the Irish Farmers Journal/KPMG milk price review for 2018. Barryroe delivered a milk price of 36.95c/l excluding VAT, levies and collection charges to suppliers. The other three west Cork co-ops – Lisavaird, Drinagh and Bandon – take up second, third and fourth position respectively (Table 1).
The average net price paid in 2018 was 34.63c/l, down 1.23c/litre on the 2017 average milk price. It is still a relatively high price and is the fourth highest price when we look back over the last 10 years (Figure 5). The most recent peak in averages was in 2013, when the price averaged 37.76c/l.
The four west Cork co-ops that trade under the Carbery banner keep the big players out of the top four. Based on the Irish Farmers Journal/ KPMG main table, Glanbia assumes fifth spot.
However, the Glanbia price used for ranking by the Irish Farmers Journal is revised to reflect the fact that the KPMG figure includes the trading bonuses paid to suppliers for agribusiness inputs. As per the technical definition, because payment for these schemes is made in c\l, the price, reviewed by KPMG, includes the trading bonuses. The Irish Farmers Journal believes the inclusion of these schemes compromises the ability to compare prices equally across all processors.
Throughout our analysis, the Irish Farmers Journal has therefore revised downwards the figure in the KMPG table by 0.5c/l to reflect what we believe to be the value of these schemes. This is based on our own calculations as Glanbia was not in a position to provide this information.
When this adjustment is made, Dairygold leapfrogs Glanbia into fifth position (as per Table 1) paying an average of 0.07c/l above the revised Glanbia price.
Dairygold and Glanbia are by far the biggest processors and between them had over 52% of the 2018 manufacturing milk supply captured in this analysis.
There is 0.55c/litre between Glanbia and Tipperary Co-op, which comes in seventh position in the review. Tipperary had a difficult autumn in 2018 with a contamination event, and while its board obviously kept milk price to the farmer up, it did have consequences in terms of profitability for the business.
There is only 0.26c/l separating Tipperary from Lakeland in eighth position. Behind Lakeland is Kerry which is marginally ahead of near enough neighbour in north Tipperary Arrabawn, which comes in at 10th position with a price of 33.14 c/l. There is very little between Lakeland, Kerry and Arrabawn, with the range from 33.26c/l from Lakeland to 33.14c/l for Arrabawn. Arrabawn has slipped down a position from 9th to 10th place this year.
Bottom of the review comes the largest processor in the west Aurivo with a price of 32.91c/l in 11th. In last year’s review Aurivo was the one processor that had made considerable progress moving from 11th in 2016 to eighth position in 2017. It means the typical cow producing 5,000 litres in the Aurivo catchment is bringing in €202 less per cow than the cow in west Cork.
One of the standout messages from the review this year, similar to last year, is the gap between top and bottom. A 5,000 litre cow supplying Barryroe would yield €1,848 in output value compared to a 5,000 litre cow delivering to Aurivo yielding a value of €1,646, that’s €202 less per cow. Compared to previous years, less of the price difference is explained by the fact the lower-ranking processors get poorer fat and protein compared to the co-ops higher up the review table. Some also benefit from a higher proportion of milk delivered in November, December and January with winter premiums included. From Table 1 you can see 13.89% of the annual manufacturing milk is collected from November to January inclusive for Lakeland. However, most processors have over 10% supplied during November to January inclusive. Much of this winter milk qualifies for a bonus in an effort to compensate farmers for the higher costs of producing milk in this period. The KPMG/IFJ price review examines the price paid for manufacturing milk and excludes all milk bought for or used in the liquid milk market.
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