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The ICMSA has heavily criticised Glanbia’s decision to cut its base milk price by 2c/l to 28.46c/l excluding VAT for non-members.
Chair of the ICMSA’s dairy committee Gerald Quain said that suppliers would be angry and confused by the milk processor’s decision.
They don’t want to be recipients of Glanbia’s charity
He acknowledged that markets had not been as strong recently but insisted that they had been gaining momentum, particularly in the powder area.
“Global milk production has only grown by 1.4% in 2018 to the end of October, with a similar figure for the EU,” Quain said.
“Put that very modest growth in supply against the increased volumes and prices of skimmed milk powder that has left Intervention in the last month – over 60,000 tonnes in the last tender – and any reasonable analysis points to a positive market.”
Top-up
Not only did he insist that the cut to Glanbia’s base price was unjustified but he also called the 2c/l top-up to Glanbia members an attempt to fool suppliers.
“I have no idea why Glanbia indulges in this practice of cutting base price and then returning it as ‘top-ups’, as if it was somehow ‘out of the goodness of their hearts,” Quain said.
“They [suppliers] don’t want to be recipients of Glanbia’s charity or to be paid ‘top-ups’ with their own money out of the co-op.”
He added that farmers were now receiving less than the Ornua PPI, which he called embarrassing.
Loyalty payments
Quain continued that with the amount of skimmed milk sold out of intervention recently, the dairy market for 2019 was looking increasingly positive.
Loyalty or hardship top-up payments were common among a number of dairy processors over the last year during trying weather conditions.
Adding it back as a discretionary payment doesn’t fool anyone
However, Quain was emphatic that the ICMSA was not willing to accept a loyalty or hardship top-up payment model.
“If Glanbia wants to pay a bonus or discretionary payment then they should pay it on top of the minimum market price and that is the Ornua PPI. Cutting the base and then adding it back as a discretionary payment doesn’t fool anyone – certainly not their suppliers”, Quain concluded.
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