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A case study into dairy farms by the IFA has found that even without May price cuts, €7,000 comes off a commercial farmer’s May milk margin.
The case study looked at a farmer who was producing 400,000l in 2013 and increased his production in line with national output growth to date.
It was found that the farmer would lose €7,181 from his May milk margin compared with May two years ago – assuming there are no further milk price cuts.
This means the producer would be in the red by €744 in May this year because milk price falls 1.13c/l below production costs for this month.
Sean O’Leary called on Minister for Agriculture Michael Creed to suspend superlevy deductions and introduce short-term loans to relieve cashflow pressures from superlevy, merchant credit and other debt, as intended by the EU Agriculture Council’s March decision on state aid.
Challenging markets
“Superlevy deductions for farmers who signed up to the three-year repayment scheme have started to be taken from the April milk cheque, and will continue into May and other peak months. Minister Creed must suspend those immediately,” he said.
“Our calculations are for a farmer who grew relatively organically, on par with national growth of 4.5% in 2014, 13.09% in 2015, and we have assumed growth of 7% for 2016. Any farmer who made a significant investment will be faced with much higher costs and their losses will be proportionally higher. Also, the remuneration of the farmer’s own labour is not included as a cost by Teagasc in the National Farm Survey,” the dairy committee chair said.
“I understand that markets are challenging, with only limited signs of improvements – and those unlikely to take hold for some time – but farmers simply cannot take any further pain.
“The industry needs a better strategy than the one which relies on all the risk being imposed on the farmer and I will continue to press for this around the Ornua board table and with co-ops.”
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