The Irish Farmers' Association (IFA) has said that the milk price for December supplies must increase, adding that a 13th payment for suppliers should be implemented due to the rise in input costs.
“Given the buoyant year processors have had and the rising costs farmers will have to incur this year, every board member has to seriously consider a 13th payment for its suppliers,” IFA dairy chair Stephen Arthur said.
Arthur argues that processors pay a milk price well in excess of 40 cent per litre (c/l) this month.
Teagasc estimates that the average cost of production will increase by 13% in 2022, on top of a 9% increase in 2021.
Combined, this will lead to a cost increase of around 23% within two years and is expected to result in a decline in average incomes for dairy farmers this year.
The Ornua PPI for December has climbed to 135.5, an equivalent farmgate price of 41.6c/l (VAT included).
When adjusted to include the Ornua value payment, worth €3.72m, the equivalent farm gate price is 45.6c/l.
Due to rising input costs, adverse weather and new environmental policies, global milk supply from the main exporting countries has been constrained, despite a substantial increase in dairy commodity prices, Arthur said.
"This tightened supply is supporting the sustained rise in milk price we have seen for the past six months," he said.
This week’s New Zealand Global Dairy Trade auctions also reported milk price increases in butter, SMP and cheddar cheese.
However, Arthur argues that the benefits to farmers from the increase in milk price have been significantly offset by the rise in input costs.