IFA national dairy chair Tom Phelan has said co-ops must develop strategies to optimise market returns and price to ensure base prices are above 30c/l for all of 2018.

“Co-ops must understand that, from a farmer’s perspective, industry planning can no longer be purely supply-driven, with expansion expected to be its own reward. It must be about identifying and servicing market needs for sustainably produced high-quality dairy products, and optimising the returns for Irish farmers,” Phelan said.

He pointed out that a number of factors are combining to increase costs on dairy farms. “The last 12 months have been wetter than average and fodder reserves are diminishing rapidly. In addition, the new nitrates derogation will require many to invest heavily in additional slurry storage capacity and in costly new low-emission spreading equipment. With calving in full swing, the shortage of labour at the busiest time of year is also adding stress and cost.

“This comes after only one year of strong price recovery and income growth, following from three years of uninterrupted price falls. Farmers are ill-equipped to deal with a significant price decrease any time in 2018, and co-ops must make a commitment that they will keep base prices above 30c/l for the year,’’ Phelan said.

“During 2017, co-ops needed to rebuild their balance sheet, and had ample opportunity to do this. While lifting milk prices, they retained some of the rapidly rising dairy returns. We estimate the value of retained profits for the entire industry over that period at above €190m.

“While being acutely aware of the falls in dairy returns, we believe there are indeed reasons for optimism about global dairy prices for 2018 based on price and demand trends.

“Strong market signals from industry must be about more than milk price decisions: it must be about informing farmers of markets we are uniquely well placed to supply and which can deliver sustainable returns,” he said.