Dairygold drops September milk price as it warns further cuts to come

Dairygold has announced a 3.57c/l (excluding VAT) decrease to the base price it will pay for September’s milk, as it warned that “further milk price corrections will be required” before the year is out.

The co-op is to pay suppliers 39.25c/l excluding VAT for September milk, with this latest cut bringing the total reduction for the last two months to 6.43c/l excluding VAT.

The drop in the September price will cost the average Dairygold supplier with 100 cows around €1,713.

The cut in the August milk price cost the average supplier around €1,600.

The latest drop in milk price leaves Dairygold rooted to the bottom of the Irish Farmers Journal Milk League at a price of 39.25c/l (excluding VAT) and sees it drop below the 40c/l threshold for the first time this year.

Markets slip

“Global dairy market prices have dramatically deteriorated in the past two months, with butter prices decreasing by more than €1,600 per tonne (-23%) and cheddar prices falling by over €800 per tonne (-18%),” a spokesperson for Dairygold stated on announcing the price cut.

“The combined market price reductions for butter and skim milk powder and cheddar exceed the cumulative 6.75c/l [including VAT] milk price corrections applied by Dairygold in August and September. Current market returns are less than 40.0c/l [including VAT].”

A spokesperson for Dairygold denied suggestions of a split between management and the co-op board over the extent of the latest price decrease.

However, the Irish Farmers Journal understands that the September milk price was not announced until the latest cut had been communicated to regional and committee members by way of a Teams meeting.

September strife

September saw over 200 Dairygold suppliers gather outside the co-op’s head offices in Mitchelstown to call for the board and management to step down after a 2.85c/l (excluding VAT) price cut was announced for August supplies.

A meeting was subsequently held by the co-op in Mitchelstown last month where over 550 suppliers gathered for what some in attendance described as a “boisterous” showdown.

The co-op has, in announcing its September price, stated that high levels of stock remain exposed to a declining market.

“Dairygold has produced a high volume of cheese with milk purchased earlier in the year at substantially higher prices than this product will now realise in the marketplace,” the spokesperson continued.

“Therefore, Dairygold had to react quickly and, consequently, this has required a considerable milk price correction over the past two months."