Some farmers in fixed milk price contracts are losing out on around 10c/l, as a result of milk prices increasing past the 40c/l mark, chair of the joint Oireachtas committee on agriculture Jackie Cahill TD has said.

Deputy Cahill stated that forward selling contracts had been promoted “very strongly” by dairy processors, with farmers’ prices down by up to 10c/l - some 25% - on those paid for non-contracted milk supplies.

The farm viability concerns were raised as the issue of fixed-price forward selling was addressed in Cahill’s opening remarks to the committee when the group was joined by officials from the European Commission to discuss rising fertiliser prices.


“Some of them are in three-year contracts. The price of the product they are selling has gone up by 25% to 30%.

“They’re losing roughly, at the moment, 10c/l on the price on those contracts. They now have the full impact of this very significant increase in the cost of production.

“I sit on the board of a co-op myself and this discussion was there the other night - and these farmers’ viability is under serious, serious question,” the committee chair informed the officials.

“They are losing very, very significantly on price and the cost of production has increased very substantially,” he said.

Cahill explained that the “unenviable” position these farmers find themselves in resulted from a rise in production costs that went beyond the expectations of anyone in the agricultural sector when the contracts were signed.

Forward buying fertiliser

Senator Tim Lombard said that the “real issue” was the disparity in farmers’ ability to forward buy fertiliser when considering forward selling their milk.

The supply of milk could be forward contracted for up to three years, while fertiliser prices could only be quoted 60 to 80 days ahead.

A risk management strategy that remains “prudent without putting you in a trap” should be developed, deputy head of the European Commission’s governance of agri-food markets unit Fabien Santini said in response to the concerns raised.

Last week, Kerry Group opened its forward selling scheme to suppliers at 40.75c/l excluding VAT.