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DEAR SIR: The recent cut in milk price by Glanbia for March milk should serve as a wake-up call for those of us supplying milk to GII.
Once again, GII has failed to match other milk processors on price, especially at the most critical time of the year. Dairy farmers all over the Glanbia supply region have gone through the most expensive year with severe drought and all the extra costs associated with it. Cows in this region have been fed silage continuously since June 2018.
The bills from last year can only be sorted this year, so a decent milk price for the spring is vital to enable farmers get back on an even keel but instead, Glanbia cut the feet from under its suppliers yet again.
A few serious questions need to be asked about the Glanbia model. All other co-ops are able to pay a better price at this time of the year.
Management in Glanbia are very quick to point to the KPMG/Irish Farmers Journal Milk Price Review at the end of the year. This price is a distorted price for an awful lot of suppliers, especially those who are in all-year-round milk production – they would not have the same level of solids in their milk and depend on price/litre, especially in the peak months of the year.
It also takes account of trading bonuses, from which a lot of farmers derive no benefit. These bonuses (winter milk, SCC bonuses, etc) basically cover up a lot of cracks in the price structure.
What is the cost of processing? The cost of the management structure? How can other processors supplying basically the same market pay more?
Why has Glanbia co-op continually topped up the price with farmers’ own money – this could be paid out by way of dividend.
All this distortion of milk price has the effect of leading down milk price.
What role have farmer directors in all of this? Are they just being used as pawns to justify management decisions?
The 3.2% after-tax profit margin that GII is guaranteed from milk processing is being made up from a poor milk price to farmers – this is wholly unacceptable.
Glanbia will claim that it is continually investing in new plant and infrastructure to accommodate the huge growth in milk production. This is fair enough, but do farmers have to continually accept a poor price to pay for all this extra production?
Surely the extra milk should pay for it.
After all, farmers since quotas were introduced had to spend thousands on purchasing quota from their own milk cheques. One cent a litre for a year is worth €30m on a throughput of 2.7bn litres last year to Glanbia. This is money that should be paid out to milk suppliers.
Farmer directors need to show a bit of resolve and make a stand based on the principle of equity and fair play. Milk suppliers can no longer carry the can on costs – volume is not the answer to making a living from dairy farming.
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