UFU question processor performance after latest milk price cut

Wednesday, 18 September, 2019

The Ulster Farmers’ Union says dairy farmers are appalled by the latest unjustified reduction in milk price paid by local dairy companies, leading many farmers to question processor performance and acumen.

The comments were made as processors ignored the UFU’s calls last week to pay a reflective and true milk price to farmers and milk price fell to around 24.50p per litre.

UFU dairy committee chairman, Mervyn Gordon said, “It is extremely disappointing that local processors continue to cut prices and continue to refuse to pay a fair price for milk. We have analysed the data and it is clear there is room in the market to pay producers a reflective and true price for their milk.”

 The UFU says the milk price cuts could not come at a worse time.

“Many dairy farmers are struggling. The cut in price essentially means that many are producing milk below the cost of production at a time when input costs are rising. Things are about to get worse as the oil price shocks from Saudi Arabia reverberate through the farming sector. Producing milk below cost, as input costs rise is completely unsustainable and processors are playing a dangerous game with their suppliers,” said Mr Gordon.

Data from AHDB shows processors in Great Britain consistently outperforming their Northern Ireland counterparts every month since July 2018, the longest sustained gap since 2015.

“It begs the question, why are Northern Ireland processors lagging behind their GB competitors? What’s going on in their businesses? Ultimately, they are failing their producers and it is grossly unfair that farmers are footing the bill for external business decisions. It’s time processor CEOs step up and explain why their businesses are underperforming, and have been for the past 15 months,” said Mr Gordon.

Looking at the markets, cream and butter commodity prices have shown sustained signs of recovery in recent weeks.  Mr Gordon says with Muller and Arla holding on to cream, prices in GB are on the up.

“This upsurge in activity has seen UK butter rising past the £3,200/tonne-mark. Mozzarella prices also saw the most notable increase in months with spot prices by €100/tonne and prices of other products are stable at consistently higher levels. Furthermore, the price index in the latest New Zealand milk auction is up 2 per cent.  All signs pointing towards a market where there are gains to be made and shared throughout the supply chain,” he said.