Tirlán, the Irish dairy co-operative, has officially confirmed a price cut for milk supplies in February. The move comes as demand from international buyers has weakened due to the ongoing COVID-19 pandemic. The decision by Tirlán is set to impact farmers and the wider dairy industry, adding further uncertainty to an already challenging year. This article will explore the implications of the price cut and the potential knock-on effects for the Irish dairy sector.
Tirlán has announced that it will be reducing the base price that it pays farmers for milk supplies by 6c/L for February.
The co-operative based in Kilkenny will now pay farmers a total price of 49.08c/L (including VAT) for February creamery milk supplies at 3.6% butterfat and 3.3% protein.
This price includes a seasonality payment of 3c/L, including VAT, that will be paid on all creamery milk volumes supplied in February which meet quality criteria.
Last month, Tirlán announced that it would pay a total price of 56.08c/L for milk supplied in January, which included a seasonality payment of 4c/L.
Milk Price Breakdown
The February price of 49.08c/L is made up of the following:
- Base milk price for February of 39.08c/L (including VAT), which represents a decrease of 6c/L compared to January;
- An Agri-Input Support Payment of 6.5c/L for all milk supplied in February, including volumes in Fixed Milk Price schemes;
- A Sustainability Action Payment of 0.5c/L (including VAT) to all qualifying suppliers;
- A Seasonality Payment of 3c/L (including VAT) which applies to all creamery milk volumes supplied during February that meet quality criteria. This payment also applies to non-contracted volumes from autumn calving and Liquid Milk scheme members.
The processor stated that the base price, Agri-Input Support Payment, Sustainability Action Payment, and Seasonality Payment will be adjusted to reflect the actual constituents of milk delivered by suppliers.
Based on standard European constituents of 4.2% butterfat and 3.4% protein, the total price for Tirlán creamery milk in January was 53.25c/L (including VAT), which also included the sustainability action payment, agri-input support payment, and seasonality payment.
John Murphy, chair of Tirlán, commented on the announcement, “Our farmgate milk price unfortunately needs to move lower this month to reflect the significant correction in market returns that occurred between September and January.”
“While there has been some recent signs of stabilisation in dairy commodity markets at low levels, buyers remain cautious in the current inflationary environment, especially as milk volumes across Europe increase towards seasonal peak.
“Farm input costs remain elevated and the board will continue to closely monitor the situation on a monthly basis,” he said.
In conclusion, the recent announcement made by Tirlán regarding a milk price cut for February supplies is not the ideal news for dairy farmers. However, it is important to remember that fluctuations in the market are not uncommon, and it is imperative for farmers to incorporate risk management strategies into their business plans. With that being said, it is important to keep an eye on the milk prices in the coming months and make necessary adjustments to ensure profitability. In the meantime, let us hope for a recovery in the market to benefit the dairy industry as a whole.