Sunday 07 October 2012
Dairies have to much power
The division of spoils between the farmer, processor and retailer are not fair and are unsustainable long term for the liquid milk business. This was the message from Connacht Gold chief executive Aaron Forde at the IFA organised regional meeting in Carrick on Shannon on Monday night.
When pressed by suppliers on a poor milk price in the light of market upturns, he suggested that Connacht Gold milk price may increase for September supply if markets continue to firm.
He said: "There is still a €500 per tonne differential between European and southern hemisphere butter prices but I am positive that the sentiment has improved significantly over the last number of months and prices for protein are firmer."
Forde warned there would be 'choppy waters' post 2015 on milk price and that volatility was not going away. He suggested the recent consolidation of the Connacht Gold business with Donegal was already paying dividends in better efficiencies on purchasing inputs, packaging, laboratories etc.
Other speakers were Anne Randles of the Irish Dairy Board, as well as Catherine Lascurettes and Kevin Kiersey from the IFA. The meeting was chaired by Padraig Divilly.
When pressed on milk price, Aaron Forde said: "We can only pass back what the market returns. We are running a business the same as each of you.
"Our money for milk price depends on when we sell and who we sell to. I expect a lift in milk price for September milk but that depends on markets evolving. Our forecast suggests we will average approximately 30c/litre which I suggest is reasonable for 2012."
He continued: "Over the last couple of months a small gap has appeared between our near neighbours and ourselves. This is unusual in the context that we have been at least 0.5 to 0.75 cent/litre ahead of our near neighbouring co-ops for the last seven years.
"It's not a question of efficiency for us. Like all co-ops we have subsidised the price of feed to the tune of over €300,000 over the summer months and I expect this to finish at approx €450,000 by end of year. We have also subsidised milk price over the summer months so there is a hole that needs to be filled. As soon as we have funds from the market place we will pass them back to farmers. The price of protein has firmed but I am still concerned about butter markets. Remember Kerry, Carbery and Dairygold didn't lift milk price yet either."
He also confirmed that Connacht Gold are in the process of finalising a joint venture to supply biomass energy to the site at Ballaghadereen from 2013 onwards.
Source: Argentine Beef Packers S.A.
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