Milk price decreases have cost Irish dairy producers over 38% of their earnings in the last year.
Surprising new numbers have shown the magnitude of the financial crisis confronting dairy farmers throughout Cork as a result of continued milk price decreases, with over half a billion Euro wiped off their profits this year.
The data produced by the Irish Creamery Milk Suppliers organization (ICMSA) so sobering that organization president Pat McCormack calls them a “disaster for the rural economy.”
Dairygold was the latest processor to cut its July quoted milk price by 2 cents per pound to 36 cents per pound, with a spokeswoman claiming that “global milk markets continue to weaken due to pressure on demand in key markets, with no sign of near-term correction.”
To put the magnitude of recent milk price cuts into perspective, Dairygold paid its milk suppliers 55.5c/pl in June of last year.
This reflects a year-on-year decrease of little more than 35%.
According to the ICMSA, the persistent drop in milk prices has cost dairy farmers throughout the nation €2 billion in earnings, with Cork suffering the brunt of this.
According to their projections, milk income in Cork will equal €1,269,394.000 in 2022. According to the ICMSA, the income number for 2023 is now €777,865,000, a €491,529,000 or 38.7% decrease.
The ICMSA conducted a comprehensive examination of each of the 26 counties to determine the decrease in dairy farmer income over the previous two years.
The results reveal that milk values have dropped dramatically, with about €2 billion less estimated to be paid to dairy producers in 2023 compared to 2022.
ICMSA president Pat McCormack described this as “an astounding amount to lose” and predicted that it would have a “very serious impact” not only on dairy farmers but also on the wider rural economy this year and in 2024 as farmers tightened their purse strings and made drastic cuts to their spending.
“We all know that farmers spend in their communities, and many local services and businesses rely on them.” It is unsurprising to see dairy farmers’ spending power diminish considerably, as observed by companies in rural towns that offer products and services to dairy farmers and the larger dairy sector,” Mr McCormack said.
“From concrete to shed suppliers, to milking equipment to farm machinery, reports are coming back that dairy farmers have stopped buying and investing, and only the very basics are being purchased, and this is going to have a dramatic impact on the local economy,” he continued.
According to Mr. McCormack, with a dairy outlet multiplier of two, the overall loss to the Irish rural economy in 2023 may be as high as €4 billion.
“At the county level, we see Cork losing nearly half a billion in direct revenues, while Tipperary will lose nearly a quarter of a billion in direct revenues.” “With so many indirect jobs reliant on the dairy sector, the multiplier effect can bite even harder in these counties,” Mr McCormack said.
Given the current weather and pricing circumstances, the ICMSA research utilized an average total milk price of 59cpl for 2033 and a projected average price of 37cpl for 2023, with output predicted to reduce by 2% year on year.
“This means that nearly 38% of dairy revenues have been wiped away in the last year, and this analysis does not include the very severe cost elements facing dairy farmers, implying that dairy farm incomes will be severely impacted in 2023,” Mr McCormack added.
“While fertiliser prices have fallen slightly, most fertiliser was purchased at inflated prices earlier in the year or last year, and unfortunately, electricity and feed remain stubbornly high,” he said.
Mr McCormack urged Agriculture, Food and Marine Minister Charlie McConalogue to organize a meeting of the Dairy Forum so that a “clear strategy” could be put in place to kick-start an urgent recovery in milk prices.
“This is required not only by the farmers who produce the milk on a daily basis, but also by the larger rural businesses that rely on it for revenue,” Mr McCormack added.
