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Cows are led through an Asda supermarket in the UK Sky News

There are cows in supermarkets as people lose the plot over the price of milk

Farmers saying they are being paid less than it costs them to produce the commodity.

FARMERS ARE BEING paid less for their milk than it costs them to produce the staple after a collapse in global demand for dairy.

British farmers have been protesting across the country at the below-cost returns with groups leading cows through to the dairy aisle and buying up all the milk in major supermarket chains to complain about “unfair” pricing.

They were paid an average of below 24p (€0.34) per litre for their milk in June despite needing about 30p (€0.42) to break even. Prices have continued to fall further through July.

Meanwhile in Ireland, the Irish Farmers’ Association (IFA) has warned one-third of dairy farmers could find themselves selling at negative margins for 2015 as a whole.

Cows

Global milk prices have collapsed with a sudden drop-off in the demand from China for powdered products, as well as the impact of a Russian embargo on Western food imports.

Last week the GlobalDairyTrade price index, the main benchmark for world milk prices, hit its lowest point in 13 years.

Milk GlobalDairyTrade GlobalDairyTrade

More milk, lower returns

While farmers in Ireland are some of the most efficient milk producers in Europe, they are far from immune from those falling returns.

In its recent market update, Teagasc said dairy commodity prices were up to 40% lower this year than in 2014 although the weak euro had protected producers to an extent.

It predicted incomes on the average dairy farm would drop over 40% on last year’s returns from over €67,000 to between €35,000 and €40,000.

Milk2 Teagasc estimate Teagasc estimate

Local dairy farmers have been unshackled from EU milk quotas since earlier this year and there has been a big increase in Irish output, as well as from major producers like the US and New Zealand in recent months.

Plentiful dairy product supplies have not been backed by strong dairy product demand over the last 12 months,” Teagasc said.

IFA president Eddie Downey called on dairy co-ops to do whatever they could to “stop the milk price slide” by making their own processes more efficient.

IFA continues to work hard at home and in Brussels to secure a review of the intervention ‘safety net’ level to help put a more realistic floor under markets, and we are demanding that superlevy funds be used to support farmers through this difficult period,” he said.

READ: Is the food in those perfectly sculpted ads fake? We asked an expert >

READ: The world has been losing its thirst for Irish beer >

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26 Comments
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    Mute Beachmaster
    Favourite Beachmaster
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    Aug 10th 2015, 2:40 PM

    Cleanup on aisles 4, 5, 6, 7….and now 8.

    171
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    Mute Gavin Redmond
    Favourite Gavin Redmond
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    Aug 10th 2015, 2:59 PM

    hold on a minute 0.34 cent per litre. jesus we’re been robbed here.

    153
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    Mute Randle P McMurphy
    Favourite Randle P McMurphy
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    Aug 10th 2015, 3:18 PM

    Gavin, that exchange rate is at present weak levels..not a fair ‘average/mean’ price comparison.

    3
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    Mute Pádraig Caoimhín
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    Aug 10th 2015, 3:31 PM

    2014 Average was 39c in Ireland

    51
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    Mute Donal O'Brien
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    Aug 10th 2015, 9:51 PM

    Currently 27c

    11
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    Mute bacoxy
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    Aug 10th 2015, 2:38 PM

    Its an udder farce!

    55
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    Mute Randle P McMurphy
    Favourite Randle P McMurphy
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    Aug 10th 2015, 2:57 PM

    This price collapse was well predicted before auction last year…did dairy farmers not make contingency, or did many of them just borrow to attempt to over-expand…without due caution for the first 3-4 yrs post quota?

    53
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    Mute Eddie Byrne
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    Aug 10th 2015, 3:41 PM

    Where things supposed to get better for the dairy farmers when the milk quotas were dropped recently. (If im right in thinking)

    47
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    Mute Jimmy Jim-Jim
    Favourite Jimmy Jim-Jim
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    Aug 10th 2015, 4:34 PM

    The Dept. of Agriculture had promised more export agreements to coincide with the removal of quotas.

    26
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    Mute Eddie Byrne
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    Aug 10th 2015, 4:42 PM

    Ta Jimmy does that mean that the Dept of Agri messed up with false promises ?

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    Mute Jimmy Jim-Jim
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    Aug 10th 2015, 4:47 PM

    I’m not sure tbh. They have had some successes over the last few months but sanctions on Russia and the BSE scare a few weeks back wouldn’t have helped matters for beef or dairy. My gut feeling is they oversold it. Hopefully something better can be pushed through soon as huge amounts of money have been invested by farmers and creameries.

    16
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    Mute BannerBoyDesmond
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    Aug 10th 2015, 5:22 PM

    Demand from China was down 40% in the first four months of 2015 for milk powder. Domestic supply is now up. Demand for actual milk is up 18% but that’s no good to the EU. Demand for baby milk powder is also up 18%.

    China buys one third of the worlds milk supply. Yet they decided to finish milk quotes because the greedy farmers wanted to kill the golden goose. Imagine increasing supply at the same time that the world largest importer cuts imports by almost half. Crazy.

    Not to mention the new synthetic milk thats on the way, I’m sure there are millions of Chinese who would be happier to buy this cheaper alternative. The future is not looking good.

    13
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    Mute John Grennan
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    Aug 10th 2015, 4:10 PM

    What about the beef farmers? The dairy men have had it good the last few years while the price of beef has remained at rock bottom. Many beef farmers farming at a loss for years now

    41
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    Mute Donal O'Brien
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    Aug 10th 2015, 5:07 PM

    Not true, cattle prices at marts and factory prices are up considerably this year

    16
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    Mute John Grennan
    Favourite John Grennan
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    Aug 10th 2015, 7:50 PM

    Factory prices and mart prices are up one week and down the next there’s no consistency

    16
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    Mute John Moylan
    Favourite John Moylan
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    Aug 10th 2015, 5:27 PM

    ..well I paid €2.50 for a litre of milk in Normandy on Saturday. …..even “fake” UHT milk is €1.00 a litre….someone, somewhere is making a lot of money.

    39
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    Mute Brendan
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    Aug 10th 2015, 5:29 PM

    Not from a farming background myself but always wondered why the likes of dairy farmers don’t come together collectively and have their own plant for processing and sell at a price that they set?

    With the processor say glanbia taking a big cut and the supermarkets dictating prices is it not an obvious thing to do and manage it all from cow to bottle?

    39
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    Mute The Girl
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    Aug 10th 2015, 2:46 PM

    Send in the cows. Workers rights..

    38
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    Mute Niall O'Sullivan
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    Aug 10th 2015, 2:59 PM

    The IFA should buy inputs on behalf of members. All that volume pooled together would help drive down costs. They seem to only be worried about getting prices up getting EU payments to farmers.

    22
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    Mute Randle P McMurphy
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    Aug 10th 2015, 3:22 PM

    Niall, latter part of your comment is unfair..prior part a good idea but farmers in general can never agree on anything cos they don’t trust each other. Hence they sold/lost control of their co-ops, meat processing, milk processing, marts…..

    27
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    Mute John Considine
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    Aug 10th 2015, 4:16 PM

    You’re right on, Randle. They sold co-ops out to become PLCs and all became shareholders in the PLCs. All that matters in a PLC, like any other company, is earnings per share. High earnings per share is achieved by buying raw materials as cheaply as possible – in this case, milk from those same farmers. If they got more for the milk they’d be howling at AGMs at the poor dividends on their shares. Having the IFA act as a collective bargainer in the milk business is taking them right back to being a co-op.
    All the PLCs have creamery stores like the old days, where they can buy products on account against the milk cheque, and those stores’ profits contribute to EPS. For one cent in ten tons of fertiliser, they’ll purchase from a rival store down the road, and they don’t want to know about how that damages their own shares in their company.

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    Mute Jimmy Jim-Jim
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    Aug 10th 2015, 4:42 PM

    Purchasing groups exist in most counties by now, but suppliers are targeting a few bigger members with better prices to undermine the group as a whole.

    7
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    Mute Cormac Gibney
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    Aug 10th 2015, 3:50 PM

    The teagasc cost of production is bullsh.
    It includes 6 c a litre for wages and 7 c a ltr for non cash depreciation and notional interest.
    I have never read a journalist challenging the teagasc figure .
    It costs roughly 600 a year to keep s cow in food fertilisers vets etc and the cow will produce at least 4500 Ltrs milk plus a calf worth 200.

    10
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    Mute gerrymiah
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    Aug 10th 2015, 5:38 PM

    Farmers again the victims of Government spin. They were promised the sun,moon and the stars would be theirs when the milk quotas would go. Independent sources are saying that this drop could go on for a minimum of a year and possibly longer.

    7
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    Mute andrew haire
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    Aug 10th 2015, 3:45 PM

    Who’s going to clean the floor when the cow does what cows do.

    7
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    Mute Ariana
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    Aug 10th 2015, 4:29 PM

    Hope for the shop’s sake, health and safety inspectors weren’t around.

    4
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