Ireland: ‘Severe’ milk price cuts ‘will wipe €2bn’ from dairy farms’ revenues in 2023

ICMSA president Pat McCormack said the €2bn/$2.48bn was an ‘astounding’ amount to lose from Ireland’s rural economy and would affect spending ‘by possibly double that amount’, i.e. €4bn/$4.9bn.

The Association’s analysis includes each of the 26 counties and used an average milk price of 59cpl for 2022 (eurocents per liter, or around 63 US cents per liter, ed.) and an expected average price of 37cpl for 2023. With production expected to fall by 2% YoY, this amounts to 38% of dairy revenues wiped away within 12 months, according to the trade body. The analysis does not consider input costs from fertilizer, energy or feed, suggesting that income losses could be greater.

At county level, Cork has seen almost half a billion of reduced farmer incomes, while Tipperary is set to lose around a quarter of a billion in direct revenues, according to ICMSA’s calculations. “These counties have large processors and this is where the multiplier effect can bite even harder with so many indirect jobs depending on the dairy sector,” said McCormack.

“2023 has seen very severe cuts to milk price throughout the course of the year and it comes as no surprise to see the spending power of dairy farmers dramatically deteriorate and this is being reported by businesses across rural communities that provide goods and services to dairy farmers and the wider dairy industry,” McCormack continued. “From concrete to shed suppliers, to milking equipment to farm machinery, the reports coming back is that dairy farmers have stopped buying and investing, only the very basics are being purchased and this is going to have a dramatic impact on the local economy.”

The ICMSA president added that the milk price reductions this year had been ‘very severe’ and called on the minister for agriculture, food and the marine to convene a meeting of the Dairy Forum and set out a clear strategy to ‘kickstart an immediate recovery in milk price’.

More recently, ICMSA Dairy Committee chair Noel Murphy called Lakeland Dairies’ decision to pay a base price of 34cpl ‘really unjustified and unacceptable’ since this was 1.2cpl less than the Ornua price of 35.2cpl for August. “And bearing in mind when many farmers are producing milk below the cost of production and every cent is absolutely critical in the current climate”, Murphy added.

“Irish farmers sustainability statistics are amongst the best globally; we operate a grass-based system of production almost unique in the EU; we are fully quality assured and we are getting paid the worst price in the EU.

“There is something seriously wrong with our milk price at present relative to other EU countries and this Lakelands decision to pay an August milk price below the Ornua purchase price index (PPI) is simply unacceptable and highlights the need for co-op boards to ensure that the PPI is the minimum price paid to farmer-suppliers”, he concluded.

Irish dairy exports reached a record value of €6.8bn in 2022, representing 33% growth versus 2021, with over 1.7m tons of product shipped to over 130 markets worldwide. The growth was achieved on the back of strong milk collections, and Bord Bia expected this year's supply to be 'modestly ahead'. However, milk supply was down 43.9m liters from January to July 2023, i.e. -0.8% on the same period in 2022.