'˜Milk price increases needed'

The end of January will mean the end of seasonal bonus payments for many dairy farmers '“ and the Ulster Farmers' Union says there is a strong case for a higher base price.

Dairy committee chairman, William Irvine, said that while the bonus payments have brought welcome relief to hard pressed farmers over the past three months they have disguised a still poor base price for milk.

“Commodity returns would justify an increase and we do not want to see a situation, come February, where people see a big drop in payments because the seasonal bonus has gone,” said Mr Irvine.

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In the autumn the UFU pressed the case for a better milk price to reflect improvements in commodity returns, driven partly by the weakening of sterling but also by stronger global and UK consumer markets. This has improved the competitive position of local processors. “The reply then from many processors was that forward commitments meant it would take time for this to be reflected in prices paid to farmers. Since then the base price has only increased by 4 to 4.5 pence a litre. We believe there is a significant gap between what the market is returning and what farmers are receiving,” said Mr Irvine.

The UFU says its price index, based on market returns and currency rates, has been over 30 pence since early November. It says this, and what is happening elsewhere, is why it believes processors could, and should, pay more for milk when the seasonal bonus payments end.

“Processors are telling their producers to save money during the good times to be ready for the bad. But farmers can’t do this when base milk prices are lagging so far behind the market returns. The crisis in the dairy sector is far from over, and this was confirmed by the EU farm commissioner, Phil Hogan, who recently described the current recovery as fragile,” he added.