Manufacturing & Supply Chain

Glanbia has been accused of paying below the market rate for milk from its suppliers after it cut base milk prices to 22 cent a litre. The lowest price it has paid in seven years, amid the ongoing downturn in dairy markets.

The IFA has severely criticised Glanbia’s decision to cut its base milk price this week accusing the co-op of ‘shortchanging’ its suppliers.

The company said the move was in response to weaker returns, while noting a significant portion of its suppliers were on fixed-price contracts, which shielded them from the worst of the slump.

IFA national dairy chairman said the move short-changed Glanbia suppliers and strongly suggested the company was seeking to keep the cost of milk below that paid by other co-ops.

“Glanbia is paying farmers the lowest possible base price while utilising the co-op’s resources – farmers’ own money – and the bonus received from Ornua to prop up the price,” he said.

Henry Corbally, Glanbia chairman, said that the Board and management of Glanbia is acutely conscious that the current weakness in dairy market returns, as well as the challenging weather, is extremely difficult for milk suppliers.

“Glanbia appreciates the income challenge and is doing all it can to support our farmer suppliers, particularly through Glanbia Co-operative Member Support payments, our Fixed Milk Price Schemes and the recently launched MilkFlex Fund,” he said.

Rival dairy co-op Lakelands also reduced its base price by 1 cent to 24 cents while Dairygold, Carbery and Kerry are due to set their prices in the coming days.

The average milk price paid to farmers here has fallen from 38 cent a litre in 2014 to a current rate of 24-25 cent a litre. A glut in production globally but more recently in Europe following the removal of quotas, a slowdown in Chinese demand and Russia’s trade embargo, have fuelled the worst market slump in a decade.