Concerns over Milk Pricing Still Reign High

Concerns over the setting of milk prices and the differences between different companies, countries, co-operatives and trading areas seems never to go away.

In Ireland this week, the differences in prices between co-ops have appeared to widen and according to the farmers is starting to become unsustainable.

Co-ops at the lower end of the KPMG/FJ audit have an immediate challenge to address, as their suppliers cannot afford the differences in their milk cheque compared to their neighbours according to the president of the Irish Farmers’ Association John Bryan.

The plea from the farmers is to be treated even-handedly and to be offered competitive milk prices - a mantra that has been echoed across Europe recently.

The European Dairy Association has welcomed the proposals in the Common Agricultural Policy for a more market oriented industry, however the desire for a more even handed approach to pricing, it seems, will never go away.

Irish Farmers Association National Dairy Committee Chairman Kevin Kiersey said: "In our co-op based industry, milk prices are a crucial indicator for farmers to gauge their milk purchaser’s business performance, efficiency and the value they add to their milk. The focus on delivering competitive milk prices for supplier shareholders must accelerate necessary change in Irish dairy co-ops."

One of the countries that has been at the centre of a bitter battle over prices recently has been Spain.

However, although the farmers have been complaining that they have not been receiving sufficient for their milk, they seem to be producing more.

Last year, national milk collection rose by 3.65 per cent on 2011 figures, reaching 6.07 million litres.

Ministry figures have shown major production months were earlier in the year with May topping the monthly production chart at 538,500 tonnes of milk. Delivered milk data showed 3.64 million tons were distributed nationally.

However, the Italian dairy industry could be thrown into turmoil following a ruling by the European Commission.

It has declared that state aid paid to the farmers is illegal.

The aid was a deferred payment given to milk producers liable to the Italian State for the amount of the milk levy, which Italy had paid to the Union budget on their behalf under an aid scheme approved by a Council Decision.

However, the Commission has now said the aid to be incompatible with the internal market.

Italy will have to recover the incompatible aid together with the interest due.