Dairy lobby group calls for voluntary cut in output

Overproduction of milk has seen prices fall from 38 cents a litre to about 25 cent

With no sign of an upturn in milk prices, the State’s leading dairy lobby group has called for a cut in output – a move that would have been unthinkable a year ago with the lifting of EU milk quotas.

The Irish Creamery Milk Suppliers’ Association (ICMSA) said there was no alternative but to introduce a voluntary supply reduction scheme here and in other EU member states to rebalance the market and bolster incomes.

ICMSA president John Comer said the onus was on critics to spell out the alternative as the only policy currently being pursued was cutting milk prices. "This isn't a policy – it's a step-by-step destruction of our priceless family dairy farm system," he said.

Mr Comer called on the new Minister for Agriculture Michael Creed to establish a scheme to pay at least 10 cent for every litre less a farmer produces this year compared with last year.


Overproduction in Europe – with Ireland and the Netherlands at the fore – is cited as the primary cause of the downturn, which has seen milk prices drop from 38 cents a litre to less than 25 cents.

The ICMSA's call came as Kerry Group chief executive Stan McCarthy unexpectedly announced he was resigning as head of the group's co-operative arm amid the company's ongoing row with suppliers over price. The State's largest food company played down the significance of the move, saying Mr McCarthy and Kerry would continue to provide executive support to the co-operative, the company's largest shareholder. "Our commitment to farmers and to shareholders is unchanged by this decision," a spokesman said.

Mediation process

“Kerry Group has a contract which has been signed by milk suppliers and agreed by the board of Kerry Co-Operative and its sub-committees. That contact allows for a process of mediation and that is ongoing at the moment,” he added.

Farmers’ groups, however, claim Kerry has rowed back on a 2011 agreement to compensate them for lower prices via a “13th payment” – a claim the company denies.

In March, the European Commission agreed new rules allowing member states to introduce voluntary milk supply control measures on a temporary basis.

The Commission described the proposal an emergency exception to the rules guaranteeing economic competition prompted by the current downturn. The move was championed by France, which has been calling for cuts in supply for several months. The Irish Government is, however, against restricting supply fearing Ireland would cede ground to rival jurisdictions in the global milk market.

Progressive farmers

In a recent submission, former minister for agriculture

Simon Coveney

suggested regulating supply was not an appropriate response to a downturn in price. His opinion was supported by the Irish Farmers’ Association (IFA), which said the industry must reject the notion that progressive Irish and European dairy farmers were the main cause of the current international dairy market imbalance.

The IFA said the current downturn was due to a number of global demand and supply factors, which coincided with the end of milk quotas.

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times