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Friday, April 17, 2009

Farmer anger grows at Glanbia

I missed the milkman this evening. He called about 20 minutes earlier than normal and I didn’t get to pay him but I’ll sort it out with him in a fortnight when he’s back again. There aren’t too many milkmen delivering to the door anymore, the entire business has changed enormously since the days of Hughes Brothers, Premier Dairies or Drogheda and Dundalk, each independently owned usually by farmers co-ops. The co-op guaranteed competition for the farmer and this drove prices for farmers up. This in turn led to cartels that impacted on the consumer, If you wanted milk in Dublin depending where you lived you only had one supplier as the dairies carved up the territory, that was until Drogheda and Dundalk came along.
The system worked well for the farmers, prices were good and the consumer had little choice and food was relatively dear. However as the 80’s turned into the 90’s and companies like the sugar company was privatised and meat processors opened up new markets to compensate for the loss in EC support for prices, the co-ops here started to see that their scale could not give them the competitive edge on a wider market. So slowly the independent names like Lough Egish, Ballyclough, Golden Vale, Mitchelstown, Waterford, Hughes Brothers, Kilashandra, and Drogheda and Dundalk started to disappear as mergers produced super co-ops like Glanbia or Kerry. Next up was accessing money that would allow expansion and not necessarily in Ireland, The super co-ops bought outside the country and to maintain the momentum the shareholder farmers were bought out as the co-ops evolved into PLC’s. Farmers were insulated against the market reality by the quota mechanism, one the EU cannot maintain as it expands and agreement on liberalising trade means world prices and European prices will merge someday. So quotas will go in 2012. This suits the processor and strengthens their hand of major but weakens the small producers in Ireland.

So why the history lesson, well tonight in Enniscorthy a lot of angry dairy farmers who supply Glanbia with milk are meeting because the co-op is cutting their milk price by 4c a litre. What is gob smacking about this is that they only get 33 cent a litre. My litre delivered to the door is €1.10. Glanbia is a major processor of dairy products and producer of meats. Their business is not as dramatically effected by the collapse in the economy as many others. They justify the price reduction because they say the euro has a high value and demand has dropped as people’s spending declines somewhat. The price offered to farmers is equal to that given about 25 years ago. While the Ministers are arguing that due to budget cuts, nationally living standards are set to decline to this of 2004, you can put farming 20 years further again!
There is an enormous difficulty there for farmers. Farm size has increased radically since and farms are now more productive than they were 30 years ago however the benefit of all the efficiencies has been the processors not the producer. There are a lot of farmers, already caught because the Dept of Agriculture under-estimated how much they should be paid for farm improvement work and is stalling payment and now they see their incomes being reduced by the processors. I have sympathy for farmers in this case. I haven’t seen Glanbia pass on the price reduction to the consumer, indeed are Irish consumers paying more than they should for dairy products? Is the processor taking advantage of the vulnerability of farm families to profiteer? Farmers have a point, I know some will say why did you sell the co-op off and it’s a fair point, farmers have effectively cut off their nose to spite their face. However some of those shareholders have left farming, passed their farms on or sold. Five years ago I met a farmer during the canvas living in a housing estate who complained that he couldn’t get planning permission to build on his own land, Now planning permission is another issue not the subject of this blog but I make the point to you that farmers have like everyone else felt the cold wind of change and have had to adapt or die. We need farming now because the land is one thing that cannot be taken from us, farms will always mean jobs in our economy and we ignore this entire sector from field to plate at our peril. Its time to cut them a better deal because in its absence by 2012 there’ll be less of them. Previously many in my party would have been disinterested in farmers. They do not connect between farming and many jobs in processors that recognise union membership. Disinterest is a luxury we cannot afford. Its pay up time!

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