Dairy farmers in Northern Ireland could be offered the option of cutting their milk production levels, in lieu of a pro-rata increase in prices.
This was discussed at a meeting in Co Antrim yesterday (Thursday), which was attended by representatives from a number of dairy processing organisation, the banks and Fair Price Farming.
One of the processor representatives who attended the meeting said that no final agreement was reached on the proposals discussed.
“The initial template brought to the table centred on the recent FrieslandCampina commitment to pay their farmer-suppliers for cutting milk production levels.
“But it was quickly recognised that such a principle would not work in Northern Ireland. In reality the cutting of milk production levels argument must be broadened out to include the rest of the Ireland, the UK and, possibly, the EU as a whole.
“It was recognised that farmers who have invested heavily in their businesses over recent years, more than likely as part of a succession plan, are most exposed at the present time.
“There are plans for the group to meet again in the near future.”
Fair Price Farming said that it would not be commenting on the meeting, which was chaired by Holstein UK Chairman Andrew Dutton.
Ulster Bank’s Agricultural Manager Cormac McKervey attended the event said he gave an update on farmer finances.
“Most Northern Ireland dairy farmers will survive but at the cost of increased overdrafts, likely increased loan repayments and merchant credit. And all of these will need addressed.
"There are increasing numbers of farmers needing to move to interest only loans and or increased overdrafts.
Some milk producers will not trade out of the current crisis.
“Until now farmers have managed with support from banks, feed merchants, off-farm income, savings etc.
“But the issue for all of us in the industry is how long will the continued low prices remain. Supply is still running ahead of demand and while currency exchange has moved in our favour it is not enough to feed through to improved prices.
“The next issue will be fertiliser bills and with most merchants already well stretched in extending feed bills it will be difficult for them to offer the same for fertiliser.
“Obviously fertiliser is key to growing lower cost feed and farmers need to plan how the bill will be paid. It should be part of any cash flow projection they are preparing for their bank.”