Limerick farmers criticise ‘insulting and inaccurate’ claims by Kerry Dairy Ireland CEO

KERRY Dairy Ireland officially opened its new state-of-the-art Cheestrings facility in Charleville last week but it was comments made by CEO Pat Murphy that made headlines.

Mr Murphy, CEO of Kerry Dairy Ireland, said in an interview with Agriland: “If the cost of production today is about 34-35c/l, well then the farmers are not making a bad return on that. We’d love for it to be more.”

Mr Murphy noted that input costs are still high, but urged all farmers to put a plan in place to reduce their cost of production for the coming years.

“If the best farmers can get the production cost down to 30c/l, why can’t the other bunch of farmers do the same thing?. There are constraints around farm size and about the type of land, but we have to get better at reducing the cost of production,” Mr Murphy told Agriland.

An earlier version of the article quoted a figure of 20c/l which was like a red rag to a bull for dairy farmers. It caused quite a stir on social media and WhatsApps were flying among farmer discussion groups.

One dairy farmer posted on X (formerly Twitter): “I can’t believe he said that. I looked at circa 75 sets of financial figures for 2023 of very good farmers and no one could do better than low 30s for cost of production. Average was 40c/l and that was before own labour, never mind tax and bank repay. Shocking comments.”

Limerick IFA chairman Sean Lavery told Farm Leader Mr Murphy’s comments that “Limerick's best and most efficient farmers were able to produce milk at 20c/l later changed to 30c/l was both careless, insulting and inaccurate”.

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“It was careless that it was made in the first case, insulting when every farmer knows that all input costs are up, and inaccurate when professional practitioners on the ground say that costs are nearer 40c/l,” said Mr Lavery.

He said he has received numerous phone calls from Limerick dairy farmers complaining about the tone of the comments.
“They said it confirmed their belief that Kerry is not listening to their farmer suppliers’ concerns around cost of production. Kerry’s milk price lags the leading milk buyers.

“If Kerry knows of suppliers who can produce milk at 30c/l they should hold an open day at that farm and demonstrate how it is done,” said Mr Lavery.

Noel Murphy, chairperson of ICMSA dairy committee, called on Kerry Group to clarify its position in relation to the comments made and accept the “absolutely obvious reality” that the income that will be returned to dairy farmers in 2024 – including Kerry suppliers - will in no way reflect the efforts made by dairy farmers.

“There can’t be any room for ambiguity on this and we – all of us involved in dairy farming - have to be very clear: a milk price of 41c/l will not return a level of income that is required to keep Ireland’s milk production at its current levels and milk production costs of 30c/l contained in media reports are unattainable and frankly ‘the stuff of dreams’ given where input costs have gone over the last three years and the terrible weather conditions since June 2023.

“The reality for any farmers today is that based on paying all costs including labour costs and debt, producing a litre of milk is going to cost in excess of 40c/l and if anyone needs evidence of this, then they should go and look at farmers’ bank accounts or even credit accounts with credit suppliers - who might be their co-ops,” said Mr Murphy.

He said it is simply an observable fact that farmers’ ability to make the improvements and investments needed on water quality were completely dependent on the milk price they were paid and the income that generated.

“There is an ongoing and crippling cash flow situation on Irish dairy farms and it has been like this for probably two years. Dairy incomes and milk production are way back, and milk processors would want to wake up to this reality fast and start supporting their farmer-suppliers based on realistic production costs.

“We are surely owed that much and even at that minimum amount of support to which we are entitled, I’m not sure it’s going to stop a slide in milk production that is beginning to look inevitable,” said Mr Murphy.

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Farm Leader contacted Kerry Dairy Ireland over their CEO’s comments. In response to the media query, a spokesperson said they “acknowledge the concerns raised by our milk suppliers regarding a reference to milk production costs in a recent interview”.

“We regret any confusion this has caused and fully recognise that milk-production costs have and continue to be significantly higher than the figure referenced in the article. We recognise that farm margins remain highly challenged, a situation compounded by recent adverse weather conditions,” said the spokesperson for Kerry Dairy Ireland.

The Kerry base milk price for May is 41c/l which compares to Dairygold at 42c/l and Arrabawn at 43.65c/l.

Farm Leader understands that dissatisfaction among some Kerry milk suppliers in Limerick extends so far that they are considering switching co-ops when their contracts with Kerry end with Dairygold believed to be interested in processing their milk due to their increased capacity in recent years.