THE Irish Farmers Association has launched a fierce attack on Waterford Foods for cutting its September milk price and has described the action as "no less than a bid to court stockbrokers and institutional shareholders".
Waterford has cuts its price for September milk deliveries by 2p per gallon to 107.8p - made up of a basic 103p per gallon, VAT at 2.8 per cent and a 1.8p payment on investment stock units. In cutting the September milk price, Waterford has broken ranks with the major milk processors, most of whom have given a commitment to hold milk prices at current levels until the end of the year.
A spokesman for Waterford said that the board took the decision to cut the September milk price because of the continued weakness of international dairy markets and the imbalance between milk costs and market prices.
September is the last month when milk production is at a high level with supplies tailing off in the final quarter of the year before peaking again in March next year. Further price cuts are expected for milk supplies in 1997, and many analysts believe that a price of below 100p per gallon is inevitable next year.
But Waterford came under strong attack from the IFA which said that the cut in the September milk price "ignored the price scene set by Avonmore and Kerry, who earlier this year committed to maintaining prices at current levels until the end of December".
"While there is no denying that weaker market returns have reduced the substantial profits clocked up by co ops last year, this isolated move by Waterford is clearly an attempt by Waterford Foods milk suppliers to reduce milk producers incomes by stealth during the low output winter months. This is no less than a bid to court stockbrokers and institutional shareholders," said IFA dairy committee chairman Mr Liam Foley.
Whatever about the IFA objections, there is no question that the stock market will welcome Waterford's decision to break ranks and cut the September milk, price. Waterford's share price has been weak all year and even slipped as the stock market soared recently.
Other companies seen as less dependent on domestic milk production such as Avonmore and Kerry have been in strong demand during this bull run.
The shares closed up 6p on 86p yesterday but trading volumes, were low. It remains to be seen whether yesterday's cut in the milk price will be sufficient toe reduce the ratings gap between Waterford and Avonmore - the company with which Waterford is usually compared.
