MAINTAINING milk prices at a high level during 1996 has proved to be costly for North Connacht Farmers Co-op (NCF), with profits for the year slumping from £2.28 million to £1.52 million while sales for the year were marginally down from £170 million to £165 million.

As with most of the dairy companies which propped up the milk price to farmers despite a sharp fall in market prices for dairy products, NCF has taken remedial action in the current year with milk prices down 10p to 98.5p per gallon.

NCF spokesman Mr Michael Morley would not be drawn on whether further cuts in the milk price were in prospect, but a green pound revaluation equivalent to 3p per gallon has yet to find its way through to the milk price. "Our board has not yet made a decision on the April milk price," said Mr Morley.

The main reason for the fall was a sharp fall in sales through the group's cattle marts from £54.6 million to £48.6 million. Another significant factor was the fall in production of animal feed because of the difficulties in the beef sector.

The decision to hold the milk price to within 1p of 1995 levels meant that profit margins fell to less than 1 per cent compared to the 1.34 per cent margins in 1995.