Learning to Operate with Price/Income Volatility in the Dairy Sector
Published on: Thursday, 05 April 2018
Cork Institute of Technology (CIT), working in collaboration with, and with the support of, Cork County Council is proposing the development of dedicated education offerings for dairy farmers to enable them to acquire new skillsets to increase awareness of the implications of price volatility.
Price/income volatility is now a well-established challenge in the dairy sector. Extremely low dairy product prices can cause many financial problems for dairy farmers (e.g. low margins, cashflow management issues, and financing difficulties) and will ultimately threaten solvency, while extremely high prices can result in product substitution which can then be difficult or impossible to reverse. Dairy produce buyers prefer to conduct business with more price stable sectors due to the benefits that product price stability can bring to financial planning and customer relationships. This preference for price stability has seen buyers favour the implementation of fixed-price contracts and a move towards products displaying lower levels of price variability.
In an effort to enhance sustainability and competitiveness within the industry, there are numerous tools which can help manage volatility. These tools range from diversification, forward contracts, dairy derivative contracts and insurance to policy initiatives. However, each actor within the supply chain will respond to volatility based on their own unique circumstances. As such, no one tool is suitable to all members in the supply chain and thus a suite of tools and mechanisms has developed. The use and growth of these tools is conditional on those in the sector understanding their use and role in managing price and income volatility. CIT’s Vice President for External Affairs, Dr Orla Flynn says “CIT is delighted to have the support of Cork County Council as we seek to address the education gap in this area.”
Dr Declan O’Connor, Department of Mathematics in CIT, elaborates further “we are particularly interested in engaging with the various stakeholders, including farmers, on the structure and content of bespoke education offerings which will form part of our Farm Education (FarmED@CIT) programme”.
In an effort to ascertain as broad a range of views as possible, County Cork based dairy farmers are offered the opportunity to attend one of these information and consultation events:
- Wednesday, 11th April 2018 - Celtic Ross Hotel, Rosscarbery
- Wednesday, 18th April 2018 - Wallis Arms Hotel, Millstreet
- Wednesday, 25th April 2018 - Firgrove Hotel, Mitchelstown
All events commence at 7.30pm.
Mayor of the County of Cork, Cllr Declan Hurley, is again encouraging Cork’s dairy farmers to attend and has highlighted the importance of their perspectives on these educational offerings, “As a dairy farmer myself I am only too familiar with the uncertainties of this industry. As such, I am very pleased to announce Cork County Council’s support for such a fitting project. I look forward to the dairy sector of Cork sharing its views and examing such options.”
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