DAIRY FORUM CONFIRMS IFA VIEW THAT FURTHER WINTER MILK PRICE INCREASES ARE FULLY JUSTIFIED

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DAIRY FORUM CONFIRMS IFA VIEW THAT FURTHER WINTER MILK PRICE INCREASES ARE FULLY JUSTIFIED
09 Dec 2016

DAIRY FORUM CONFIRMS IFA VIEW THAT FURTHER WINTER MILK PRICE INCREASES ARE FULLY JUSTIFIED

Dairy

IFA National Dairy Committee Chairman Sean O’Leary has said the analysis of the Dairy Forum earlier this week matched views expressed recently by industry leaders on 2017 milk prices, which are expected to average out at between 30 and 33c/l for basic constituents, with scope for farmers to receive more for higher constituents.

Mr O’Leary said IFA was, therefore, fully justified in lobbying board members this month for a 2c/l milk price increase for November milk. Every cent obtained before Christmas is a cent which will contribute not only to liquid and winter milk producers, but which will also go towards establishing a viable milk price before spring peak, he said.

“All industry experts around the Dairy Forum table agreed with our analysis – that after two years of negative margins on farms in most world milk production regions and significant increases in cow culls, the global supply of milk was unlikely to increase significantly within the next 12 months. Practically, this means the seasonal Irish dairy sector, including farmers, should be able to optimise dairy and milk prices for peak 2017,” Mr O’Leary said.

“Meanwhile, demand has remained strong in both developed and emerging countries, and the dairy price recovery has been particularly marked for butter, cheese and whole milk powder. However, even skimmed milk powder, the market for which is undoubtedly affected by high intervention stocks, has seen price increases of 25% in Europe since May, and of 55% on GDT since July. The first auction in December, which took place last Tuesday, saw a 1.4% increase in the GDT SMP price, despite the announcement by the EU Commission that they are going to release intervention product from intervention. The 6th December SMP/butter GDT prices would return around 34c/l incl VAT at Irish equivalent constituents,” he said.

“EU average returns for all of November have been around 35 to 36c/l before processing costs – equivalent to a farmgate price of around 30c/l + VAT, and the Ornua PPI for the same month has increased to 99.4 points, equivalent to a milk price 27.75c/l + VAT (29.2c/l incl VAT),” he added.

“The Dairy Forum showed a good deal of optimism for 2017, even allowing for some caution around Brexit, European and US political volatility, and low feed costs in the US. I am very clear that co-ops can afford to, and must, support farmers’ still ailing cash flow, pass back every possible cent returned by the market before peak, and the National Dairy Committee will be lobbying co-op board members accordingly in the coming days,” Sean O’Leary concluded.

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