Carbery Milk Price Increase Welcome, Other Co-ops Must Stay on Track for 33cpl by Peak – O’leary

IFA National Dairy Committee Chairman Sean O’Leary has said the 1.5c/l increase announced by Carbery on February milk will bring the West Cork Co-ops within just over half a cent of the 33c/l predicted by several industry leaders for 2017.

He added that Lakeland, Glanbia and Dairygold’s decisions to hold their price at January level was disappointing, but he urged all co-ops to stay on track to deliver 33c/l before peak.

“EU milk supplies continue to fall back. Milk supplies in France were down 5% in January, and are estimated to be back 7% for February (not corrected for last year’s leap day). German milk output in the last week of February was back 3.6%, and the Irish output was back 4.6% for January, with a continued downward trend into March. With the phosphates related cow cull to start in the Netherlands from March, output there – the only EU region which had still be expanding – will also fall back,” Mr O’Leary said.

“Output will be slow to pick up around Europe as in most cases, though rising, milk prices continue to be below production costs. A case in point is France, where the dairy farmers’ union FNPL state that while current prices are around 30-31c/l – only around 14% up on a year ago – production costs are around 34c/l,” he said.

“Milk powder prices are being affected by the large intervention stock, EU butter, cheddar and whey prices have been firming in the last couple of weeks. EU returns at 5th March, based on EU Milk Market Observatory reports, would have yielded just under 37c/l gross before processing costs, or a milk price equivalent of 32c/l + VAT (33.7c/l including VAT),” he said.

“Even after the 7th March 6.3% fall in the GDT auction, the average prices for SMP (significantly down) and butter (holding its own and still rising) would return a similar gross of just over 37c/l before processing costs,” he added

“I believe co-ops need to hold their nerve, and remain on track to deliver 33c/l before peak for Irish milk producers,” Sean O’Leary concluded.