IFA National Dairy Committee Chairman Kevin Kiersey has said that in increasing their December 2010 milk price by 0.5c/l to 29c/l + VAT, Lakeland Dairies had taken an early first step to pass back improved market returns, showing for other co-ops to emulate what was possible for December milk.
Commodity prices have increased further in January, and Kevin Kiersey urged the Irish Dairy Board to pass these back in their January prices. He also called on all co-ops, in the context of rapidly rising on-farm input costs, to first examine the scope for an end of year top up on 2010 milk, and then start passing back rapidly to farmers the significant market improvements of recent weeks.
Mr Kiersey said, “The Lakeland Dairies price increase shows that their recent programme of investment and efficiency improvements has allowed them pass back quickly the early increases in December market returns. Other co-ops must be able to follow their example.”
“During January, commodity prices have increased a great deal more again, with powders up by over €200/t, and even butter prices, which had weakened somewhat in recent months, now rallying by up to €80/t in the last week. These price improvements must be reflected in the IDB prices to be paid for products traded during the month of January,” he said.
“We calculate that gross spot returns for Dutch food-grade SMP and butter this week, before processing costs, exceed 37c/l – an improvement of over 3c/l since late November,” he added.
“With fast rising input prices, we estimate that, just to maintain margins, dairy farmers will need an average 2011 milk price at least 10% or 3c/l higher than the 2010 average,” he said.
“For this to be achieved, co-ops will need to start increasing milk prices straight away, and the good news is that significantly improved market returns mean they can easily afford to do this,” he concluded.