Glanbia and Kerry Undershoot February Milk Price Increase – Kiersey

IFA National Dairy Committee Chairman Kevin Kiersey today (Wed) said that Glanbia and Kerry, had both jumped the gun and undershot a fully justified 3c/l February milk price increase to 33c/l + VAT (34.7c/l including VAT). Glanbia have increased by 1.44c/l + VAT in both Jan and Feb, and Kerry by 2.85c/l + VAT in Feb.

Mr Kiersey said that the average combined returns for EU SMP and butter had lifted by 8.6% between January and February, and yesterday’s 5.9% increase in the average Fonterra auction price confirmed the strong market outlook to November 2011 at least.

He urged the Irish Dairy Board to reflect immediately the increase in market prices for product traded during February, and to lift the index by the full extent of the 3c/l to just under 38c/l (at 3.3% protein and 3.6% butterfat). Mr Kiersey also called on all co-ops to pass back the 3c/l minimum increase in the February milk price, in addition to the January milk price increases most of them have already paid.
Both Glanbia and Kerry have now lifted their price to 31.36c/l plus VAT for February.

Mr Kiersey said, “this does not fully reflect improving market returns. Co-ops must lift prices by 3c/l at least to 33c/l + VAT to ensure farmers, many of whom are still dealing with the financial consequences of the 2009 income crisis, benefit from the real increase in market prices.”

“The average EU gross spot market price for butter has increased by over 7% between January and February, while SMP prices have lifted by 9.95%, whole milk powder prices by 10.5%, and whey powder prices by a whopping 24.7%. The recent improvement in UK cheddar cheese prices represented a more modest 1.16% lift over the same period,” Mr Kiersey said.

“End February spot quotes indicate that most commodity combinations can pay well in excess of this, with butter/skimmed milk powder, whole milk powder and cheddar cheese/whey powder gross returns all between 40c/l and 44c/l. This augurs well for co-op returns as milk supplies begin in earnest,” he said.