ANALYSIS: DUTCH AND IRISH IN FIRING LINE

THE Dutch, along with the Irish, have seen the biggest increases in milk production since the removal of milk quotas.

Many other regions blamed both the Irish and their Dutch counterparts for collapsing milk prices over the last two years. While Dutch milk output is likely to fall by a minimum of 750,000t, it is a preferable to losing their nitrates derogation, which would double the cut imposed.

While Irish dairy farmers will see the development as a positive one, beef finishers will be concerned about the impact of an extra 100,000 cull cows in a European beef sector that is already struggling. Spot milk prices in Holland have risen to 45c/l in recent weeks, with Fonterra also giving their price forecast by 12pc to NZ$6/kg milk solids. The move by the world’s largest dairy co-op is set to boost returns for Kiwi farmers by €850m, and brings the average milk price in New Zealand to 29.9c/l, similar to Irish averages following increases across the board from Irish milk processors for October deliveries.

However, large Irish exporters of milk powders such as Ornua and Glanbia will be unhappy this week as the EU has decided to start selling intervention stocks at prices of just €2,100/t, which is likely to slow further price increases.

Meanwhile, Northern Irish milk suppliers are pushing for processors to switch to setting milk prices on a forward rather than retrospective basis.