Farm bosses demand 33c/l milk price
Global price slowdown is just a ‘blip’
THE farm organisations are pushing for a further lift in milk prices for December supplies despite a 4pc drop in the first Global Dairy Trade (GDT) auction of 2017.
The ICMSA and IFA insisted that supplies of dairy commodities on world markets remained tight and there was scope for further price increases to milk suppliers as a consequence.
A number of dairy processors are due to meet this week to set their December milk price, with Kerry Group and Lakeland Dairies usually among the first to make a decision.
Base prices have increased continually since last summer and now range from around 29c/l to 31c/l.
Gerald Quain of ICMSA said the EU and world price for dairy products remained in a fundamentally strong position despite two consecutive falls in GDT auctions.
He described these reductions as ‘blips’ which did not change the fundamental trend of supply falling behind demand across the globe.
And he warned that milk suppliers would be “furious” if processors used the GDT falls as an excuse to cut milk prices. “ICMSA expects the underlying upward trend in milk prices to continue for the first six months of 2017,” Mr Quain insisted.
The ICMSA representative said the average cost of production was 28c/l and returns to farmers had only been above this level for 10 weeks. He said ‘spot’ prices across Europe were in the region of 35c/l on the back of lower milk volumes.
“Dutch dairy quotes are returning over 37c/l, with UK prices coming in around the equivalent of 34.5c/l (VAT exclusive).”
He said ICMSA would not accept a situation where “long term identifiable market strengths and trends are ignored” and every opportunity was taken “to hold back on the real farmer price.”
Meanwhile, the IFA’s Sean O’Leary said the EU Milk Market Observatory’s (MMO) report for 2017 confirmed the view that milk prices of 3233c/l plus VAT were justified.
“Assuming a representative Irish product mix, the prices reported for the week ending January 1 suggest gross returns of just under 38c/l, and therefore equivalent to a farm-gate price of 32-33c/l plus VAT,” he said.
“A growing number of contracts signed by Irish co-ops will be for products priced nearer those higher levels, and this will undoubtedly improve the ability and confidence of co-ops to pay further milk price increases, not only on December milk, but also in the coming months,” added Mr O’Leary.
‘SPOT’ PRICES IN EUROPE ARE IN THE REGION OF 35C/L