Farm leaders call for 2c/l milk price rise as market lifts

A RISE in the dairy prices on the Ornua index and the Global Dairy Trade auction has given a boost to farm organisations’ campaign for a significant lift in milk returns.

The boards of both Lakelands and Glanbia are due to meet and announce their May milk prices today, with other processors due to follow later in the week.

IFA and ICMSA are seeking a 2c/l lift in prices, and have called for a base of at least 33c/l, including VAT.

Processors have resisted supplier pressure for an immediate jump to 33c/l, pointing out that while the market for milk fats such as butter was extremely strong, demand for proteins such as skim milk powder (SMP) remained depressed.

However, Sean O’Leary of the IFA said the 1.8 rise in the Ornua May PPI to 106.8, the equivalent of a 32c/l milk price including VAT and minus protesting costs, shows the market has recovered to deliver for farmers.

Mr O’Leary said the 17pc fall in dairy farmer incomes highlighted by the National Farm Survey confirmed that milk suppliers had taken the brunt of the sector’s downturn.

Recovery

“While co-ops may be tempted to further rebuild their balance sheets, we believe farmers must not be denied the full benefit from the recovery which started 12 months ago, and has been strengthening further,” Mr O’Leary said.

He pointed out milk prices increased around 7.5c/l between July 2016 and last February but have stagnated ever since.

Mr O’Leary said the GDT auction was the “sixth bullish one in a row” and EU butter prices have increased by over 18pc since the trough in early March.

However, Ger Quain of ICMSA said returns to Irish dairy farmers lagged behind those being paid to continental farmers and he warned that the gap had to close. “According to the EU Milk Market Observatory (MMO), the average milk price in Europe for April 2017 was €33.2 per 100kg, with Ireland lagging behind at €31.66 per 100kg,” Mr Quain explained.

“Irish co-ops are lagging behind and there is simply no excuse,” he said.

The ICMSA representative pointed out that butter prices increased 6.2pc in May, while SMP quotes also improved over the last week. Dutch dairy quotes saw the butter/SMP mix rise by 17pc and whole milk powder (WMP) rise by 10pc.

“Italian spot milk prices now stand at 40.5c/kg, while Dutch spot prices are at 37c/kg,” Mr Quain said. “ICMSA fully expects processors and co-ops to announce 33c/l for May milk because we know that there is more than sufficient scope for the suppliers to be paid that price,” he maintained.