Milk price boost needed to take pressure off farmers

JUNE milk prices will have to reflect improved market conditions and tightening supplies across Europe, the ICMSA and IFA have warned.

The farm organisations’ comments come as both Glanbia and Lakeland Dairies prepare to announce milk returns for last month.

ICMSA dairy chairperson Ger Quain said it was time for processors to lift prices in accordance with market developments and the pressure on their farmer-suppliers.

“Dairy markets have increased steadily from their lowest in point in March to a current position where the butter/SMP (skim milk powder) mix is slightly below 35c/l after processing in the spot market,” said Mr Quain.

Tom Phelan of IFA said that despite the recent easing in the GDT, returns for both SMP and butter would yield an Irish price equivalent of 33.5c/l including VAT, while European spot price levels would equate to 37c/l including VAT.

“EU and global commodity markets have been strengthening, with the EU MMO returns up by just over 5c/l since January — more than half of the reduction seen over lower volumes between September and December 2017. Latest figures suggest a milk price equivalent, including VAT, of 34.63c/l,” Mr Phelan said.

“Dutch, German and French spot quotes, based only on SMP and butter prices, suggest a milk price equivalent over 37c/l including VAT.”

The scorching weather across Europe has been reflected in lower milk deliveries and increased demand. Irish processors also report lower supplies, with most back around 1pc relative to last year.

Meanwhile, the June milk price to be announced by Glanbia on Thursday will attract significant attention, with the returns paid by the country’s largest processor to date this year attracting harsh criticism.

An IFA analysis of milk prices paid by the eight main co-ops in May found that there was a €1,366 difference in returns for an average supply of 350,000 litres.

The analysis found that Glanbia paid €879 less than the average for the eight co-ops, while Dairygold paid €487 over the average.

This analysis excluded weather and fodder supports paid on May milk supplies by some co-ops and took account only of base prices (excluding VAT) at 3.3pc protein and 3.6pc butterfat.

Tom Phelan said Glanbia Ireland (GI) needed to address the price differential over the coming months. Similar sentiments were expressed by ICMSA president Pat McCormack, following a meeting between the farm body and GI officials.

“If Glanbia is serious about addressing their suppliers’ genuine concerns, then they are going to have to significantly increase their milk price and lead from the front for the remainder of the year,” Mr McCormack said.