European dairy farmers say the price of skimmed milk powder (SMP) needs to nearly double before the EU can sell its 350,000 tonnes of the powder stored in intervention.
Romuald Schaber, president of the European Milk Board farmers’ grouping, said the current EU average milk price of 33c per litre is way below a cost-covering level, and the price would fall further if the EU sells SMP at the current market price of €175 per 100kg.
“But the price of €215/100kg set by the EU is also too low, and would exert too much downward price pressure”, he added.
He said the milk production cost is over 40c per litre of raw milk in countries such as France, Germany and Belgium, and when costs for transport, processing and marketing are added, a stabilising price of at least €335 is needed for SMP.
The European Milk Board supports a production cap dairy policy in the EU.
Meanwhile, on Tuesday, dairy product prices rose for the fifth consecutive time in the Global Dairy Trade auction, due to solid demand for fat products (although the SMP price index gained 1%). The overall GDT price index gained 3.2%.
Strong demand for milk fat is attributed to many consumers in developed nations eating more natural foods, and the world remains very short of milk fat products.
The EU butter price is at record levels.
But New Zealand is the largest supplier of globally traded butter and anhydrous milk fat.
Last week, Glanbia was the first Irish milk buyer to announce an April milk price, unchanged from March at 31c for 3.6% fat and 3.3% protein manufacturing milk.