As the next sale of EU skim milk powder (SMP) out of public intervention kicks off today, dairy farmers will hope a week of good dairy industry news continues to relieve their worries over Brexit, international trade and tariff disputes, and global economic trends.
European Commissioner for Agriculture and Rural Development Phil Hogan has come to their rescue, spearheading prudent disposal of 95% of an SMP mountain that built up between 2015 and 2017.
Only 22,000 tonnes out of the original 380,000t remained, after the January 11 largest to date tender sale of 80,000t.
At the end of 2016, the EU Commission began the monthly and bi-monthly public tenders to gradually and cautiously put these stocks back into the market without disrupting milk prices paid to farmers.
Today’s SMP sale is likely to leave the intervention stores empty, as global buyers snap up SMP bargains while prices are still affordable.
The global market is absorbing more SMP than is currently being produced.
The material from intervention is likely to be only of feed grade quality after a long period in storage, but is fetching near spot price market prices.
In combination with flat EU milk production, still affected by last summer’s drought, the rapid unwind of the massive SMP stockpile is supporting EU milk prices, and even boosting the global market, with an impressive 10.3% rise in the SMP price at last week’s Global Dairy Trade auction, lifting their average dairy product price 4.2%.
The previous two GDT auctions saw 7.9% and 0.3% rises in the SMP price.
The favourable market trend has enabled Irish co-ops to maintain milk prices for December supplies, or increase them in the case of the cross-border Lacpatrick processor.
Dairygold maintained its base price, and introduced a Milk Supplier Sustainability Bonus for suppliers who participate in milk recording and herd health programmes.
Those who participate in milk recording get a 0.1cpl bonus, plus 0.05cpl if they join Munster Cattle Breeding Group’s Herd Health programme, on top of the existing 0.1cpl SDAS bonus and milk quality bonus of 0.4cpl.
There was more good news for dairy farmers on Tuesday when plans to build a continental cheese plant in Co Kilkenny were announced, in a joint venture by Royal A-ware, a leading global cheese and dairy producer in the Netherlands, and Glanbia Ireland, Ireland’s largest milk processor.
The €140m plant scheduled for commissioning in 2022 with a production capacity of 450m litres of milk per annum, sourced from local farmers, is part of the critical response to Brexit challenges, in terms of developing new products and new markets, said Agriculture Minister Michael Creed.
It is required “to diversify our product mix and to ensure that our suppliers have the opportunity to fulfil their growth ambitions,” said Glanbia Ireland Chief Executive Jim Bergin.
The plant will be located near Glanbia Ireland’s infant nutrition plant at Belview, Co Kilkenny, where €130m is being invested in a third drier, and expanding capacity.