Dairy groups welcome Glanbia’s decision to increase milk price

DAIRY groups have welcomed yesterday’s move by the Glanbia board to increase its January milk price by 1.44c/l to 29.94c/l (+VAT).

IFA national dairy committee chairman Kevin Kiersey said Glanbia’s price increase was a welcome first step in passing back the rising market buoyancy to their suppliers. He said the IFA had identified the scope in January commodity returns for an increase of 1.5c/l, and had emphasised the need for a price lift in the face of feed, fertiliser and fuel cost hikes.

Mr Kiersey said the IFA had forecast that feed, fertiliser and fuel price increases could lift overall milk production costs by 14% in 2011 when compared with 2010 costs.

Mr Kiersey said: “This means that, just to maintain margins, milk producers will need an average milk price 3c/l higher in 2011 than in 2010.

“We have lobbied board members in all co-ops in recent weeks, to impress upon them that current strong market returns allow for early milk price increases to deliver the necessary margin improvements.”

ICMSA dairy committee chairman Pat McCormack said the price increases from both the Irish Dairy Board and Glanbia in January returns is clear recognition of the improvements in dairy product prices.

However, Mr McCormack cautioned that this must be viewed as a first step. He said that there was now overwhelming evidence that the prices on international markets were now moving rapidly, and an unacceptable gap was opening up that would have to be addressed in February prices.

Mr McCormack said: “The milk price equivalent of the Dutch quotation price for butter/SMP is now equivalent to 41.8c/l before processing costs are deducted and VAT is added.

“The milk price equivalent of the Dutch price for WMP is now equivalent to 43.6c/l before processing costs are deducted and VAT is added.

“The Northern Ireland Milk Auction price increased by 2.18p/l on January 21. Butter is up €150 per ton in France in January alone.”