IFA claims co-ops have undershot milk price rise due for February

THE IFA claims Glanbia and Kerry undershot the 3c/l milk price increase it feels was due for February.

The farm group says Glanbia and Kerry have jumped the gun on the Irish Dairy Board index, due out in the next few days. Based on spot quotes from Holland and domestic price trends for December and January, the IFA was expecting a 3c/l increase to 33c/l + VAT (34.7c/l including VAT).

Glanbia has increased its milk price by 1.44c/l + VAT in both January and February. Kerry gave no increase in January, but has given 2.85c/l + VAT in February. Both Glanbia and Kerry have now lifted their price to 31.36c/l plus VAT for February. The IFA argues this price is almost 1.5c/l short.

IFA dairy committee chairman Kevin Kiersey said: “This does not fully reflect improving market returns. Co-ops must lift prices by 3c/l at least to 33c/l + VAT to ensure farmers benefit from the real increase in market prices. The average EU gross spot market price for butter has increased by over 7% between January and February, while SMP prices have lifted by 9.95%, whole milk powder prices by 10.5%, and whey powder prices by a whopping 24.7%. The recent improvement in UK cheddar cheese prices represented a more modest 1.16% lift over the same period.

“End February spot quotes indicate that most commodity combinations can pay well in excess of this, with butter/skimmed milk powder, whole milk powder and cheddar cheese/whey powder gross returns all between 40c/l and 44c/l. This augurs well for co-op returns as milk supplies begin in earnest.”

The IFA’s research showed that the average combined returns for EU SMP and butter had lifted by 8.6% between January and February, and yesterday’s 5.9% increase in the average Fonterra auction price confirmed the strong market outlook to November 2011 at least.

Mr Kiersey urged the Irish Dairy Board to reflect market prices in its next index by the full extent of the 3c/l to just under 38c/l (at 3.3% protein and 3.6% butterfat). Mr Kiersey also called on all co-ops to pass back the 3c/l minimum increase in the February price, in addition to the January price increases most of them have paid.

National dairy committee executive secretary Catherine Lascurettes said: “We regularly monitor the developments in the marketplace, and make an educated guess on prices. In January, we did a similar guesstimate relative to December prices and we were out by just 0.1%. In other words, we were right.

“Kerry implemented no price increase in January, and they gave less than 3c/l in February. Glanbia has come in early before we know what the Irish Dairy Board are going to do, and before yesterday’s Fonterra auction, which showed strong global prices for commodities.

“We are urging the other co-ops to do better, and there is still time for Glanbia and Kerry to offer a better price for February. There is at least 1.5c/l +VAT in the price difference.”