Dairy chairman insists co-ops can hold milk price at current level

CO-OPS can afford to hold their present milk price despite a weakening in overseas markets, according to IFA national dairy committee chairman Kevin Kiersey.

He said Irish co-ops had improved their margins significantly in 2010 and 2011, and most could afford to hold milk prices through the spring. The current 12-month rolling average is 34-35.5c per litre.

“Co-ops generally collect relatively little milk this time of year, and will collect even less this year because of superlevy restrictions,” said Mr Kiersey. “Most can afford to hold milk prices over the coming months because they have improved their margins in 2010 and 2011 at times when strong dairy prices coincided with strong milk supplies.

“Increased global milk supplies and the economic downturn have clearly impacted international dairy markets in recent months. However, this is a very expensive time of year for Irish farmers to supply milk, and simply too early in the Irish production season to make definite milk price decisions.”

Mr Kiersey also noted that recent Fonterra auctions present a mixed picture for international dairy markets. As a result, it is too early to pre-judge 2012 milk prices, he said.

“Irish milk supplies will remain constrained by the prospect of superlevy for the next few months, and with less than usual milk to collect, most co-ops will be able to hold milk prices for the spring, at which point we should have a better feel for the realities of the market,” Mr Kiersey concluded.