IFA/ICMSA urge co-ops to increase milk prices

Both the IFA and ICMSA have urged the co-ops to start thinking about increasing the milk prices they pay out to suppliers.

IFA dairy committee chairman Michael Murphy said the Irish Dairy Board had this week increased its skim milk powder (SMP)-butter price by 0.89c/l (4.04c/gal) to €29.42c/l, reflecting a €100/tonne improvement in SMP prices.

The IDB had earlier announced yet another retrospective butter price increase of €50/t, to reflect better than expected trading performance during the month of October.

Mr Murphy said this must put an end to the constant talking down of milk prices by some co-op managers and board members. EU protein markets have started strengthening again, with SMP intervention stocks dwindling rapidly, and buyers scrambling for fresh supplies.

“Feed quality fresh SMP is selling at least 3% above intervention prices, while food quality fresh product is at least 6% dearer.

“In addition to this, butter prices on EU markets, though less buoyant than SMP, are still substantially above the new intervention price, which has led the IDB to review its price retrospectively again for October, having already done so in August and September,” he said.

Mr Murphy said with this month’s SMP price increase, returns to co-ops will now be greater than they have been for the last three months, and consequently, there can be no credible argument for price reductions at this stage.

“Co-ops must now stop talking down prices, and start thinking about increasing prices to producers” he said. ICMSA dairy committee chairman Dominic Cronin said demand for dairy products is increasing and looks likely to hold well into 2005. He said this is a most welcome development and supports his contention that all co-ops should, at least, hold their milk price for the immediate future and should be looking to increase milk price in 2005.

Mr Cronin said his confident prediction rested on the reality of continued good demand from both EU and Third Country markets for skim milk powder, with the on-account price standing at a three-year high.

He said this was good news for farmers who would also note the positive forecast from New Zealand, where Fontera Co-op has increased its payout to farmers. Mr Cronin said Fontera’s analysis that commodity prices would continue gaining strength well into 2005 was of particular significance to Irish farmers.

In light of this positive outlook, boards of management should plan for increased milk price in 2005 with the farmer-suppliers gaining the increased returns from the market place, he said.