Irish milk prices ahead of the pack
This reflects the Irish dairy industry’s dependence on bulk commodities like butter and milk powder, for which there have been tremendous price rises, according to the Dutch Dairy Board.
But they said farmers in the US and New Zealand are gaining much more from the buoyant global dairy product market. For example, Fonterra in New Zealand is forecasting a record payout for 2007/08 milk solids, 27% higher than the current season forecast.
In April, Irish farmers got €27.40 per 100kg from Glanbia and €27.85 from Kerry Group, according to the Dutch Dairy Board, compared to an average of €26.45 paid by 16 co-ops and dairies across the EU.
These prices are standardised for 4.2% fat, 3.4% (crude) protein, 500,000 kg of milk per year, TBC 24,999, and SCC 249,999.
For the first time in the last couple of years the April milk price review showed a year-on-year increase, ending a trend of declining EU milk prices. Meanwhile, further milk price rises for May and June have been announced across Europe.
Demand exceeding supply is pushing dairy markets, according to the Dutch Dairy Board, especially for bulk commodities.
But the extent to which this trend can be reflected in payments to European farmers is limited because of the abolition of export subsidies and internal aid measures by the European Commission, and because it is products like cheese and liquid milk products that mainly drive milk prices in Europe (unlike Ireland, where bulk commodities dominate product mix).
“Just recently there are signals that cheese prices are also moving upwards, and the industry is able to conclude new contracts with retailers at higher prices,” according to the Dutch Dairy Board.
Prices for milk powder have reached record highs in the EU and on the world market. Stocks have been run down, and there will be little product available from the southern hemisphere producing countries until the autumn, due to a seasonal decline in production and a shortfall in Australia due to drought. For buyers the EU is the only producing region.
World market prices of milk powder currently exceed $4,000 per ton; $2,000 was the upper limit in the last decade. Lack of supply and rising demand has also boosted butter prices.
It is expected that demand for dairy products will remain firm, particularly in high economic growth regions in Asia and in parts of North Africa and the Middle East.
