Milk prices set to improve, says Teagasc
In the Teagasc outlook report, Trevor Donnellan and Paul Smyth have said an annual average milk price of 26 cent per litre may be achieved in Ireland in 2010, with the possibility of a higher average price for the year if dairy markets are in good shape through the peak milk production months. “Indications are that much of the world is emerging from the recessionary period and this may boost dairy product demand internationally. The growth in global dairy supplies has slackened off following the period of low dairy prices.
“The existence of relatively high levels of dairy stocks, and uncertainty about the timing of their disposal, complicates the forecast of milk prices and dairy farm margins in 2010.
“The recent suspension of export refunds will be a concern if a period of international market weakness returns.”
Production costs should continue to decrease. However, they will still be considered high relative to the cost level that prevailed in 2007 and 2008.
Therefore, recovery in farm profit margins in 2010 is likely to depend almost entirely on recovery in farm gate milk prices.
Reacting to the Teagasc report, ICMSA president Jackie Cahill said the catastrophic collapse of dairy farmer margins and the level of their personal debt were set out for all to see. He accused Teagasc of inability to follow its own logic and cease supporting expansion of milk production – the main factor behind the price collapse, according to ICMSA.
Mr Cahill said Teagasc and others must stop being passive about policy tools that could at least help restore some degree of stability and growth to dairy margins.
The ICMSA leader urged Agriculture Minister Brendan Smith to support a supply-management system that will match EU dairy production to demand, and end the headless, free-for-all, deregulated disaster that had effectively wiped out the Irish dairy sector. If this was labelled a policy U-turn then that could not be helped. It was the only viable policy to restore dairy farm margin, he said.
