14.5% milk jump despite market slump
Milk production since EU quotas ended on April 1 has fallen behind last year’s levels in France by 2.6% and in Germany by 1.1%.
German dairy farmers say their average production costs in January were 45.64 cents/kg of milk, and they were paid only 31.03 cents. As a result, farmers there are cutting back production.
Meanwhile, on the other side of the world, a weakening of the New Zealand dollar softened the impact of price falls in the sixth successive GlobalDairyTrade auction.
But the DairyNZ organisation which supports dairy farmers said the milk price forecast for next season will translate into an average farmer’s milk income dropping by $150,000 (about €96,000).
DairyNZ has launched the Tactics for Tight Times campaign of advice and help, warning that those who have just bought farms or are first year share-milkers are the most vulnerable to the downturn, because of higher indebtedness.
But lower milk prices worldwide are set to continue until farmers around the world respond, by cutting production significantly.
Instead, Fonterra last week reported strong growth in New Zealand’s low season production.
Drought in California has hit US production, but output continues to rise in the midwest and northeast.
Ireland leads the growth in the EU, with milk output rising 14.5% year-on-year in April. But IFA dairy committee chairman Sean O’Leary pointed out that this included milk held back in the last days of March to avoid superlevy.
He said exceptionally good production conditions in early April then brought forward peak production a couple of weeks, but the weather change in late April and May has slowed down production.
Elsewhere in Europe, major processing companies like Friesland Campina and Arla have announced price cuts in May and June — despite the weak euro against the dollar making European products relatively more competitive on world markets.
These cuts could be decisive, because market analysts suggest the European post-quota milk production trend plays an important role, and if European growth is less than expected and international demand starts to improve, markets could improve worldwide.
