€10k less for June milk on greenfield farm
Due to some key commodity milk powder buyers staying out of the market, GDT auction prices for some products have fallen to 13-year lows.
The effect for Irish farmers was starkly revealed on the greenfield farm at Clara, Co Kilkenny, where best practice in conversion of a greenfield site into a fully functional dairy farm is demonstrated.
Their June milk cheque was €10,000 less than in June 2014, despite 15,000 litres of extra milk and higher milk solids this year.
Expect milk prices to move 50% once or twice every 10 years, dairy farmers have been advised by Torsten Hemme, managing director at the International Farm Comparison Network (IFCN) dairy research centre.
IFCN claims to be the leading global knowledge organisation in milk production, milk prices and related dairy economic topics.
IFCN’s network of dairy researchers from over 90 countries analyse milk prices and costs and sustainability of milk production.
Mr Hemme said 20% swings could become the new normal, and managing the risk of volatility is the biggest challenge in the industry.
Larger, higher-input farms are more vulnerable, because they lack the smaller farms’ inbuilt buffer of family labour.
He called for milk processors, farm input suppliers, and retailers, to shoulder more of the milk price risk and feed price risks in milk production, because it all rests on dairy farmers, in most countries.
He said futures markets are not the answer yet, because of insufficient liquidity, and lack of knowledge of how to use them.
Alongside the risks, IFCN’s 10-year outlook is for the world to need 30% more milk than today, by 2024.
IFCN also predicts the world milk price averaging 41c/litre over the next 10 years, but with much higher feed costs.
Mr Hemme sees favourable prospects for EU dairy farmers, due to temperate climate, water availability, and the weaker euro making production more competitive.
