29c per litre milk price offer up to 2019
For months one to 15 (April 2016 to June 2017), participants will be paid a composite price of 29cpl, including any support payment from Glanbia Co-Operative Society to its members.
From months 16 to 33 (July 2017 to December 2018), participants will receive any Glanbia Co-op support payment on top of the fixed 29cpl price.
Running from April 1 next to the end of 2018, this voluntary scheme includes priority access for manufacturing milk suppliers that applied for the heavily over- subscribed preceding scheme. An allocation will also be made available for 2016 new entrants.
Glanbia chairman Henry Corbally said Fixed Milk Price Schemes have proven extremely popular with Glanbia milk suppliers, who value the option to fix the price of a portion of their milk supply, in order to protect against the income volatility which has been plaguing the dairy industry.
The milk volume allocated to each scheme participant will automatically double after 15 months.
The Fixed Milk Price Scheme offers 4 cent more than the 25 cent per litre Glanbia price for January milk, indicating that the company does not expect a major early recovery in dairy produce markets.
It follows last week’s warning from Kerry Group chief executive Stan McCarthy milk is the new oil, and that expectations of a long-awaited dairy prices recovery late this year are over-optimistic.
“I am bearish on dairy,” he said.
He said it will take a long time for the environment of extremely high production around the world to right itself.
Like the oil market, milk output has been growing even as prices fall.
“We are heading towards levels where it is uneconomical to produce long term and that is going to have to correct itself. It’s not sustainable,” said Mr McCarthy.
He said the key dairy market driver will be demand in China — and some market analysts attributed this week’s modest milk price rally in last Tuesday’s Global DairyTrade auction to stronger demand in China for New Zealand dairy produce.
