IFA welcomes Dairygold milk prices increase
The company’s decision to add 1.5c per litre has brought its milk price up to 24cpl, including quality bonus (0.5c/ltr) plus Vat for July milk supply.
Nonetheless, the Cork-based co-op does not expect global milk markets to recover strongly until early next year.
Dairygold CEO, Jim Woulfe, said: “We are seeing some positive sentiment in the market and we are cautiously optimistic that we are beginning to see the early stage of an upcoming gradual recovery in milk price but it will still take a number of months before firm clarity of where the market is going will become evident.
“At the minute, production has fallen back in key milk producing geographies but there is substantial global overhang of dairy stocks. With Russia remaining out of the market for European dairy and purchasing by oil- dependent economies remaining relatively weak it will be into 2017 before any significant or sustainable recovery gains traction.
“Dairygold is well placed to take advantage of the recovery and to reflect the recovery as it develops in a gradually improving milk price,” said Mr Woulfe.
Analysts at the financial advisory group Davy also note that any milk price recovery will remain gradual in the short term. They contrast a 35% fall in global farm-gate milk prices this year with a tentative price recovery in the US, but say that this bounce could be threatened by a possible rise in US milk stocks.
Davy’s analysts also highlight signs of Chinese buyers returning to international dairy markets. They say Europe’s milk output was still growing 4.7% year-on-year up to the end of May 2016, but expect this rate of growth to slow throughout 2016.
Meanwhile, IFA president Joe Healy praised Dairygold’s decision to pass back July milk price rises to its suppliers, and he said some other co-ops have given increases of 1c per litre to suppliers.
However, he criticised Kerry Co-op’s decision to stay at its June milk price. He urged Kerry to revisit this decision for the sake of cash-strapped suppliers.
“Kerry suppliers are under as much financial and cashflow pressure as all other dairy farmers. My phone has been hopping all day with outraged producers who feel let down by this decision must do the right thing now and urgently revisit their milk price decision,” said Mr Healy.
