Co-ops urged to follow dairy commodity market trend

Dairy farmers are urging Ireland’s leading milk processors to raise their September milk price to reflect EU global commodity trends.
Co-ops urged to follow dairy commodity market trend

IFA dairy chairman Sean O’Leary is calling for an extra 2c per litre from co-ops.

Citing the latest global milk market indices, falling milk production, and rising cow culling, he is urging co-op board members attending meetings this week to pass back the rapidly improving dairy market returns.

“EU milk supplies are below last year’s level for June (-1.6%) and July (-1.4%); the EU production reduction scheme will exacerbate that trend as we go into the back end,” said Mr O’Leary.

“Within countries such as the UK, France, Germany, and Poland, that falling trend has been visible for several months now.

“Even in Ireland and the Netherlands, where production has increased, growth levels are considerably slower — 1.8% and 4.9% respectively for August. In New Zealand, output is down 3% for that month, while Australian July supplies are back over 10%.”

Mr O’Leary said that very poor profitability in most countries has led to strong increases in the number of cows culled — in the EU, up 7.8% for the first half of the year, and 9.5% in June alone.

The EU Milk Market Observatory’s September returns were 10c/l higher than in early May, equivalent to around 35c/l gross for an Irish product mix. After deduction of processing costs, this is equivalent to a farm milk price of 30cpl-31cpl.

The ICMSA says that these rising global market trends are reflected in the Ornua September PPI reaching 92.2 points, equivalent to 26.6c/l including Vat.

The farmer group also notes that Glanbia, Kerry and Dairygold are mid-table in the latest Dutch Standardised Milk Price Comparison league.

Fonterra is paying 28.5cpl versus the 23cpl to 25cpl of the top Irish processors.

ICMSA deputy president Pat McCormack predicts milk prices to exceed 30cpl from next spring, with dairy futures markets indicating a steady demand for the next six months. He says the EU Voluntary Milk Reduction Scheme will act to further lift farmgate milk prices.

However, while welcoming signs of milk price recovery, the ICMSA has also highlighted current difficulties facing dairy farmers, noting it will take time to rebuild from the income wipe-out over the last 18 months.

ICMSA president John Comer has expressed disappointment to hear MEP Mairead McGuinness advocate that cereal farmers be prioritised for the €11m EU Crisis Fund.

He said dairy farmers need a flat €1,200 payment, and urged Agriculture Minister Michael Creed to push for a separate tillage fund at today’s EU Farm Council meeting.

“Dairy farmers are still producing milk below the cost of production,” he said.

“Despite the last two months of market rallies our milk suppliers are getting a price up to 3c per litre below the cost of production. That’s the reality and it has become unbearable for our 18,000 dairy farmers.”

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