Farmers to benefit as EU faces risk of dairy shortages
Continuing strong milk prices in Europe have been predicted by Peder Tuborgh, chief executive of Arla Foods, the world’s seventh largest dairy company.
Announcing the company’s half-year earnings, Mr Tuborgh said, “The second half of 2017 should be even stronger, and we anticipate that both sales and consumer prices, as well as milk volumes, will increase in the months to come.”
Mr Tuborgh said the surge in dairy fat prices, taking butter values to record highs on some markets, represents a “fundamental change in the dairy market”.
If it continues, production and product management will have to change.
Mr Tuborgh said: “The change is driven by low or non-existing butter stocks and an increasing consumer trend and demand for richer dairy products.”
He warned this situation could leave Europe short of milk, cream and butter by Christmas.
“There is a big lack of fat, cream and butter products everywhere in Europe. It will not at all be possible to meet demand up to Christmas.”
This is why Arla plans a third consecutive monthly milk price in September, and possibly more price rises before the end of the year, having already increased the milk price it paid its farmers by 19% so far this year.
The Arla CEO’s comments, and the Arla Foods announcement of a September milk price increase by 1c/kg to 34.6 cent per litre (at 3.3% fat and 3.6% protein), have been welcomed by IFA National Dairy Chairman Sean O’Leary, who said he expects Irish co-ops to continue increasing milk prices for August and later supplies.
“Between August and December, Irish dairy farmers produce between 35% and 40% of their total annual supplies. Every cent passed back for August milk and beyond will make a significant positive difference to dairy farmers’ financial situation after three years of cash flow challenges.
