A 55c/l base milk price “or maybe a bit more” for suppliers in the coming months would be “quite justified”, dairy committee chairman of the Irish Creamery Milk Suppliers’ Association (ICMSA) has said.
With “good demand for product” and supply being “scarce enough”, milk prices are being “driven up” to record level highs, despite another slip of 2.9% in the Global Dairy Trade price index in the most recent trading event.
“It’s pretty buoyant, we’ve never seen such high prices and it’s quite justified that farmers should reap the rewards and that the price should be passed back as much as possible by our co-ops and processors,” Noel Murphy, ICMSA dairy committee chairman said.
However, he said, “we have to see where trade is going, at the prices you’re at, there’s bound to be a bit of burn off”.
Dairygold announced this week that it has increased the milk price for April by 4c/l to 50.5c/l, based on standard constituents of 3.3% protein, and 3.6% butterfat, inclusive of bonuses and Vat.
This equates to an average April farmgate milk price of 54.6c/l, based on average April milk solids, achieved by Dairygold milk suppliers.
A Dairygold spokesperson said that “continued weak global supply and sustained demand for dairy ingredients has meant that markets have remained firm”.
“This increase in milk price reflects strong dairy markets but also recognises the significant increase in input costs for milk suppliers since the beginning of the year,” they said.
In the Republic of Ireland, Lakeland Dairies has also increased its base milk price by 3c/l to hit 50.1c/l, inclusive of Vat, for milk at 3.6% fat and 3.3% protein.
On average, Lakeland pay out will be 53.02c/L for April milk.
In Northern Ireland, Lakeland has increased its milk price by 2.5p/l to 40p/l which will see an average pay out of 42.1p/l for April milk.
Lakeland commented that dairy markets are “balanced, with an uptick in milk supply”.
“However, a demand challenge is now emerging as higher prices feed through to consumers,” a spokesperson said.
“Inflationary pressures continue to bite at farm, processor, food production, and consumer levels.
“Some key Asian markets remain significantly impacted by the pandemic, and the war in Ukraine continues to affect market sentiment on a global basis.
“However, the overall view is that the markets will continue to provide good returns for the foreseeable future.”
Meanwhile, Glanbia’s base milk price for April is 46.58c/l and against a backdrop of record farm input costs, the Glanbia board has agreed to pay a 3c/l agri-input support payment on all milk supplied in April.
A sustainability action payment of 0.5c/l is also being paid monthly by Glanbia on all milk supplied in 2022 to recognise specific sustainability actions undertaken on-farm.
Glanbia will pay its milk suppliers a total of 50.08c/l for April milk supplies at 3.6% butterfat and 3.3% protein.
Glanbia Co-op chairman John Murphy said this payment comes as the industry is at a “crucial time of year for investment in farm inputs to ensure adequate fodder supplies for next winter and spring”.
“The war in Ukraine is continuing to affect farm input costs and supply chains,” Mr Murphy said.
“Tight global milk supply has pushed European dairy product prices to record levels, with high input costs appearing to be curtailing any major global milk supply response.
“A watch out for the future is that high prices and cost of living challenges may impact on demand in some regions.”
The Kerry Group base price for April milk supplies has increased to 49.5c/l.
Based on Kerry’s average milk solids for April, the milk price return inclusive of Vat and bonuses is 53.31c/l.
Noel Murphy told the Irish Examiner that if the demand stays steady, he doesn’t “see any reason why we can’t get 55c/l, or maybe a bit more” in the coming months from processors, with this as a base price “quite justified”.
“We’d be very positive about the next few months, definitely that the price should hold because at the end of the day supply is not there and supply probably won’t be there either,” Mr Murphy said.
He also acknowledged “welcome developments” recently for those with milk locked into fixed-price milk contracts.
Such developments include Lakeland announcing in recent days that it has adjusted the milk price it pays on existing fixed contracts with farmer suppliers, to help “alleviate the prolonged on-farm cost squeeze for farmers engaged in these contracts, as severe inflationary pressures on feed and fertiliser continue to bite”.
In the Republic of Ireland, all fixed milk volumes will receive an 8c/l supplementary payment from April 2022 to December 2022 inclusive.
Meanwhile, the board of Carbery has increased its milk price for April by 3cpl. If this decision is replicated across the four West Cork co-ops; Bandon, Barryroe, Drinagh and Lisavaird, it will result in an average price for April of 50.9cpl, inclusive of Vat.
It will also make a one-off payment of 5c/l to their fixed milk suppliers based on their annual volumes, which will be paid this month.
Mr Murphy said “there wouldn’t be a major amount of them”, but there are “unfortunately” farmers across the country who are “locked in with prices around the 31c/l, 32c/l for over 50% of their milk”.
“They’re hurting pretty badly in fairness,” Mr Murphy said.
“We would ask all processors to look and see if they can come up with a mechanism to relieve the hardship on those people.”
