€17m milk price support at Dairygold

Dairygold Co-op has revealed a €17m spend this year to-date on milk price support.

The co-op, which set its July base milk price at 25.5/cpl including VAT, says price support will be funded out of cost savings and profits.

“We will reduce non-core spend, pending a recovery in the markets, and we will continue our relentless drive for efficiencies across every aspect of our operations.

“We will also defer some elements of our capital expenditure programme,” chief executive Jim Woulfe told farmers.

Meanwhile, EU Agriculture Commissioner Phil Hogan has warned of limitations on what the Commission can do in response to low prices affecting EU farmers, which have hit dairy farmers worst.

“We all agree that we need to maintain the market orientation of the CAP which began as far back as 1999 and which was further confirmed by the 2013 Reform,” he said, ahead of next Monday’s emergency meeting of EU agriculture ministers in Brussels, to discuss the difficult market situation brought on by factors such as Russia’s ban on Western agri-food products.

However, it is likely there will be extra help at least for countries worst affected by the Russian ban, such as the Baltic member states, with Commissioner Hogan saying, “Given Russian President Putin’s decision to extend the ban for another year, we must re-evaluate the situation”.

Agriculture Minister Simon Coveney has asked the Commission to use exceptional measures to temporarily increase support prices for butter and skim milk powder to a realistic floor price.

He also sought restoration of Aids to Private Storage for cheese, use of superlevy fines to support the market, exceptional promotion measures, advanced direct payments, and Aids to Private Storage for Pigmeat.

On the global front, agri-lender Rabobank has predicted that New Zealand will lead world dairy market supply adjustment, with a sizeable fall in milk supplies when their main production season gets underway, with farmers offered about 22 cent per litre.

In the year to last July 2015, over one million dairy cows were culled in New Zealand, an increase of 21%.

Latest forecasts by the US Department of Agriculture suggests that the EU, US and New Zealand will all reduce output.

But sources at Rabobank said world dairy prices are unlikely to look much better in the next six months.


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