Farmers suffer in ‘cruel’ milk price cycle

ICOS has called for structures to allow farmers and co-ops deal with “cruel” milk price cycles, as sinking butter and skim milk powder markets across Europe pointed to milk prices of just over 21.5c per litre.

However, the Irish Dairy Board Purchase Price Index for December suggested a milk prices of over 28c per litre, even after the most recent index fall of 5%.

Meanwhile, dairy farmers have taken heart from the two-in-a-row price rises for commodities traded through the Global Dairy Trade (GDT) platform run by Fonterra.

“I think there will be little doubt left but that we are finally witnessing a real turning around of global dairy prices,” said IFA National Dairy Committee Chairman Sean O’Leary, after last week’s 3.6% increase in the GDT weighted average price.

ICMSA’s dairy chairman Pat McCormack said the price rise would provide a degree of hope for farmers.

However, sources in ICOS said the GDT price trend must be seen in the context of lowering volumes. as per the New Zealand season.

ICOS sources said dairy product prices on the Eurex international derivatives exchange have gone lower than their last weakest point in May, 2012 — after which they recovered rapidly, due to poor weather combined with low milk prices and high feed prices.

Meanwhile, dairy farmers are hurting around the world as milk prices fall.

In England and Wales, 60 dairy farmers are estimated to have given up milk production during December.

Britain’s last remaining large dairy co-op, First Milk, has hit cash flow problems and has delayed payment of its January 12 milk cheque, and all future payments, by two weeks. It also asked members to increase their capital investment in the co-op by 2p per litre.

According to ICOS, in Irish terms, a setback like this would have left a typical Irish supplier of 320,000 litres having to fund additional cash flow of €4,300, and pay an additional €8,200 in shares — on top of the potential milk price hit of about €30,000.

Some British farmers face their lowest milk price since 2007, at around 20p per litre, but their farming costs are 36% higher than 2007.

On the other side of the world, Chinese farmers are reportedly throwing away milk or feeding it to pigs, and killing their cows, after milk prices plunged in Northern China.

They turned to dairy farming when milk prices rose in 2013, but have been left high and dry by processing companies switching to imported raw materials.


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