Rising July milk prices and a jump in the global dairy auction have encouraged dairy farmers to believe a long overdue recovery is under way after a record two-year dairy market slump.
Ireland’s biggest milk buyer, Glanbia Ingredients Ireland (GII), said it will pay its member suppliers 23cpl including VAT for July manufacturing milk, inclusive of a 2 cpl Glanbia Co-op payment to its members (for manufacturing and liquid milk), after Glanbia Ingredients Ireland (GII) increased its base price by 1c to 21c, at 3.6% fat and 3.3% protein.
It is Glanbia’s first milk price rise in more than 15 months, having paid 22 cpl for June milk.
Lakeland Dairies have also decided to increase their July milk price by 1c/l, to 24c including VAT, at 3.3% protein and 3.6% fat.
Lakeland was the first processor to set its price after Ornua’s PPI index of Irish dairy commodity prices rose from 81 for June to 81.8 for July — the first PPI rise in 16 months.
Glanbia Chairman Henry Corbally said: “We have seen some tentative signs that global dairy markets may be turning in the right direction, but are also very aware of the ongoing challenges that our suppliers are facing, and we’ll continue to do whatever we can to provide tangible and practical support.”
Arrabawn Co-op also increased its milk price in the past week.
And dairy farmers’ confidence was boosted further by Tuesday’s GlobalDairyTrade auction jump of 12.7%, on average, in commodity prices, compared to the last auction two weeks ago.
An 18.9% jump in the whole milk powder price was attributed to output from New Zealand, the world’s biggest exporter, falling in line with decreasing milk output, and to the giant Fonterra co-op saying it will cut whole milk powder sales over the next 12 months by 1.8%.
On the demand side, Chinese whole milk powder imports have increased 20%, apparently due to the country having worked through heavy dairy commmodity stocks. The GDT butter index rose 14.1% on Tuesday, but the skim milk powder index, also of major interest to the EU, advanced only 3%
IFA President Joe Healy cautioned that the quantities traded through GDT were small in the context of total global trade, but said Irish co-ops should take heart from those results, and plan for significant further milk prices increases on milk for July, August and beyond.
“Also, farmers are gauging whether or not to apply for the EU production reduction scheme, and clarity on the milk price outlook will be a decisive factor, bearing in mind that present prices still fall well below production costs,” he said.
Mr Healy recently launched IFA’s autumn milk price increase campaign, saying EU returns allow for a farm gate price of 26.1c/l including VAT.
ICMSA’s dairy chairman, Gerald Quain, said rising prices indicate that processors are concerned that farmers might avail of the EU’s voluntary supply reduction scheme this autumn, rather than produce milk.
He said the pressure is heaviest on co-ops paying the lowest milk prices, and said Aurivo, Dairygold and Kerry need to immediately move to close the gap compared to the top paying co-ops.
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