Milk price could fall further without more co-op supports
Published 06/04/2016 | 02:30
The rest of the world's dairy farmers are blaming the Irish (and perhaps the Dutch) for the critically low prices they are suffering.
There is little appreciation that the Irish dairy farmers who, in cost of production terms, are among the most efficient in the world have as much right to produce milk as any New Zealander or Californian producer.
It is true that much of the additional milk that flowed on to the world market from Europe did emerge from Ireland (+8pc year on year between April and January) and Netherlands (+4pc year on year between April and January).
Production has risen more slowly elsewhere in Europe. But where it has been possible to generate a 'cash return', if not a 'profit', farmers have done so.
The short term outlook is not great.
Returns from commodity markets where much of the Irish production heads is still only around 26c meaning that either cooperative boards will need to continue to dip into reserves to support prices, or there is room for further weakening of prices at the farm-gate.
Indeed, in our quarterly forecast constructed by our dairy analysts around the globe and published this week, we remain pessimistic in the short term.
Global dairy commodity US dollar prices have continued to stumble along a market floor largely determined by the level of EU intervention support.