Farm Ireland
Independent.ie

Monday 5 December 2016

Milk supplies up 30pc despite price crash

Published 09/02/2016 | 02:30

The Ornua index is expected to slip to a new low.
The Ornua index is expected to slip to a new low.

Milk supplies continue to surge, despite dairy markets weakening further to levels last seen in 2009.

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Despite expectations that the Ornua index due out tomorrow will slip to a new record low, and large volumes of Irish powder being sold at rock-bottom prices into EU intervention stores, milk supplies were up by as much as 100pc in some southern processors in January.

Nationally the figure was closer to 30pc. Tipperary co-op reported a doubling of 2015's intake, Dairygold also reported a big increase of 50pc, while Glanbia, LacPatrick, Carbery and Lakelands all reported a 25pc increase.

Arrabawn recorded a 36pc increase, while Aurivo were up 20pc.

Dairy calvings are already up 10,000 this year on the same period as last year.

The milk supply data comes as new figures show that Ireland is the main culprit for over supplies on the European market.

Despite accounting for less than 4pc of the total EU milk pool, Ireland produced a third of the 1.7 million tonnes of the extra milk output from the region in the first eight months of 2015.

The 11.4pc increase in Irish output was more than double the next nearest, a 5.3pc increase in Holland. In volume terms, Ireland's 620,000t increase was 70,000t more than the Dutch.

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The records show that an extra 100,000 dairy cows are due to calve in Ireland in 2016.

All analysts agree that the current price slump - now close to the historic lows of 2009 - is driven by a surplus of supply rather than a lack of demand. Again, the finger of blame is being pointed at the EU region, where the biggest increase in milk output was recorded in 2015.

Banks

While some experts believe that milk prices will not improve materially for Irish farmers before 2017, the main banks are still optimistic that Irish farmers will survive the current trough.

"We've only had a handful of clients looking to restructure their loan repayments," said Ulster Bank's head of agri lending, Ailish Byrne.

All the banks insisted that they would work with farmers experiencing tightening cash-flows, by providing interest only payments, extra working-capital facilities or restructuring options.

"We're confident that dairying is still a good long-term investment when viewed over 20 years, and we've enough set aside to facilitate every dairy farmer on our books if milk price stays low this year," said Ms Byrne.

Bankers also note that farmers are in a better position heading into 2016 than in 2009 due to the absence of non-performing off-farm investments and lower overdraft facilities that were extended in 2008 to help many farmers complete building work started during the Farmyard Improvement Scheme.

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