Farm Ireland

Tuesday 25 October 2016

Slump in milk price worse than 2009 lows

Published 19/04/2016 | 02:30

Glanbia Ingredients Ireland CEO Jim Bergin
Glanbia Ingredients Ireland CEO Jim Bergin

Dairy farmers are now worse off than during the last milk price crash in 2009, when milk prices hit lows of 19c/l.

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It comes as Glanbia slashed over 8pc off its March payout to bring the basic price to just 22c/l when VAT is included.

The co-op will top up this price by 1c/l from its own coffers, along with another 1c/l from cash bonuses from Ornua.

However, an analysis of the figures from the CSO shows it calculates from 2009 to 2015 the farm input costs rose 23pc, meaning that farmers need to receive over 23c/l to be on par with 2009.

While fuel prices decreased significantly in the last 18 months, much of this fall has been captured in the 2015 data.

Dairygold suppliers will be anxiously awaiting word from their co-op's board meeting later today to see if their society follows Glanbia's lead on price cuts. Last month, it cut its price to 24c/l which mirrored Glanbia.

They will be hoping that CEO Jim Woulfe opts instead to stick with neighbouring processors Kerry and Carbery.

Both co-ops decided to hold March milk prices at 25c/l and 27c/l, respectively. Monaghan's LacPatrick has also held its March milk price.

GII CEO Jim Bergin has said he can foresee some who borrowed heavily having to restructure their finances.

However, the pressure continues on the country's processors, with the Ornua price index falling for the 12th consecutive month to 84.2, a 37pc drop from the highs of 2013.

While EU dairy exports are up, and there is evidence of increased buying activity in China, European milk prices remain under pressure, with the Dutch spot price falling to just 18c/l last week.

Lakeland Dairies cut its milk price by 1c/l to 24.78c/l when VAT and a lactose bonus are included. The ongoing shortage of grass at farm level has severely curtailed milk output, with weekly milk volumes down in Kerry last week when compared with the same week in 2015.

A spokesman for Glanbia said supplies were slightly down last week compared with last year as weather takes a toll.

The West Cork co-ops are about 4pc ahead of last year, while LacPatrick is marginally up on last year.

Grass growth according to Teagasc's PastureBase records is struggling at little more than half of last year's levels for the same week.

While grass growth in Moorepark was 57kgDM/ha this time last year, it was 33kgDM/ha last week.

Ballyhaise grew just 23kgDM/ha last week, compared to 39kgDM/ha during the same week in 2015. Johnstown castle was little better at 27kgDM/ha, in contrast to 59kgDM/ha 12 months earlier.

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