independent

Wednesday 16 April 2014

Superlevy of €17m looms as supplies surge

Surging milk supplies and strong price forecasts are pushing the country closer to a significant superlevy bill next April.

With weekly milk supplies to some co-ops running as much as 20pc higher than the same week last year, the ICMSA has predicted a superlevy bill in excess of €17m for next year.

Official figures from the Department of Agriculture due later this week are expected to show that Ireland has exceeded its national quota as of September 30.

"The size of the superlevy won't be known until summer 2014 but we can safely assume that it will be in excess of the €16.5m that we had to pay in 2012," maintained ICMSA dairy chairman Pat McCormack.

Glanbia confirmed yesterday it is 2.6pc or 22m litres over quota, while its subsidiary Premier is 0.2pc or 0.2m litres over quota. Dairygold is running 2.15pc or 7m litres over quota.

Supplies to Kerry are running 15-17pc higher than 2012 on a weekly basis, although a spokesman for the co-op confirmed it was still 2.9pc or approximately 20m litres under quota.

LEADERS

Milk intake at Town of Monaghan is up 20pc on the same week late year and Aurivo is reporting a 16pc weekly increase compared to last year.

September milk prices nationally look set to remain around 39c/l, with many co-ops following the lead set by Glanbia Ingredients Ireland (GII) last week.

Town of Monaghan confirmed it was to remain on 39c/l including VAT on Friday, The west Cork co-ops also remained unchanged at 39.62c/l VAT inclusive in Bandon and 39.4c/l in Lisavaird.

Kerry added 1c/l to its price to give suppliers 39c/l including VAT for September. The boards of Dairygold, Aurivo and Tipperary co-ops will meet today and tomorrow to decide on milk price.

Meanwhile, agri-banking specialist, Rabobank, is upbeat about the prospects for global milk prices in the short to medium term.

Constrained growth capacity in many key supply and demand regions will underpin milk prices for the coming years, according to Bill Cordingley from Rabobank.

"I just cannot see where the milk is going to come, especially to turn it on at the speed required to cope with increasing demand," said the Australian analyst, who was in Ireland for Alltech's Global 500 conference.

TRADE

Global trade in dairy commodities is set to rise quickly over the next seven years to reach 85bn litres by 2020. Rabobank analysis shows the EU will drive much of the extra milk, with a 9bn litre increase by 2020 predicted. This contrasts with a 5bn litre increase from the US and less from New Zealand, Australia and South America.

"New Zealand and Australia have almost reached their limits in terms of the number of beef and sheep farms that can be converted.

"So it is going to be challenging for them to increase their output. Similarly, any increase in South American output is likely to be consumed domestically as their demand increases," he said. China's scope for milk production is limited by land availability, he added.

"This presents a tremendous opportunity for the likes of Ireland where the capacity for increased output is obvious," he concluded.

Irish Independent

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