Business Irish

Friday 9 December 2016

Rising dairy to cheese off consumers

Published 10/05/2011 | 05:00

JUST as it looked like things couldn't get any worse for consumers, the rise in the price of dairy products could be about to accelerate.

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Food economist Ciaran FitzGerald warned last night that extra costs that had been absorbed by many companies may now have to passed on to consumers.

"The last 15 months have seen sustained increases in milk prices internationally, with farmgate prices increasing 24pc since the start of last year,'' he said.

Liquid milk, followed by butter and cheese, were all likely to cost even more this year.

"The increase has been driven mainly by China, where demand has been pushed by a westernisation of diet. Liquid milk demand is increasing as is cheese consumption," Mr Fitzgerald said

Another factor in China was a big increase in infant milk formula demand, following a scandal involving tainted infant milk produced by local Chinese companies. Ireland is the biggest exporter of infant milk powder in the world.

Pointing to the steady rise in milk prices over the last year and a half, the economist said this was good for Irish producers.

"Ultimately, the higher price consumers pay does benefit the economy because that capital goes back to Irish companies and, by extension, the farmers as this is an almost exclusively indigenous industry. That probably isn't much comfort to someone paying more for milk and butter as wages fall."

Co-ops have reported strong results for 2010, with many saying the era of cheap dairy products is over. While that may be the case at present, Mr FitzGerald is sceptical it will last.

"There has always been volatility in milk prices, that is the nature of the business. It is also dependent on other factors such as oil as the cost of transport is a huge factor in milk prices overall."

Irish Independent

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