Dairies hold milk price at 30.5c/l as outlook improves
Glanbia Ingredients Ireland (GII) and Aurivo have held their January milk price at 30.5c/l (including VAT).
In addition, the board of Glanbia Co-op has decided to provide support, if necessary, so that the base February and March manufacturing milk price for farmers who have signed a milk supply agreement (MSA) will not fall below 30.5c/l including VAT.
The GII move is a major boost for dairy farmers and comes as the IFA and ICMSA have stepped up the pressure on dairy processors to hold milk prices for January on the back of more positive international dairy market sentiment.
GII has also announced its fifth index-linked fixed milk price scheme. The scheme will be available to suppliers who have signed a milk supply agreement and will run from April 2015 to March 2018.
At standard constituents and including VAT the base milk price under the scheme is set at 32.61c/l. At average supplier constituents the base milk price equates to 34.5c/l, Glanbia sources noted.
GII's decision reflects a more positive mood in the dairy sector generally. A worsening drought in New Zealand has resulted in a serious reduction in that country's dairy output for the 2014/15 season, while EU milk production has fallen sharply since Christmas due to the milk quota situation.
International markets have also been helped by stronger demand from Chinese and other Asian buyers.
Although the Irish Dairy Board (IDB) cut its purchasing price index for January from 94.4 to 93, it held butter and skim milk powder (SMP) prices at €2,850/t and €1,950/t respectively, and industry sources predicted that IDB will be under pressure to raise the price paid for butter in February since it is currently trading for a close to €3,200/t on European markets.