Farm Ireland
Independent.ie

Friday 19 January 2018

Dairy groups set for battle in summer milk price row

A Glanbia truck on its rounds - Glanbia is holding its milk prices for April.
A Glanbia truck on its rounds - Glanbia is holding its milk prices for April.
Declan O'Brien

Declan O'Brien

Glanbia Ingredients Ireland (GIIL) is holding its milk price for April at 39c/l, the company has confirmed.

GIIL made the announcement over the weekend following a board meeting last Friday.

The news comes as processors and farm organisations prepare to do battle on milk price through the summer.

Dairies have warned that prices will have to come back from the current high levels to reflect returns available on international markets.

Industry sources have predicted that while prices will hold for April supplies, they will come under pressure from now until the end of the summer.

One processor pointed out that the Irish Dairy Board (IDB) price for butter had fallen by €675/t since January to €3,325/t.

He said this equated to a 17pc reduction. He said prices for skim milk had fallen by 10pc or €300/t in the same period. Taken together, he estimated that the cuts equated to a 5c/l cut in milk price.

However, the farm organisations have accused the industry of attempting to talk down prices.

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Pat McCormack of the ICMSA accepted that markets had weakened but they remained in a very strong position and he maintained there was no need for "negativity".

"Co-ops were slow to follow the IDB's purchasing price index last year when it started to rise and this index is still close to record highs. The fundamentals behind dairy markets are strong and any contrary talk is incomprehensible," Mr McCormack said.

"Demand for milk is running at 2.5pc extra year-on-year and dairy prices are at near historic high," said Mr McCormack.

Signal

Meanwhile, IFA dairy committee chairman Sean O'Leary said the latest GDT auction results may very well signal the end of the recent dairy commodity price slide.

"There is some evidence that lower-priced international dairy products are bringing price sensitive buyers back onto the market, and this is stimulating demand," Mr O'Leary said.

"An Irish product mix, based on last week's EU average dairy prices, would return a gross 43c/l – comfortably allowing co-ops to hold current prices even after processing costs," he said.

"Even allowing for the various bonuses, volatility funds and input credits funded by co-ops, they have also benefited from significantly higher accumulated profits in 2013, and a €13m injection in bonuses and dividends from the Irish Dairy Board.

"These should also help co-ops to hold milk prices past peak," he added.

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