Fat to protein imbalance is the only blot on the horizon
Farmers boosted by upturn in milk prices, but butter shortage could spell trouble, says Kevin Bellamy
Most people would agree that the situation of the dairy industry is a vast improvement on where we were last year.
The European Commission estimate that the average farm-gate price paid to Irish dairy farmers in August was 35.24c/l - that's an upwards move of over 30pc from the same time last year.
Based on the current value of dairy products, many suggest that there is room for even more upward movement in the months to come.
This upturn in prices has stemmed from the dairy market's continued adjustment following the removal of milk quotas in 2015.
In the period leading up to and then following milk quota removal, dairy farmers across north-west Europe expanded production, and as a result oversupply of milk caused prices to fall. The fall was exacerbated by reduced buying from China and the Russian trade embargo.
In the second half of 2016, milk prices had fallen so low that many farmers across Europe were forced to cut back production, and the market started to re-balance, and prices began to rise again.
The subsequent recovery of prices has been further fuelled by the return of China to the international dairy market - on course for a 20pc year-on-year increase in imports in 2017.
Further good news is that while many farmers in Europe have been forced to cut back production, the lower cost of production, and the efforts of co-operatives to support prices, meant that Irish dairy farmers have continued to grow production, with 6.6pc more milk produced in the first half of 2017 than was the case last year.