Farm Ireland

Wednesday 13 December 2017

Lakeland increases milk price for December supplies

Lakeland Dairies
Lakeland Dairies
Ciaran Moran

Ciaran Moran

Lakeland Dairies has increased its milk price by 1 cent per litre to 30.28 cents per litre including VAT for December milk.

It comes as farm organisations are pushing for a further lift in milk prices for December supplies despite a 4pc drop in the first Global Dairy Trade (GDT) auction of 2017.

The ICMSA and IFA insisted that supplies of dairy commodities on world markets remained tight and there was scope for further price increases to milk suppliers as a consequence.

A number of dairy processors are due to meet this week to set their December milk price, with Kerry Group, Lakeland Dairies and Glanbia usually among the first to make a decision.

Base prices have increased continually since last summer and now range from around 29c/l to 31c/l.

Gerald Quain of ICMSA said the EU and world price for dairy products remained in a fundamentally strong position despite two consecutive falls in GDT auctions.

He described these reductions as 'blips' which did not change the fundamental trend of supply falling behind demand across the globe.

And he warned that milk suppliers would be "furious" if processors used the GDT falls as an excuse to cut milk prices. "ICMSA expects the underlying upward trend in milk prices to continue for the first six months of 2017," Mr Quain insisted.

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The ICMSA representative said the average cost of production was 28c/l and returns to farmers had only been above this level for 10 weeks. He said 'spot' prices across Europe were in the region of 35c/l on the back of lower milk volumes.

Meanwhile, the IFA's Sean O'Leary said the EU Milk Market Observatory's (MMO) report for 2017 confirmed the view that milk prices of 32-33c/l plus VAT were justified.

"Assuming a representative Irish product mix, the prices reported for the week ending January 1 suggest gross returns of just under 38c/l, and therefore equivalent to a farm-gate price of 32-33c/l plus VAT," he said.

"A growing number of contracts signed by Irish co-ops will be for products priced nearer those higher levels, and this will undoubtedly improve the ability and confidence of co-ops to pay further milk price increases, not only on December milk, but also in the coming months," added Mr O'Leary.

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