Lakeland and Glanbia holds milk price but warns of dairy downturn

Glanbia Ireland has a 2.4 billion litre milk pool from 4,800 suppliers
Glanbia Ireland has a 2.4 billion litre milk pool from 4,800 suppliers
Ciaran Moran

Ciaran Moran

Lakeland Dairies has held its base milk price at 32.78 cents per litre including VAT for October milk supplies.

A lactose bonus of 0.28 cpl will also apply for October milk, bringing the effective milk price to 33.06 cents per litre including VAT.

Lakeland Dairies noted that global dairy market conditions have become decidedly weaker in recent months.

Milk supplies have generally been strong and were up by 20pc in October compared to the same time a year ago.

Meanwhile, Glanbia will pay its milk suppliers 32 cent per litre (cpl) including VAT for October manufacturing milk supplies at 3.6pc butterfat and 3.3pc protein.

This is unchanged from the September price. However, Glanbia Chairman Martin Keane said milk suppliers should be aware that there has been a sharp reduction in dairy market returns which is not being reflected in the base milk price.

The Board will continue to monitor developments on a monthly basis”.

Increased supplies of milk are putting pressure on the market, with farm organisations calling for co-ops to hold prices for the remainder of the year.

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Supplies for October are running 20pc ahead of last year, with many co-ops forecasting a 2pc increase in 2018 supplies due to excellent grass growth.

Ornua's PPI decreased from 110.4 to 106.5 for October, which is a price decrease equivalent of 32.7c/l to 31.9c/l.

Latest IFA analysis shows that most co-ops have failed to pass back the full value of the Ornua PPI since last May.

IFA dairy chair Tom Phelan pointed out that milk prices need to match up to global processing counterparts.

"It is clear that co-ops have benefited from major milk volume increases for the August to October period, which they purchased at less than the market was returning to them at the time," he said.

"Over the same period, European milk purchasers such as Friesland-Campina, Arla, Lactalis and others were actually increasing payouts for farmers.

"With market signals now a little more challenging, and bearing in mind that volumes will ease seasonally - even if they continue to be up on last year's - co-ops must now make a clear commitment to farmers that they will hold the milk price at current levels at least for the winter months," he said.

'No backsliding'

ICMSA dairy chair Gerald Quain also urged that there be "no backsliding" in milk pricing as farmers are currently enduring increased feed costs.

"The Irish dairy sector has had a rough 2018 and it is imperative that there is no ­backsliding in price at this late stage of the year when we see bills being presented for ­settlement by the various contractors.

"Feed prices seemed to move upwards over the last few weeks so we're asking for all co-ops to be cognisant of the very 'tight corner' dairy farmers are in this year and make a concerted effort to help by maintaining farmer price and margins."

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