Scope for milk prices to rise by 2-3c/litre claim farm leaders

File photo
File photo
Declan O'Brien

Declan O'Brien

A New Year battle on milk prices is looming this week as the farm organisations and dairy processors go head to head.

Processors maintain dairy markets are finely balanced, with muted demand clearing relatively weak supplies. However, the farm organisations insist there is scope for a 2-3c/l lift in milk prices this spring.

"EU dairy product prices reported through the EU Milk Market Observatory just before Christmas suggested a milk price equivalent, after deduction of a notional 5c/l processing costs, of 32.4c/l plus VAT or 34.15c/l including VAT," said IFA's Tom Phelan.

"With Irish milk prices for November averaging around 29c/l plus VAT, there is strong scope for co-ops to increase milk prices further for December supplies and beyond into spring," he added.

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ICMSA's Ger Quain maintained that the early indicators for dairy markets in 2020 made for "positive reading".

"Current market indicators highlight a demand for dairy products," Mr Quain said.

"Dutch dairy quotations have remained strong and are returning 34.84c/l for the industry standard butter-SMP mix, and 36.35c/l for WMP after processing costs are excluded," the ICMSA representative noted.

"So we think that we're looking at a series of price rises that bridge the lag that unfortunately was allowed develop here between the Ornua Index and farmer prices," Mr Quain added.

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However, processor sources pointed out that butter prices have eased back since November, dropping from €3,900/t to €3,750/t.

And while SMP has increased steadily to €2,600/t, processors argue that milk output is also recovering across Europe. In addition, US milk volumes increased through the back end of 2019 by around 1.3pc per month.

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