Farm Ireland

Tuesday 20 March 2018

Milk prices bounce as markets recover

Kerry finally ups its price by 2c/l as IDB's index climbs 14pc in two months

Darragh McCullough

Darragh McCullough

MIlk price increases across the board are on the cards as dairy commodity values continue to strengthen.

The Irish Dairy Board (IDB) milk price index rose again this month to 104.9, more than 14pc higher than its July equivalent. It brings the IDB's returns to within two points of July 2011's milk price.

Both Glanbia and Town of Monaghan have increased their milk prices for the second month in a row by 1c/l to a VAT inclusive price of 31c/l.

However, the biggest jump came from Kerry, with the company increasing its milk price by 2c to bring it in line with the price being paid by Glanbia and Town of Monaghan.

The 7pc hike comes on the back of the announcement that Kerry has formalised a long standing partner-ship with Chinese dairy giant, Beingmate.

Kerry management believe that this outlet for ingredients in premium infant formula products will increase over time.

Dairy farmers' attention will now focus on the country's largest co-op, Dairygold, who are trailing on a milk price of 29c/l.

The IFA's Kevin Kiersey said that the increases were fully justified, despite the news that Fonterra auction prices slipped by 0.9pc last week.

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"The main product traded through the auction, whole milk powder, saw a 2.8pc price uplift," said Mr Kiersey.

He also pointed to European prices for skimmed milk powder and butter, which he claimed were 11c/l above where they were last May.

Class III milk prices in the US also rose 7pc to $19/cwt in the last month.

However, the ICMSA offered a cautious welcome to Kerry's price increase on the basis that it was too late to have a big impact on cash flow at farm level.

"There has been growing frustration amongst Kerry suppliers in relation to the commitment to pay a leading milk price," said the ICMSA dairy chairman, Pat McCormack, who believes that the company should now be paying at least 32c/l.

He also called on Kerry to deliver on its commitment to pay the country's "leading milk price" by making an early 13th payment to suppliers this year.

The fall-off in September milk supplies has been surprisngly severe, with many dairies' intake down by 10pc. Town of Monaghan was down 12pc.

However, Glanbia reported that supplies were only down 4pc. A spokesperson said that milk supplies at the end of September were slightly ahead of the same period last year.

Most dairy farmers are being told that milk quota will not be a problem this year.

Kerry are currently 4.5pc under quota, or 44m litres behind the equivalent period last year, when the processor still managed to come in under quota. Town of Monaghan is 4pc under quota, while Glanbia is 0.7pc over quota.

Meanwhile, Britain's Wiseman Dairies has promised its suppliers 29p/l (36c/l) from next week. This represents a 17pc increase over the proposed August milk price of 24.7p/l (30.7c/l). That proposal sparked a wave of protests by British dairy farmers that forced processors into a U-turn on further price cuts.

The move by Muller-owned Wisemans follows price increases by other major British milk processors. Arla Foods increased its price to 29.5p/l (36.6c/l) and Dairy Crest has requested a cost price increase from its customers which will be reflected in the farm gate milk price.

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