Milk prices set to fall as global pressure grows
30c/l is 'artificially' high says dairy board boss ahead of crucial milk price meetings
DAIRY processors cannot continue paying "artificially" high prices of 30c/l for milk as international markets fall closer to 20c/l, according to Ornua chief executive Kevin Lane.
His comments come ahead of a critical week when processors will be setting milk prices for the peak supply month of May.
While Glanbia have already guaranteed 30.5c/l for May, the Glanbia Ingredients Ireland (GII) board meets next Monday to decide how much their suppliers will be required to contribute to keep the price at this level.
The co-op committed up to €20m from shareholder funds to top up flagging milk prices this year following the spin out of €238m worth of shares in the Plc last month.
The top ups for March and April cost the co-op €6.6m, leaving enough to shore up May milk prices by close to 6.5c/l if required.
There are fears in the industry cuts may be on the way that would see prices fall over the summer at a time when many dairy farmers have invested heavily in their operations.
Fonterra's Global Dairy Trade (GDT) auction price fell another 4pc last week, bringing the overall index to a level not seen since the price crash in the first half of 2009. The index is currently 683, almost 2.5 times lower than the 2013 peak of 1,573.
"The current GDT is saying that milk is around 20c/l on a New Zealand equivalent," Mr Lane told the Guild of Agricultural Journalists in the headquarters of Ornua, formerly the Irish Dairy Board.