Supplier boost as Dairygold holds June milk price

Dairygold
Dairygold
Declan O'Brien

Declan O'Brien

Dairygold has held its June milk price at 37c/l (VAT inclusive), in a move which will be welcomed by the southern co-op's 3,000 suppliers.

It had been rumoured that Dairygold would pull prices further, having cut returns for May supplies by 2c/l. However, the decision to hold at 37c/l will be viewed as a real boost for the co-op's dairy farmers.

The farm organisations have pointed out that every 1c/l cut in milk price at this time of the year costs dairy farmers with a 350,000-litre milk quota close to €1,500 to the end of year.

Last week both Kerry Co-op and Aurivo dropped their June price back 2c/l and the two dairies are now operating off a base of 37c/l. Lakelands held at 37c/l, Town of Monaghan reduced its price by 1.5c/l to 36.5c/l, while Tipperary Co-op is on 37.5c/l.

The milk price reductions had been anticipated and came in the wake of an 8.9pc fall in the latest Global Dairy Trade (GDT) auction. The weak GDT sale was attributed in the main to a sharp fall in demand for whole milk powder which experienced a 10.9pc fall.

Weak

A spokesman for Kerry Co-op described the market for dairy commodities as very weak. He said the latest fall in the GDT meant that buyers would be more reluctant to commit to forward buying large volumes.

Industry sources also pointed out that global milk supplies were increasing at 4.9pc but demand was increasing by just 2.5pc.

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As a consequence, dairies maintain that milk prices could fall further unless international markets improved significantly over the next month.

Responding to the GDT price falls, Sean O'Leary of IFA pointed out that Irish exporters do not trade on the Fonterra platform.

He said European dairy commodity returns and the Irish Dairy Board (IDB) index "comfortably justified" the 37c/l return being paid by Irish processors.

Pat McCormack of ICMSA welcomed the decision by many dairies to hold prices.

"Rabobank are predicting a reduction in global supplies as the year progresses and dairy farmers will be hoping that the relative price stability - possibly even some of the improvements/recoveries we saw in May and June - will be sustained for the rest of the year so that dairy farmers can enter 2015 in a relatively strong position and meet their investment costs where they are expanding and taking on the substantial debt that involves," said Mr McCormack.

On a related matter, Mr McCormack called on the Department of Agriculture to release the national fleximilk figures to co-ops so that co-ops can return monies withheld from farmers due to superlevy concerns.

Disappointing

"With the superlevy figure substantially lower than expected earlier in the year, it is very likely that co-ops are holding substantial amounts of money relating to potential superlevy fines from farmers. And in order to finalise these figures, the co-ops need to have the national fleximilk figures," Mr McCormack said.

"It is very disappointing that these figures were not available for the July milk cheque and it is absolutely essential that they are made available immediately so that all outstanding repayments are made to farmers within the next month," he added.

Meanwhile, the Department has confirmed that the Milk Quota Appeals Hardship Scheme is to be retained for 2014/15. It is still unclear when application forms for the scheme will be available.

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