Farm Ireland

Tuesday 24 October 2017

Winter milk sale talks at 'critical stage'

Declan O'Brien

Declan O'Brien

Negotiations on the premium to be paid for winter milk are entering a critical stage this week.

One farmer source said both sides were pushing hard for a deal but he admitted that there was also an amount of what he termed "hardball" being played.

With the October milk price being settled this week, there is serious time pressure on the talks.

IFA has stated that the target for the year is an annualised milk price of 40c/l. Most liquid milk suppliers are receiving an average of 44-45c/l at the moment.

However, liquid milk suppliers point out that this is because the manufacturing milk price is high rather than the winter milk premium being particularly strong.

They fear that if a favourable agreement on the premium is not in place, then liquid prices could fall sharply when the manufacturing prices comes under pressure in the spring.

Meanwhile, there was a further shake-up in the retail market for milk recently with the launch by Tesco of its Creamfield brand. Creamfield, which is taking up a third of the shelf space at Tesco outlets, will be supplied by Glanbia and is priced at €1.49 for a 2l pack.

Tesco's own-brand label is priced at €1.69 for 2l, while Avonmore's branded product has been cut to €1.89 for 2l in Tesco stores. It was at €2.19.

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The launch of the Creamfield brand was described by industry sources as an effort by the retailer to "harvest margin".

In other news, the market for dairy commodities globally has been described as quiet, with buyers waiting to see how milk supplies develop through the southern winter and into the northern spring.

Buyers are said to be taking small quantities of dairy products on short-term contracts until firm projections on global milk supplies become available.

The Irish Dairy Board (IDB) index dropped for the first time in over a year last week to 131.1.

The 2pc drop comes on the back of reports that New Zealand output has increased by 4.7pc in the first five months of the southern hemisphere milk production season.

Irish Independent