Time for dairy processors to bridge the gap in milk prices
Thursday, 24 May, 2018
Ulster Farmers’ Union deputy president, Victor Chesnutt, says it is both puzzling and frustrating that there is a gap emerging in what dairy processors are paying farmers for their milk. This is at a time when key indicators are showing that farmers should be seeing significant milk price increases on the back of strong commodity price gains.
Mr Chestnutt says, “Butter prices are over £5000/ per tonne, cream prices are advancing, whole milk powder is rising and mozzarella stocks are very tight with prices now in or around £3000/ per tonne. This is all positive news for the Northern Ireland dairy product mix. In fact, the prospects for milk prices are looking more positive beyond commodity markets.”
The most significant news in recent days has been that the European Commission has sold 41,958 tonnes of Skimmed Milk Powder (SMP) out of intervention this week for a minimum price of €1,150/tonne, which was €100/t more than in April. This counters the claim by some that the product was sold at heavily discounted prices. In fact, the Irish Farmers’ Association (IFA) estimated that some €48.25 million worth of product was sold at the event.
Mr Chestnutt says, “The overhang has been used as an excuse by many for talking down the price of milk. The UFU has been observing contrasting price movements and in particular the rising demand for skimmed milk powder over the last 6 months. However, we have now concrete proof that the overhang in Intervention stocks has reduced by 76,000 tonnes.”
International quotes for dairy commodities have been firming for weeks due to slower milk growth in the EU and lower volumes from New Zealand.
The deputy president continues, “People are pointing to the fact that here in Northern Ireland we may have already reached peak production. We are looking at a period of stable milk prices at the very least. Surely it is not unrealistic to call for dairy processors to pay a base milk price which reflects this positive outlook looking ahead.”