Time for local milk prices to reflect global trends

Thursday, 21 March, 2013

The Ulster Farmers’ Union are calling on dairy processors to pay a farm gate price which reflects the strong global demand for dairy products, following another significant increase in the New Zealand Fonterra Auction.  This weeks Fonterra auction returned an average price of $4,683 per tonne across all products, up from $4,216 per tonne a fortnight ago. The price of Whole Milk Powder is also up 21.2% to $5,116 per tonne.  

Commenting on the outcome of the latest Fonterra Auction, UFU Deputy President Ian Marshall said; “Northern Ireland dairy farmers need to see the benefits of the global market reflected in their milk cheque if they are to stay in business. In May 2012 producers took a hit as the United Dairy Farmers Auction saw a drop in price to 21.53 pence per litre while the Fonterra auction returned $2,546 per tonne for its whole milk powder.  Similarly, when the United Dairy Farmers Auction peaked at 32.46 pence per litre the whole milk powder price was $3,421 per tonne.  Today the same product is $5,116 per tonne.  In addition, European butter prices are improving due to the lack of butter fat coming in from New Zealand and powder prices have also risen significantly because European product is becoming more competitive than the global powders. Dairy producers won’t continue to accept a system where their prices will quickly fall if market conditions deteriorate, but don’t rise sufficiently when market conditions improve. Furthermore, the fact that current exchange rates are very favourable for our industry adds to the sense of concern about the way processors are responding to market conditions.”
Ian continued; “While this month’s payment could be the last milk cheque reflecting the United Dairy Farmers Auction for many producers, the Fonterra auction has indicated that current prices are continuing to rise and longer term contracts are looking very positive for the local dairy industry.  There is an expectation that processors should be paying a price reflective of the global market and there will be questions should the milk prices not start to rise significantly given that commodity prices are so strong.”