Dairy Market Recovery Means Co-ops Must Announce End of Milk Price Cuts for 2012

IFA National Dairy Committee Chairman Kevin Kiersey today (Tues) said as evidence of market recovery was mounting, co-ops who cut their milk prices must now recognise the beginning of a very real dairy market recovery and send a positive signal to their suppliers by announcing the end of milk price cuts for 2012.
Kevin Kiersey said, “The combined price cut of up to 6c/l will represent a loss of up to €13,000 in the income of the average 300,000 litre supplier over their 2012 supplies, and that is nearly 30% of the average gross dairy farm family income for the last 3 years. In these times of extreme volatility, and in the context of rising input costs, this is a major blow to suppliers, and it will make it nigh on impossible for them to make the kind of on-farm investment required to deliver on the post-2015 expansion expected of them.”

“Meanwhile, there is more evidence every day that European dairy commodity prices have stopped falling, and are now staging a recovery, as proven by European quotes for 13th June,” he said.

“Since the beginning of the month, butter prices have lifted by €100/t in the Netherlands, by €120/t in Germany, and by €180/t in France; SMP prices have risen by €140/t in the NL, €100/t in Germany and €70/t in France. Whole milk powder prices are up €40/t, €80/t and €90/t, respectively, while whey powder prices are up by between €90/t (NL) and €155/t (Germany). We estimate that the average lift in the butter/SMP returns is equivalent to an additional 1.5c/l return,” he said.

“Furthermore, the 13.5% increase in the latest average Fonterra auction price has also influenced the most recent global market quotes positively, with small increases in SMP and butterfat prices for Oceanian and European products traded on the world market reported by the USDA in the most recent week,” he added.

“Members of the IFA National Dairy Committee are currently lobbying their co-ops the length and breadth of the country, and there is now a major opportunity for co-ops to send a strong, confidence-boosting message to their suppliers by declaring the end of milk price cuts,” he concluded.