Relatively High, Stable Markets Justify 1.5c/l April Milk Price Lift – Kiersey

IFA National Dairy Committee Chairman Kevin Kiersey has said that on the day the first May Fonterra auction showed a stable trend (-0.1% overall, and +2.7% for SMP prices), the IDB butter/SMP index for April had also remained unchanged at a gross 37.8c/l for 3.3% protein and 3.6% fat milk.

“Stability in dairy returns at relatively high levels at the beginning of one of the flushest production peaks Ireland has ever experienced meant co-ops would be making substantial money over and above the 31.5c/l + VAT most of them were paying farmers.”

He urged all co-op board members, most of whom are dairy farmers themselves, to examine closely at their next meeting the scope to return stronger prices to farmers for May milk, with an increase of at least 1.5c/l fully justified.

“The Fonterra auction, where trade deals for up to January, 2012 were struck, is showing stability generally, and small growth for SMP prices. Furthermore, all industry experts speak of 2011 as a year of reasonably high, and relatively stable dairy prices. This is because robust demand from importing regions such as China and Russia, which remain short of dairy products to meet their needs, is more than adequate to absorb the significant increases in global milk production,” Kevin Kiersey said.

“Friesland Campina have this week already announced an increase in their guaranteed May milk price by €2/100kgs, which is roughly equivalent to 2c/litre, to 38c/kg, which for an Irish litre of 3.3% protein and 3.6% butterfat milk is equivalent to 34.5c,” he said.

“With additional stock, excellent weather conditions and no immediate threat of superlevy, Irish milk production is motoring on, delivering massively increased quantities of milk to co-ops at a time when markets still return a strong price for most dairy products, with most spot quotes for commodity combinations  returning between 37 and 40c/l,” he added.

“There is clear scope for a milk price increase of 1.5c/l for April, and I urge all co-op board members to challenge their management teams at the next board meeting, and deliver this price increase to their fellow-milk producers,” he concluded.