Latest market surge supports a milk price of 25-28c/L says ICMSA
The current level of the Global Dairy Trade (GDT) indicates that milk price should be in the 25-28 cent per litre band for August milk.
That’s according to the Chairperson of the ICMSA Dairy Committee Gerald Quain who says the ‘figures are there and speak for themselves’.
“The GDT weighted average price was US$2,731 in the last auction, the prices being paid by Irish Co-ops in October 2015 was between 25-28 CpL and in July 2012 it was 28-31 CpL and those were the two last occasions that the GDT was at the US$2,740 range.
“Even taking account of the fact that we are coming out of a market slump and even factoring-in forward contracts, etc, ICMSA thinks it perfectly legitimate for Irish milk suppliers to expect that Ornua and our dairy processors can deliver a price in the lower band of 25-28 cpl for August with further improvements going into September,” he said.
Quain said that while the milk price increases for July were welcome, Irish farmer-suppliers have gone through the peak production period at prices substantially the cost of production which has had a massive negative impact of dairy farmers incomes that will not be recovered this year.
“Farmers are engaged in a damage limitation exercise at this stage, and our Co-ops are going to have to move milk price up quickly to assist farmers.
“We see that FirstMilk in the UK has increased its B price (based on commodities) by 7 pence per litre in August compared to June. Their B price is now equivalent to 23 cents per litre for August milk and remember that this price is based on absolute ‘basement’ commodity type products, it’s a very clear indicator that markets are moving up quickly even for commodity type products.
“With the Irish product mix strong on value-added, it’s plain that Ornua and the processors should be achieving returns significantly above this level and this needs to very quickly passed back to farmers so that they can begin to recover from what has been a disastrous 18 months to two years”, said Quain.