182 days to end of milk quotas – feed, milk and fertiliser prices analysed

With less than 190 days to go until the abolition of milk quotas, here are some things farmers should discuss with their peers as we gear up for expansion.

Milk Price

Ireland paid some of the highest milk prices in Europe over the last two years. Yet, at the same time, Irish prices were the bottom of the pack in July 2012, and are again propping up the bottom in July 2014. Is Ireland’s fragmented dairy industry, and an over-reliance on commodity markets going to cancel out the potentials gains of quota abolition.

Feed Price

We are seeing record grain harvests across the world this year. This has resulted in feed prices falling back by over 15% in the last couple of months. However, according to the latest figures from the CSO, dairy compound feed prices in July actually increased marginally.

Fertilisers

Anticipating fertiliser prices over the coming months is a little more difficult. Nitrogen-based fertilisers are produced using natural gas. With the price of oil falling globally, this should result in fertiliser price reductions. However, both Russia and Ukraine are global top four exporters of nitrogen based fertilisers. Three of Ukraine’s largest fertiliser plants are located in South-Eastern Ukraine. Two-thirds of Russia’s fertilisers are also shipped through this region. Any escalation of the geo-political tensions in this region could potentially negatively impact fertiliser prices over the coming months.

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