Arrabawn co-op will follow the trend among processors and reduce the price it will pay to farmers for their April milk supplies.
The Co. Tipperary-headquartered co-op today (Tuesday, May 23) confirmed that it has set its April price at 41.19c/L including VAT which represents a 3c/L reduction on its March price.
Last month it reduced its milk price for March by 4c/L to 44.19c/L inclusive of VAT at 3.6% fat and 3.3% protein.
Arrabawn is the sixth processor in a row to drop its April milk price, which will be seen as a further blow by farmers.
Last week Carbery Group and Tirlán reduced their prices for April milk supplies.
Carbery confirmed a reduction in its price for April of 2c/L and if the base milk price decision is replicated across the four west Co. Cork co-ops of Bandon, Barryroe, Drinagh, and Lisavaird, this will result in an average price for April of 41.25c/L, inclusive of VAT and a O.5c/L somatic cell count (SCC) bonus.
Tirlán also announced that it will pay a total of 40.08c/L, including VAT, for April creamery milk supplies at 3.6% butterfat and 3.3% protein.
Meanwhile, Kerry Group’s base price for April milk supplies is 38c/L, including VAT, at 3.3% protein and 3.6% butterfat.
The group said that, based on Kerry’s average milk solids for April, the expected average milk price return inclusive of VAT and bonuses is 40.12c/L.
Dairygold also confirmed a drop in its offering to suppliers, reducing its April quoted milk price by 2c/L to 40c/L, based on standard constituents of 3.3% protein and 3.6% butterfat, inclusive of sustainability and quality bonuses, and VAT.
Lakeland was the first this month to reduce its price for supplies in April in the Republic of Ireland by 4c/L to 38.85c/L including VAT, for milk at 3.6% fat and 3.3% protein.
Milk price outlook
According to Richard Scheper, dairy analyst with RaboResearch Food and Agribusiness, last year “was probably the best year for Irish dairy farmers on record”.
But he has warned that there is unlikely to be any return to the margins that were recorded in the second half of last year.
Scheper said that he expects that the big correction in prices has probably now passed.
“There might be some smaller correction here and there but I think we have seen the big correction,” he said.
“There was a big gap between where the market was and where the price was – it differed a bit for each co-operative depending on how their portfolio looked.
“For example, if you sell a lot into the trade industry then the contracts are much shorter so last year they were able to increase the price quite rapidly but now they have also come down.
“We have seen the big corrections in price and I don’t really see much room for rebounds,” Scheper added.
He said that Ireland is facing challenges like other countries.
“There are only a few countries left in the EU that have a nitrates derogation so it is a kind of uncertain outlook.
“But we also expect that there is still some opportunity for Ireland to grow milk production because across Europe not all farmers have benefitted from high milk prices so some have reduced their herds and if they are not making strong margins then herd size could reduce further,” Scheper said.
He believes there is still potential for Ireland to increase milk volumes because of the “potential for yield (per cow) gains”.