First processor announces August milk price increase

Glanbia Ireland has become the first processor to announce its August milk price, deciding to increase it by 1c/L.

This increase will bring the base milk price paid to Glanbia suppliers to 35c/L including VAT for milk produced in the eighth month of the year.

This is the fourth consecutive monthly increase of 1c/L announced by Glanbia. Prior to increasing its May milk price, the processor had held its price at 31c/L including VAT for three months in a row.

The processor also announced that it will pay its milk suppliers a 1c/L bonus on all milk supplied in January to June of 2017.

Commenting on the increase, Glanbia Ireland Chairman, Henry Corbally, said: “While the short-term outlook remains positive, we note that the current high prices are leading to higher production in key regions and may affect demand when fully passed through the supply chain.

“Exchange rates, particularly the weakening dollar, may also have an impact on returns in the medium term. The board will continue to monitor market developments on a monthly basis.”

The decision to issue a 1c/L bonus on all milk supplied in January to June of 2017 is set to be included in this month’s milk payment.

Milk volumes allocated to Glanbia’s Fixed Milk Price Schemes will also benefit from the flat 1c/L bonus payment.

Corbally added: “As a business majority owned by our farmers, we are always committed to returning the highest possible milk price to our suppliers.

“We are pleased that the business is in a position to make this very significant payment to our farmers for all milk supplied in the first half of this year.”

Other processors are expected to meet and announce their milk prices in the coming weeks.

‘Irish milk prices have some catching up to do’

Earlier today, the Irish Farmers’ Association’s (IFA’s) National Dairy Committee Chairman, Sean O’Leary, said that a quick look at the most up-to-date available indices of milk returns in Europe suggests that Irish milk prices have some catching up to do.

Continued firming in butterfat prices may lead to some further uplift in Ornua’s Purchase Price Index (PPI) for August, he added.

O’Leary pointed out that average EU Milk Market Observatory (MMO) commodity returns for August 2017 – at just under 36c/L, after a deduction of 5c/L for processing costs – also argued in favour of an Irish August milk price increase of at least 1c/L.

“Most of the indices are strongly supported by the historically high value of butterfat, with EU average butter prices on September 3 coming in at €6390/t – a massive 155% increase compared to its lowest ebb of May 2016.

Strong butterfat value is also sustaining strong whole milk powder (WMP) and cheese prices, and all the indices have continued to strengthen despite the weaker skimmed milk powder (SMP) prices.

“I urge co-op board members – who will be meeting from this week to decide on their August milk price – to be sure to allow their fellow milk suppliers to fully benefit from the rising dairy returns, with a minimum of 1c/L price increase,” he concluded.