‘Hugely concerning’ – Irish butter €880/t behind Dutch price

The “hugely concerning” price gap that has opened up between Irish dairy prices and those of counterparts on the continent has been highlighted by the Chairperson of the ICMSA’s (Irish Creamery Milk Suppliers Association’s) Dairy Committee, Gerald Quain.

Quain said that his association shares the analysis of other experts within the sector in predicting a continued strengthening of dairy markets through the remainder of this year, with a further milk price boost expected for August supplies.

The widespread sector optimism is based on market data showing butter spot prices continuing to reach record highs in terms of European and Dutch quotes in the last month.

Dutch quotations are returning butter at €6,800/t compared to €3,500/t in the same period last year – a rise of over 94%.

Whole milk powder (WMP) has performed well in that time period – up 35%, from €2,300 to €3,100 – while skimmed milk powder (SMP) has been steady, but still suggests that the milk price returning to farmers should continue to increase, the ICMSA outlined.

Despite these improvements, the ICMSA has repeatedly drawn attention to the disparity between Irish prices and comparable mainland EU markets.

Quain was adamant that very pointed questions need to be answered before concerns can be allayed. He said: “While milk prices in Ireland have obviously improved in 2017, the ICMSA would point out that Ireland is currently only in 12th position of the EU in terms of milk price.

“Furthermore we note that Fonterra – which is heavily geared towards commodity products – pay higher prices than our Irish co-ops, who have for years told their farmer-suppliers that they had to be very cautious on the price they paid to farmers – because the future was going to be about moving away from commodity and into value-added.

“This disparity in milk prices between Irish, EU and global competitors must be addressed and we will keep stressing it and asking for a logical explanation,” Quain said.

“The internal market price of butter within the EU presently shows Irish butter prices lagging behind Dutch quotes by a staggering €880/t.

Irish butter prices are also €200/t below the EU average, as stated by the EU Milk Market Observatory.

“How can such a disparity exist when Irish produce is of the highest possible quality and traceability through the Sustainable Dairy Assurance Scheme and has a global brand leader in the form of Kerrygold butter?

“How can Fonterra still pay higher prices to their suppliers?” the chairman asked.

“This must be looked at in greater detail in the coming weeks, so that farmers can feel that they are getting a fair deal compared to their European counterparts and – in the meantime – we expect to see a substantial price rise for August milk supplies,” Quain concluded.

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