Processors and co-ops have been urged to reflect a recent “bounce” in dairy markets and urgently increase the milk price paid to farmers.
That is the key message coming from the Irish Creamery Milk Suppliers’ Association (ICMSA) today (Thursday, October 4) ahead of the next round of price announcements.
Earlier this week there was a further increase recorded in the Global Dairy Trade (GDT) price index at the latest trading event.
The GDT price index now stands at 953, having increased by 4.4% on the previous event held last month.
The latest Global Dairy Quarterly report from Rabobank also highlighted that there may be a “possible whiplash effect” in key global markets in relation to milk prices – although it is does not expect a complete market rebalance until late 2024 or early 2025.
The bank has previously warned that Ireland’s “large exposure” to the global milk powders market has, in the last year, resulted in a “more negative sentiment” among Irish farmers.
Milk powders
In 2022, exports of milk powders from Ireland increased across the board.
According to Bord Bia, exports of fat-filled milk powder (FFMP) increased by an estimated €230 million in 2022 to around €920 million, while exports of specialised nutritional powders also grew by an estimated €70 million in 2022 to €730 million.
Meanwhile, exports of casein powders also increased by €320 million in 2022 to €790 million.
However, 2023 has been a year, dominated to date, by a decline in farmgate base milk prices across Europe.
But the chair of ICMSA’s dairy committee, Noel Murphy, believes that latest market sentiment suggests that this may be about to change and prices are going to head “upwards”.
“This can be seen in the last three GDT auctions with successive increases since September 5, of 2.7%, 4.6% and 4.4%,” he said.
“The Dutch dairy quotations have followed a similar trend with the industry standard butter / skimmed milk powder (SMP) combination increasing by 4.5c/L since the start of September now returning the equivalent of 37c/L.
“Whole milk powder (WMP) has increased by 2.6c/L over the same period returning the equivalent of 37.8c/L at the farmgate. These improvements are hugely significant,” he said.
Murphy is now urging co-ops and processors to follow suit in Ireland.
He said that processors were “very quick to cut milk price in the quarter one and quarter two downturn” and believes there can be no justification for any further milk price reductions in September.
“We are putting every processor and co-op on notice – we had better see farmer-price rise in conjunction with market movements as quickly as we saw it fall.
“That increase is urgently required and there’s no case whatsoever for any co-op to sit on those improved returns for a few rounds of price announcements,” Murphy said.