Indicators point to ‘period of stability’ for milk price – Aurivo

Current indicators point to a period of stability on the milk price front for 2019, according to Aurivo CEO Aaron Forde.

Commenting on price outlook for the year to AgriLand following the release of the north-west cooperative’s financial results for 2018, Forde said:

“I’d say we’re in a period of stability; global milk supply is growing at just over 2% this time last year; it’s back – January and February numbers are actually in a negative situation.

“That’s turning a bit in March and April but nonetheless, milk supply is restrained – and that’s good because demand is in the same situation.”

The CEO noted that traditionally the expectation has been for dairy demand to grow at roughly 2%; this figure has retreated to probably between 0.5% and 1%.

The decrease was driven by a number of things, including Brexit and trade wars between the US and China, which are weighing on global economic growth and causing some difficulty, he added.

“Oil price hasn’t been where traditionally we need it to be to support good, strong sustainable milk price. Oil-producing countries, oil-exporting countries, account for about 30% of global dairy trade so a good, strong oil price, $70+ is important.

So, at the moment as we look and all we know at this point would suggest a period of some degree of stability in milk pricing.

Turning to the topic of Aurivo’s sport nutrition business in the UK, ‘For Goodness Shakes’, it had a strong performance in 2018, with sales growth of over 20%.

Commenting on the division, Forde said: “It’s a business that has grown very, very strongly since we acquired it in 2015 – it’s a good pipeline of innovation; a good strong position with its main customers the big multiple retailers in the main.

“It sells some online but the vast majority of the business is into retail. It has good, strong positions and good listings for the future in all the main UK customers.

It’s still a 90%+ UK business; exports to a number of countries slow and steady on that front – but [there’s] good growth within the UK with all customers.

“I suppose in a hard Brexit where the UK would go into a prolonged recession, undoubtedly all brands, particularly discretionary brands, would be challenged, but we’re optimistic about the future of it,” Forde said.