Milk price in the short-term is likely to contract even further in the months ahead as markets continue to determine returns.
That’s according to Lakeland Dairies group chief executive, Colin Kelly, who was speaking to Agriland following the publication of the cooperative’s annual report today (Wednesday, April 12).
He told Agriland: “The market today is lower than where, ultimately, the milk price is, so unfortunately a contraction looks inevitable in the short-term.
“What level that will be… I’m not so sure what that will be. Ultimately it’s the job of the board and management team in Lakeland to set that.
“When you look at the market, [it] is returning less than where the milk price is today,” he added.
Milk price
Kelly said that 2023 is going to be a challenging year for farmers. He said the cross-border processor is conscious that last year, prices were high but margins were not as high as people perceived.
“The inputs are at a level they have never been at before and the real squeeze for farmers at the moment is the milk price has come off, which reflects the drop-off in the market,” he said.
“But the inputs, for various different reasons, have not tracked that decline so, certainly it’s going to be a very tough period for farmers over the next number of months.
“Also, the weather hasn’t been kind to us, if you look at it from a cow perspective. Cows were out in February and are back in in April, so that’s very unseasonal.”
Kelly acknowledged that farmers are moving into a crucial six-week period ahead of silage-cutting.
He continued:
“As a co-op, we will be doing absolutely everything in our power to support our shareholders and our our suppliers, but it looks inevitable that there will be further milk price correction.”
Lakeland Dairies milk price
Lakeland Dairies announced a further 6c/L cut in its milk price for February supplies.
The board of the dairy business decided to reduce the cooperative’s milk price for February due to weaker dairy market conditions, which it said at the time, is having a serious effect on market returns.
In the Republic of Ireland, Lakeland Dairies reduced the milk price by 6c/L to 46.85c/L for February including VAT for milk at 3.6% fat and 3.3% protein.
The February price includes an input support payment of 1.5c/L including VAT for all suppliers.
In Northern Ireland, Lakeland Dairies reduced the milk price by 4p/L to 38.5p/L. The February price included a supplementary input support payment of 1.5p/L.
It was the second consecutive month, where milk price to Lakeland suppliers had been down.