Irish milk prices still have ‘ground to make up’ – ICMSA

The 1c/L increases in milk price offerings from Kerry and Glanbia have been described as “very welcome” by the Irish Creamery Milk Suppliers’ Association (ICMSA), which has called the increases “a starting point”.

Ger Quain, the association’s dairy chairperson, said that further increases would be necessary to “make up the ground” and to bring Irish prices “into some kind of parity with underlying market data and international comparison”.

“Despite the slight reduction in the last GDT [Global Dairy Trade] auction – the first reduction since September – there is still a visible disconnect between the prices paid to Irish farmers and their counterparts,” Quain said.

Quain pointed out that New Zealand processor Fonterra’s yearly milk price is “on a par” with Irish processors, and exceeded the price for one Irish processor in the month of October.

“Figures from the Dutch Dairy Board show that the Irish processors were over €3/100kg below the European average for the rolling 12-month average up to October 2019,” the ICMSA dairy chairperson highlighted.

Quain continued: “The average milk price paid across Europe in those 12 months was €33.59/100kg, with the three Irish processors listed [Kerry, Glanbia and Dairygold] paying out well below, that at an average ranging from €30.44 to €31.18 per 100kg, excluding VAT and based on 4.2% fat and 3.4% protein.”

He also pointed out that Irish processors were lagging behind the average US milk price, which stood at the equivalent of €35.98/100kg for the year, and €42.39/100kg for the month of October.

These are the actual figures and farmers are rightly asking how can Irish processors be so far behind our competitors even after factoring in this month’s increase?

“EU SMP [skimmed milk powder] prices are now at €250/100kg, the highest level in five years, while EU WMP  [whole milk powder] prices are €309/100kg…19.3% above the five years’ average,” Quain said.

He added: “There has been a significant increase of cheddar prices in Oceania and the US [5.3% and 6.2%] while EU butter and cheese exports to Japan have risen 65% and 5% respectively.”

Quain insisted that the increases by Kerry and Glanbia are “good starts, but no-more”.

“There is going to have to be a series of price rises through spring 2020 that bring our price back into line with that kind of growth data and our competition, and we’ll be watching this very carefully and monitoring the closing of the gap that has to happen,” he concluded.