Irish dairy processors have increased their production of Skimmed Milk Powder (SMP) by 146% in three years, according to the most recent figures from the CSO.

Last year Irish production of SMP totalled 121,000t up from 70,000t in 2014 and less than 50,000t in 2013.

The increase in the production of SMP last year coincided with a 13% increase in Irish milk supplies along with historically low prices for the product.

Ireland was not alone last year in its increase in SMP production. Latest data from the EU’s Milk Market observatory (MMO) shows that EU SMP production was running over 8% ahead of 2014 up to November.

Meanwhile, applications for private storage aid reached 52,000t for SMP in 2015 and uptake has continued in 2016. With regard to offers for sale into intervention, uptake increased in the first week of 2016 (6,400 t), but has been more moderate in the following 2 weeks (5,500t in week 2 and 5,000t in week 3).

Currently, SMP prices are oscillating around intervention level. On the world market, prices expressed in US$ generally decreased compared to their levels prior to Christmas.

According to the MMO, a recent assessment of EU stock levels based on a residual approach (production + imports – consumption – exports) confirmed important stocks for SMP, above normal needs and increasing, weighing on the market.

It says the picture is clearly better for butter whose stock level is normal and declined.

With regard to cheese, stocks increased in recent weeks. The MMO says the increase of milk production after its lowest point in November is likely to put pressure on cheese production, once drying towers have reached full capacity.

Half Of European Milk Production Growth In Intervention Or PSA

According to TJ Flanagan of ICOS , between the end of June 2015 and Jan 4, 2016, 46,639 tonnes of SMP were offered into intervention. He also said this should be considered alongside 71,489tonnes of SMP in either the 210 day or 365 day private Storage Aid Schemes.

“This total of around 118,000t of powder is equivalent to around 1.3 billion litres of milk (skim), or around 0.85% of European production.

“With Europe running at around 2% up on production, it is apparent that nearly half the growth is being put into either Intervention or PSA,” he said.