In a bleak assessment of the dairy market, ICOS’s next CEO TJ Flanagan has warned that the extent to which dairy co-ops can support milk prices is limited.
Flanagan who takes up the top job in ICOS in May said in an analysis of the current dairy market the latest EEX Exchange indices for Butter and SMP demonstrate the ongoing weakness in dairy markets.
“This week’s butter index value at €2670 and the corresponding SMP number of €1645 make sobering reading.
“Those numbers, if converted into a milk price, suggest a value of around 20c.
According to Flanagan that’s a price level not seen since 2009 and one that could be ‘enormously damaging’ to farmers livelihoods.
“That year saw a 3% reduction in Irish milk supplies, albeit combined with terrible weather.
“2009 came after a year when Irish milk processors supported milk prices to the tune of over €100 million. Arguably that was a mistake, as the support was needed more in 2009, but the Co-ops cupboards were bare.
“Arguably that was a mistake, as the support was needed more in 2009, but the Co-ops cupboards were bare.
“One can only hope that the global supply-demand relationship comes back into balance as soon as possible because the degree to which Co-ops can continue to support milk prices from their own reserves is surely limited,” he said.
Yesterday, Glanbia announced it was holding its January milk price for its member suppliers at 25c/L including VAT.
This price is inclusive of a 1c/L Glanbia Co-Operative Society support payment to its members.
Glanbia Ingredients Ireland (GII) has announced that it has set a January market price of 24c/L including VAT for manufacturing milk at 3.6% fat and 3.3% protein.
The Board of Glanbia Co-operative Society has decided to pay members that have signed an MSA a bonus of 1c/L (including VAT) for January manufacturing and liquid milk supplies.
Last week, Lakeland Dairies cut its milk price for January supplies of milk. The co-op was the first to set a milk price for 2016.
It has cut its milk price for base supplies from 26.25c/L to 25.5c/L for January.
The January Ornua Purchase Price Index dropped to 85.7, suggestive of a milk return of around 25-26c. It’s a record low for the Index, which had been in place since early 2011.