‘Milk suppliers don’t like being conditioned into accepting price cuts’

Milk suppliers don’t like the feeling that they are being “conditioned” into accepting price cuts, according to the Irish Creamery Milk Suppliers’ Association’s (ICMSA’s) Dairy Committee chairperson, Ger Quain.

Commenting on the matter, he said: “We’re a little surprised to see executives, more or less, signalling an intention to cut milk price a month or two down the line.

I can’t recall anyone being confident enough to predict price rises a month or two in advance, even when the markets were surging in front of our eyes.

“I’m not denying anyone their right to an opinion, but milk suppliers really don’t like the feeling that they’re being ‘conditioned’ into accepting price cuts.

“And there’s also the fact that current milk market sentiment continues to improve,” he said.

Quain admitted that markets had been weak for the last few months of 2017 and that did put some pressure on prices, but “the current improvement must be acknowledged and factored in”.

“The increase in Dutch quotes for butter and whole milk powder (WMP) have been matched by other European quotes and indicators and should be convincing processors and co-ops to keep milk prices at or close to current levels,” he said.

Current milk price

Last week – as Kerry Group presented its preliminary financial results – the group’s chief executive, Edmond Scanlon, explained that the current milk price – as it stands – is not supported by actual demand in the marketplace.

Scanlon underlined that 2017 was “a good year for dairy”, adding that – from a Kerry perspective – “stability in milk pricing is very important”.

He said: “Anything we can do to get volatility out of any of our commodities, including dairy, is a positive thing.

“Right now, it’s fair to say that the current milk price – as it stands – is not supported by the actual demand in the marketplace.

“The very strong performance in dairy in 2017 has been driving a huge amount of increase in supply – especially in some of the major European manufacturing, supply and exporting dairy countries.

We would certainly have some concerns about that. There’s no doubt that dairy demand is soft right now.

“It’s too early in the year to predict what the milk price is going to look like. From our stand point, we want to see stability,” he said.