A “minimum” milk price for April should be 35c/L, according to the Irish Creamery Milk Suppliers’ Association (ICMSA).
Speaking ahead of processor price announcements for April milk, ICMSA Dairy Committee chairman Ger Quain said that, while milk prices have moved forward in recent months, “there is still room for improvement”.
Farmers expect to see that in the upcoming announcements, he said, adding:
“Milk markets have stabilised in general with gains for powders being offset by small reductions in butter. Overall, it is encouraging to see stability at a relatively high level following a number of months of significant prices.
Noting today’s announcement of the Ornua Purchase Price Index (PPI) and its increase of 0.9c/L for April, Quain said: “It is encouraging to see these markets feed back into milk price.
“It’s notable that this increase to the PPI does not include the value payment – and when this is included it shows where the buoyant market for milk is at present,” he added.
“There is clearly still scope for a milk price increase as we know there is a lag between milk markets and prices paid to farmer suppliers.
“Taking that into account, ICMSA believes that the base price at 3.3% protein and 3.6% butterfat for April milk should be at least 35c/L.
“Dutch and European Quotations for butter and SMP [skim milk powder] mix are holding between 35 and 36c/L, while WMP [whole milk powder] returned between 36 and 38c/L in April.
“These ranges are encouraging and – while processors have different product mixes – it does give a clear indication of where markets are positioned at present,” he continued.
Quain said that April is the “first month of the year when early seasonal bonuses are no longer paid and he said it’s vital that the base price equates to or surpasses the 35c/L mark for all processors”.
Noting that this year’s peak production is “different”, the ICMSA chairman said:
“We presently have harsh growing conditions, along with increases in fertiliser price and concentrate usage – so costs on farms have risen and will negatively impact on margins.
“The next number of months are vital to a dairy farmer’s income for the year and it looks like a period of stability for May and June milk prices – after what should be a price rise for April supplies to at least 35c/L,” Quain concluded.