In the absence of a rapid supply-correction, there’s set to be a difficult 6-9 months ahead for the dairy industry, Ornua told the first meeting to the Dairy Forum this week.

It said the market is still digesting 2014 supply overshoot and demand shocks. Despite this, Ornua did signal that demand will eventually catch-up with supply and stock.

Ornua told the forum’s attendees, which were from the farming, processing and banking sectors, with representatives from various state agencies that current (below cost) prices are not sustainable but did state that in its view in the long term, the future is positive.

According to Ornua, the fundamentals remain in place; world populations are growing, getting wealthier, and becoming more interested in dairy fat and protein. Coupled with this it said Ireland has a competitive edge in milk production.

The Minister for Agriculture, Food and the Marine, Simon Coveney hosted the first Dairy Forum for stakeholders in the sector. The forum has been established by the Minister to focus on strategic issues for the development of Ireland’s dairy sector.

The first meeting of the forum focussed on market evolution and price volatility. The package of dairy measures agreed at the EU Council of Agriculture Ministers on September 15, was also discussed.

milk prices ornua presentation

Participants also discussed potential measures to mitigate the impact of volatility, following a presentation by Dr. Michael Keane of UCC, on potential market and policy tools.

Referring to this discussion, Minister Coveney said recent price volatility has been a reflection of turbulent global markets. This means Irish farmers are receiving a reduced farmgate price for their milk this year and he said he is fully aware of the difficulties which this has caused.

“While some price volatility is inevitable it is important that Irish farmers and processors have the tools to help overcome its worst extremes. The potential tools available go beyond EU market support measures.

“They include futures markets, longer-term fixed price contracts between farmers and processors, more stable supply and price arrangements between processors and purchasers of raw materials and finished products, and more flexible banking arrangements for farmers, calibrated to allow for periods of temporary market downturn.

“The forum provided the opportunity for relevant stakeholders to engage in a collaborative way on these challenges and to consider how they might respond,” he said.