Farmers won’t panic when milk prices fall according to the Minister for Agriculture, Food and the Marine Simon Coveney.
Over the next six months we will see the negative effects of that volatility, he said. Over the past two years we have seen all-time highs for the dairy price.
“I think farmers won’t panic when prices fall. I think they will realise that they need to get used to volatility and prices will go up and down.”
Minister Coveney detailed that the reason why milk prices are failing is because most milk globally is produced on the back of grain. He said the price of grain has now been low for two years in a row and this has encouraged increased milk production in some countries particularly the US.
“Over the last 18 months or so supply has outstripped demand in terms of the volumes of milk that’s out there which I don’t think that will be the case in the medium to long term.”
According to the Minister Coveney Irish farmers need to get used to price volatility in dairy markets. “We need to hedge against that and we need pricing models that can do that.”
The Minister commented that it is a little more than a coincidence in his opinion that while we are preparing for the abolition of dairy quotas milk prices are getting weaker.
“I think towards the back end of the year milk prices will strengthen again.
“The reduction in global milk prices at the moment has nothing to do with the decision to abolish milk quotas. We are approaching now the end to dairy quotas across Europe. Which in my view is absolutely the right decision and should have happened years ago. So that farmers can benefit from economies of scale as well as producing a high quality product.”