The case for an increase in farm-gate milk prices is incontestable. We have just had the sixth successive hike in returns at the Global Dairy Trade (GDT) event.
Of even more significance, however, is the fact that milk output in the UK and other regions of Europe is now on the wane – a full month earlier than would normally be the case. It’s all about supply and demand.
The reality is that farmers had to take the hit when prices started plummeting some 18 months ago, so the same principle should be implemented, in equal measure, when markets operate in reverse.
And, yes, these stocks must be factored into the price equation. But so, too, should the fact that a large proportion of this powder is now well past its sell-by date, from a human consumption perspective. And, of course, the last thing the EU Commission wants right now is another collapse in milk prices.
But overriding all of these issues is the fact that dairy farmers need a sustained period of viable prices – simply to pay back the debts built up in 2016 and the latter part of 2015. And this factor should be uppermost in the minds of board members within the various milk-buying organisations, as they set their summer milk prices.
There has been lots of talk in recent months about making ‘improved efficiency’ the mantra of agriculture in Ireland as the challenge of Brexit looms. And that’s all fine and dandy. But if farmers find themselves in a position where they cannot pay back existing debt, they will hardly be able to build any form of sustainable future.
This is why dairy processors must return the full benefit of the recent uplift in world markets back to farmers as quickly as possible.