‘Welcome Glanbia bonus proves market returns justify higher prices’

Glanbia’s announcement of a 1c/L bonus on January-to-June milk supplies, in addition to a 1c/L price boost for August, has been welcomed by the Irish Farmer’s Association’s (IFA’s) National Dairy Committee Chairman, Sean O’Leary.

O’Leary said that this is very clear vindication of the IFA’s view that 2017 market returns justify higher prices for farmers, and he urged other co-ops to take heed in their forthcoming milk price decisions.

“In returning an additional 1c/L on a significantly increased first half output, Glanbia will be helping its suppliers to replenish their finances after three very challenging years,” O’Leary said.

“However, we are clear that – despite the butter/SMP (skimmed milk powder) imbalance all are keen to point to – combined market returns in 2017 have evolved more positively than might have been expected, and justify higher milk prices.

Over 35% of all annual supplies are produced between August and December.

“Consequently, I urge all other co-ops to think carefully before deciding on August milk prices – farmers must be able to expect stronger milk prices for the back end, to reflect what remain very positive market trends for the period,” O’Leary said.

Meanwhile, these increases will bring the base milk price paid to Glanbia suppliers to 35c/L including VAT for milk produced in the eighth month of the year.

This is the fourth consecutive monthly increase of 1c/L announced by Glanbia. Prior to increasing its May milk price, the processor had held its price at 31c/L including VAT for three months in a row.

Commenting on the increase, Glanbia Ireland Chairman, Henry Corbally, said: “While the short-term outlook remains positive, we note that the current high prices are leading to higher production in key regions and may affect demand when fully passed through the supply chain.

The decision to issue a 1c/L bonus on all milk supplied in January to June of 2017 is set to be included in this month’s milk payment.

Milk volumes allocated to Glanbia’s Fixed Milk Price Schemes will also benefit from the flat 1c/L bonus payment.