Lakeland Dairies 'effectively' hold milk price

Despite Lakeland Dairies reducing their June milk price by one cent per litre, farmers are still set to receive the same sum as the Co-op has brought in a hardship payment. A spokesman for Lakelands explained that the price cut from May's by 1c/l was due to dairy market prices coming under "severe pressure" and "a continuing oversupply of dairy products worldwide". They added that they decided to provide the hardship payment due to the unusually wet summer. "In view of these market conditions, Lakeland Dairies has reduced its base milk price for June by one cent to 29 cents per litre including VAT," said the spokesman. "However, the Board of Lakeland Dairies recognises that Lakeland producers are currently experiencing very unfavourable weather conditions and that this is creating difficulties on all farms. "With this in mind, the Board allocated an additional hardship payment of 1 cent per litre for all June milk. This maintains the effective Lakeland Dairies milk price at 30 cents per litre for June 2012. Effectively there has been no reduction in the June milk price paid by Lakeland Dairies." Cavan IFA Dairy Committee chairman Anthony Leddy commended Lakelands on their move. "It has to be recgonised what Lakeland Dairies has done during this poor weather bringing in a hardship payment," Mr Leddy told The Anglo-Celt "They are the only co-op to have made a hardship payment. It recognises that farmers have to pay for extra feed, as they are proviing extra meal to cows which are housed indoors over night in many cases. Winter silage stocks are being eaten into, and in some instances the second cut has even been used by hard pressed farmers. Some silage crops have yet to be harvested and grass recovery is very poor." Lakeland's move follows Town of Monaghan's decision to hold their June milk price. Anthony Leddy believes that global dairy markets are indicating a stabilising of prices, and is optimistic for future growth prices in the longer term. In the short term Mr Leddy said that famers need "a little help from co-operatives". "Despite the 5.9% downturn in the average Fonterra dairy auction price earlier this week, EU commodity prices have either continued to creep up or remained stable after a month's worth of price increases," said Mr Leddy. "EU Butter and SMP gross returns have risen by around 3c/l from the low levels of late May. "There is ample evidence that global milk supplies are slowly coming back into balance with demand growth - which itself is remaining quite robust, especially in emerging countries. In the Northern Hemisphere, milk supplies are now well past the seasonal peak. US milk supply growth has slowed down to 2.1% in May, while EU production growth has also slowed to around 2% with unusually wet conditions through much of continental Europe. New Zealand are barely now starting into their new season, and reports are of a slow beginning, with farmers unlikely to spend much on feed in light of tighter milk prices. Forecasts for New Zealand production are for no increase relative to last year," Mr Leddy said. "While there is some uncertainty for the next few months because of building commercial stocks, what is certain is that the very strong supplies of the last 18 months are petering out due to high feed and other production costs and lower milk prices all over the world. There is little doubt that markets are in the process of rebalancing, and that dairy commodity prices will recover, and with them in time producer prices," he added.